Fixed Rates - is 5 years too long?

ManAtHome

I won't be going for it - another couple of years of btl-badger and co trying to slash rates then somebody will have to clean up the (inflation/public finances over-spend mess). Around 5-6% gross from Milarky's calculations - better 2 and 3 year rates around at the moment.

Mikeyorks

I've just had a 9 month fix at 6.45% mature today .. about the best rate at the time. But the same provider is currently offering 6.7% for the same period!

And a further chunk of money is fixed for 12 mths at 6.97% .... again about the best rate when that was taken a few months ago.

So ..... yes, I think 5 years is far too long. Go for shorter periods ... then forget about it .... until shortly before maturity when you either start kicking or congratulating yourself!

Nick_C

Thanks Millarky. I am happy I can put this money away and forget about it for 5 years, so I had not even bothered looking at the return if I close early, but I think the return for early closure after 42 months is pretty good.

I've also been thinking about this from another angle. While no one knows what is going to happen to interest rates, if RPI inflation stays below 4.13% for the next 5 years, then for basic rate taxpayers like me, it matches the last decent rate at which NS&I offered ILSCs.

tradetime

Difficult question to answer as everyone else is not you, that is to say they have different views and motivations, some would be mortified if there was say a 7% fix for the same period floating around a month or two after, even though in real money terms on that amount it wouldn't make a huge difference.
Even if rates rose a full percentage point above your fix (and stayed there) on £15k you'd only be losing out on about £150 a year
Interest rates are like any other market, you're wasting your time trying to pick the exact top or bottom 99% of the time you'll miss.
If you are overly worried about interest rates rising above that fix then hedge you bets, put some in there and some in the higest shorter term you can find.