Fix or not to fix my cash ISA?

iantowelsh

I understand that nobody has a crystal ball to predict the future interest rates.

I currently have an easy access cash isa which pays 4.7%. I won’t need to access the money for 3-4 years.

There are current two year fixed at 4.4%, what are your thoughts regarding fixing your ISAs?

I do have a S&S ISA, but want to keep some money in a cash isa. Maybe this will change, if interest rates drop below 3%.

VNX

Personally, when one of my ISAs matures in January I’ll be looking at 2/3 year fix. If I can get 4.2-4.4%

I don’t need access to the money and rates are due to drift down over the coming years, whether they do or not who knows but if I can lock in fir the above rates fir 2/3 years I don’t think I’ll be too disappointed at the end of the term 

I will caveat this by saying I have a range of current fixes ranging from one year to five years 

TooOrangeyForCrows

Following as I am in this current situation - looking around.

My current thinking is that interest rates have probably peaked and are heading down - possibly back to the bad old days of not so long ago.

masonic

It is highly unlikely we will see a repeat of the unusual period following the global financial crisis.

All indicators at the moment are that inflationary policies are being pursued on both sides of the pond.

ninaluna754

masonic said:

It is highly unlikely we will see a repeat of the unusual period following the global financial crisis.

All indicators at the moment are that inflationary policies are being pursued on both sides of the pond.

I'm inclined to agree with you. 
By and large people have come to see the very low rates that we had after the crash as the norm to which we will inevitably return, and there will be an element of wishful thinking here from people who have mortgages on (arguably) overpriced properties.
My understanding is that the normal cost of money over time is around 5%, but then I have savings in cash ISAs so may be equally guilty of wishful thinking 🤷🏻‍♀️

iantowelsh

Many thanks for your comments.

Looking at a few financial web sites, they seem to forecast that the BoE will keep the base rate as is after they meet next week. I suspect that interest rates would have already dropped, if the BoE was to reduce the base rate.

I’m tempted to keep my easy cash ISA until the New Year and possible move to a fixed rate before BoE meet in January.

subjecttocontract

We are not all expecting peace and harmony with interest rates, inflation and the economy. There's the small matter of war between Russia & Ukraine (and the alliance) which might cause serious problems and trouble in the Middle East etc etc. 

Hoenir

Ultimately deposit rates will fall beneath that of BOE base rate. Still considerable unwinding to go after the QE era. 

Ocelot

I always open 3 year fixed rate ISAs. As soon as you open an easy access one, they always seems to reduce the rate almost straight away.

peter021072

What would be the best up to date proxy for the direction of savings rates?  Would SONIA swap rates or SONIA forward swap rates be a good approximation?

iantowelsh

Thanks for all your comments, since I’ve been notified that my easy cash isa rate is dropping to 4.5%. I’ve decided to move it to a 3 Yr Fixed 4.34% with Shawbrook Bank.

Thanks again
Ian