Fixed Rate Offers Declining

WOTSWOT

With a high probability of a further rate cut next week many of the best offers are quickly disappearing.

It seems possible to delay funding some by up to 30 days at the moment, giving a chance to buy now with no downstream commitment  But I remember shortly after the last rate cut there was a rate rebound so you would have benefited by waiting. There are so many uncertainties at the moment it is difficult to know what to do. Will inflation suddenly take off again due to a completely unexpected event somewhere else in the world ?

With growth almost grinding to a halt many are expecting a further rate cut later this year. The odds favour locking in now as long as you have enough funds to put aside.

eskbanker

WOTSWOT said:

With a high probability of a further rate cut next week many of the best offers are quickly disappearing.

It seems possible to delay funding some by up to 30 days at the moment, giving a chance to buy now with no downstream commitment  But I remember shortly after the last rate cut there was a rate rebound so you would have benefited by waiting. There are so many uncertainties at the moment it is difficult to know what to do. Will inflation suddenly take off again due to a completely unexpected event somewhere else in the world ?

With growth almost grinding to a halt many are expecting a further rate cut later this year. The odds favour locking in now as long as you have enough funds to put aside.

The bolded wording seems to be the only actual question in your post but it's surely rhetorical?

subjecttocontract

I wasn't aware that posts had to include an actual question ?

WOTSWOT

I just see it as the main risk to locking in to fixed rates now but others may see things differently

Albermarle

WOTSWOT said:

I just see it as the main risk to locking in to fixed rates now but others may see things differently

The rate cuts are widely expected, so I assume the savings providers have already taken account of them in their fixed rate offers, to some extent at least.

born_again

WOTSWOT said:

I just see it as the main risk to locking in to fixed rates now but others may see things differently

Heads you win tails you lose.
Sadly no one has a crystal ball, as Mystic Meg had it buried with her 🤷‍♀️

Remember that fixed rates are not based on a one month drop, or the though that interest rates may drop for a couple of months. They are based over the years of the term, & best guess at that.

To my mind, if you are happy with the rates now. Take it. 

WOTSWOT

The idea of having to lock my money away for some time with no access at all does not sit easily with me, so most of my fixed bonds are in ISAs where there is nearly always provision for access, albeit at some significant penalty, depending upon the term.

The other consideration for me is the difference between instant and fixed rates. Not so long ago I seem to remember fixed rates were at some disadvantage, whereas now there seems to be little difference, slowly moving towards a trend where fixed rates are at an advantage.

Recently I have favoured 60 to 95 day notice accounts, where I still have good deals with DF, KRBS and RCI.
In particular RCI provided very competitive returns for some time after I funded and following their recent rate increase, at a time when all the competition is reducing rates, it looks as if that experience is about to repeat.

masonic

I would not lock into a long term fix with so much geopolitical uncertainty. Who knows where rates may be in a couple of years. While not savings per se, buying and holding index linked gilts to maturity would protect against inflation. Currently you can lock in a slightly positive real return (based on RPI until 2030, then CPIH thereafter). They can be sold prior to maturity, although you might not get back as much as you invested.

DjangoUnchained

As fixed rates are lower than they were a couple of years ago there seems to be not much variation in the providers ie 0.1 or .2 % therefore there doesn't make a lot of difference if you day tie up 20/30 k for a year.  Also as you get older a year seems to come round faster and faster. I try and open a fixed rate every couple of months so I always have one maturing every few weeks. For longer term I buy etf's.

WOTSWOT

DjangoUnchained said:

As fixed rates are lower than they were a couple of years ago there seems to be not much variation in the providers ie 0.1 or .2 % therefore there doesn't make a lot of difference if you day tie up 20/30 k for a year.  Also as you get older a year seems to come round faster and faster. I try and open a fixed rate every couple of months so I always have one maturing every few weeks. For longer term I buy etf's.

I had a routine of cycling Gatehouse 6 months fixed but at the last renewal, just after the last rate cut, I was able to get 12 months at 4.45%,as a loyalty bonus when the current rate on offer was only 4.25%. Shortly after the rate on offer went up to 4.40 and now it has just jumped down to 4.20%. Their 6 month is now down to a paltry 4.15% and no longer of interest to me.

I was also able to grab a new 4.50% 1y ISA right at the start of the Tax Tear when Gatehouse were top of those tables. That offer didn't last long and now it is down to 4.0%.

You have to make some quick decisions sometimes, even with fixed rates, to get the best deals.

Albermarle

WOTSWOT said:

The idea of having to lock my money away for some time with no access at all does not sit easily with me, so most of my fixed bonds are in ISAs where there is nearly always provision for access, albeit at some significant penalty, depending upon the term.

The other consideration for me is the difference between instant and fixed rates. Not so long ago I seem to remember fixed rates were at some disadvantage, whereas now there seems to be little difference, slowly moving towards a trend where fixed rates are at an advantage.

Recently I have favoured 60 to 95 day notice accounts, where I still have good deals with DF, KRBS and RCI.
In particular RCI provided very competitive returns for some time after I funded and following their recent rate increase, at a time when all the competition is reducing rates, it looks as if that experience is about to repeat.

Traditionally fixed rates are normally better than easy access rates, as a reward for tying your money up for longer.
However over the last couple of years or so, this has been turned around due to expectations of interest rate cuts.
In the end these have come more slowly than expected, so with hindsight it would have probably better to stick with EA over that period.
Once interest rates stabilise and if it is perceived that they will stay that way, then the traditional reward of better rates for tying up your money for longer should re-emerge.