Fixed rates to stay up a while longer?

Milarky

Although banks and building societies have mostly announced cuts in their day-to-day savings range of about 0.25% they don't seem to be cutting fixed rates immediately.

Yorkshire Building Society, for instance, has rolled-over its ISA rate of 6.35% for another month. Halifax is still offering upto 6.55% on larger ISA balances. Nationwide is still offering the same fixed rates.

This suggests that they are remaining defensive about attracting and retaining savings - and particularly lump sums - and cannot yet 'afford' to cut rates more generally. That's hardly what the Bank of England must have been hoping for.

Any thoughts?

ManAtHome

Depends how much the BoE is prepared to print/pump into the system - at some point, even their penalty rate may lose it's stigma (and sting).

Not sure about funding requirements of B/Socs - whether there's any relation to retail deposits or they can just maintain liquidity by borrowing from anywhere.

free4440273

One needs to tread carefully here also (with regards to always being tempted by the best rates): London Scottish Bank have been offering very attractive rates and are now in discussions with the Financial Services Authority over their capital base. I have to admit, I was tempted by their fixed rate bonds; glad I said 'No' in the end.

Jake'sGran

I've just put a lump sum with Bradford and Bingley paying 6.8% fixed for a year. Suddenly, building societies are more interesting. Everyday money is with Smile so I hope they have not been involved with USA sub-prime mortgages and I'm also using Sainsbury's which I believe is backed by HSBC.

The_Fiddler_2

Jake'sGran wrote: »

I've just put a lump sum with Bradford and Bingley paying 6.8% fixed for a year. Suddenly, building societies are more interesting. Everyday money is with Smile so I hope they have not been involved with USA sub-prime mortgages and I'm also using Sainsbury's which I believe is backed by HSBC.

No, the HBOS

Hungerdunger

Jake'sGran wrote: »

I've just put a lump sum with Bradford and Bingley paying 6.8% fixed for a year. Suddenly, building societies are more interesting.

Actually, Bradford and Bingley plc is a bank, not a building society.

Jake'sGran

Hungerdunger wrote: »

Actually, Bradford and Bingley plc is a bank, not a building society.

Yes, I did know that, I just phrased my message badly. I have shares in them as it happens.

And, thank you to the Fiddler. I always get that wrong unfortunately as I believe HSBC would be safer than HBOS. Maybe it was wishful thinking.

bristolleedsfan

ManAtHome wrote: »

Depends how much the BoE is prepared to print/pump into the system - at some point, even their penalty rate may lose it's stigma (and sting).

Not sure about funding requirements of B/Socs - whether there's any relation to retail deposits or they can just maintain liquidity by borrowing from anywhere.

world banks are planning to throw more bucks into the system,from memory sometime in january.

building societies by law have to aquire a certain percentage of their funding through retail deposits, im not sure of exact figure, it is high, at a guess in region of 60- 70% from retail funding, ( whereas NR was relying on wholesale markets for around 70-80% of its funding. :eek: )

heres an interesting 2007 document if anybody has time to read it and post back any usefull info.

http://www.legislation.gov.uk/acts/acts2007/pdf/ukpga_20070026_en.pdf

ManAtHome

That's an amendment to the 1997 amendment to the 1995 amendment to the 1986 act (I think...)

The 1997 amendment was (rest of it here http://www.bsa.org.uk/consumer/factsheets/100003.htm)
"Section 7 of the 1986 Act provides that at least 50% of the funds of a building society (or of the society's group) must be raised in the form of shares held by individual members of the society. This single funding limit, introduced by the 1997 Act, replaced the two previous limits on funding - the 50% limit in respect of non-retail funds and deposits and the 50% limit on the amount due on deposits and loans."

So looks like they introduced the option to raise the share-based funding, presumably reducing funding from external sources if/when they feel like it. Only lending twice deposits seems a bit low - will have pay more attention when I get the next set of accounts. Thanks anyway BLF.

bristolleedsfan

ManAtHome wrote: »

That's an amendment to the 1997 amendment to the 1995 amendment to the 1986 act (I think...)

The 1997 amendment was (rest of it here http://www.bsa.org.uk/consumer/factsheets/100003.htm)
"Section 7 of the 1986 Act provides that at least 50% of the funds of a building society (or of the society's group) must be raised in the form of shares held by individual members of the society. This single funding limit, introduced by the 1997 Act, replaced the two previous limits on funding - the 50% limit in respect of non-retail funds and deposits and the 50% limit on the amount due on deposits and loans."

So looks like they introduced the option to raise the share-based funding, presumably reducing funding from external sources if/when they feel like it. Only lending twice deposits seems a bit low - will have pay more attention when I get the next set of accounts. Thanks anyway BLF.

i do know that Brittannia BS asked for the law to be changed so that the amount of funding that they had to raise via retail funding was reduced so they could get more funds from other sources.