Interest rates

[fritz katzenjammer]

I once locked my mortgage in a 11% for five years… sounds dopey but it continued up and spent most of those five years at about 13%… I marvel at the nice low rates people can get now.

But then, nobody can get into the housing market anyway because the price of a home has gotten so very stupid.

 

[gbb]

For only the second time in what seems like decades, we got a windfall this week of a very nice interest payment on our savings.
It doesn't make up for its losses through inflation, but it's nice the trend was reversed for once (or twice) , but it's a win in a sea of losses it seems nowadays

 

[mr_cellophane]

Have interest rates ever been more than inflation ?

 

[Sterlo]

Sounds like the start of it for us, just been advised our ISA rate is dropping from 4.82% down to 4.41%. Time to start looking around again.

 

[wafter]

Sounds like the start of it for us, just been advised our ISA rate is dropping from 4.82% down to 4.41%. Time to start looking around again.

Is that on a variable rate ISA that's yet to complete or a renewal rate for one that's coming to an end? If it's the latter they're always trying to screw you... I have one with Sandander which is a bit over 4% currently; but the best rate they're offering on new ones is around 2%. I think they roll out the decent rates to fill the coffers, then cut them right back once they have enough capital.

The trend in inflation certainly suggests that rates need go no higher, although I think the BOE will be cautious about cuts in case it cranks the inflation up again; and let's not forget that 4-5% is the historic norm, so unless there's a fat recession (which admittedly we're due) there's no reason to drop them.. at least not significantly.

On top of that there are still plenty of potentially inflationary external threats - Russia, the middle east, the Baltimore bridge situation.... it's also interesting to note that Gold has gone to the moon recently (around 8% in a month to reach new highs) which, as a traditional hedge against risk and uncertainty suggests people aren't perhaps expecting a lot from the usual "investments"..

 

[Jenkins]

<snip>.... it's also interesting to note that Gold has gone to the moon recently (around 8% in a month to reach new highs) which, as a traditional hedge against risk and uncertainty suggests people aren't perhaps expecting a lot from the usual "investments"..

This is where I've (theoretically as I dont intend selling yet) got lucky in the past month or two. A couple of years ago I invested in a few gold sovereigns at an average cost of £350 each as a very long term thing and to have a 'solid' investment. Until recently they've held roughly steady at or around that value, but just recently the price has jumped up to where one of the bigger dealers (Atkinson's Bullion) are offering to buy at around £407 each and even Bullion by Post are offering to buy at £400.

 

[glasgowcyclist]

I have one with Sandander which is a bit over 4% currently; but the best rate they're offering on new ones is around 2%

I’ve just transferred one to Charter Bank at 5.05% and opened a new one with Paragon at the same rate. Both are 1-year fixed rate. I just missed Virgin at 5.25%.

 

[wafter]

This is where I've (theoretically as I dont intend selling yet) got lucky in the past month or two. A couple of years ago I invested in a few gold sovereigns at an average cost of £350 each as a very long term thing and to have a 'solid' investment. Until recently they've held roughly steady at or around that value, but just recently the price has jumped up to where one of the bigger dealers (Atkinson's Bullion) are offering to buy at around £407 each and even Bullion by Post are offering to buy at £400.

Good work - seems that for the past 10yrs it's been consistently outstripping inflation and given the cost and hassle of selling physical gold I think it's definitely best as a long-term hedge. A friend of mine routinely buys x-amount every year; which I think is a good stratagy. Ignoring "artifical" spikes from Brexit and Covid growth seems to have been pretty linear over the past decade, so probably a good approach when you have the luxury of "spare" money to wait until a local low and chuck a few more quid at it.

I’ve just transferred one to Charter Bank at 5.05% and opened a new one with Paragon at the same rate. Both are 1-year fixed rate. I just missed Virgin at 5.25%.

Thanks - I see a lot of the "challenger" banks offering higher rates are mostly app-based so off the menu for me... current best "mainstream" one appears to be the Post Office, but I'll have to wait until the new financial year to buy into it.

 

[vickster]

Coventry Building Society often have good savings rates

 

[gbb]

I may have said this before but reading the above reminds me we have missed a trick over and over the years. We always saved as much as possible, and yet did nothing with it barring looking at a healthy savings account. Occasionally chucking a wad into a higher rate account but that's it.
We started married life with nothing, when I say nothing, anything we could cobble together, second hand, plus whatever personal possessions we had between us in a council house
We worked hard to climb out of ( reasonably minor In the scheme of things) debt and we're always quite conservative with money, averse to risk.
It's a very good strategy...but equally, sometimes it makes you too careful, perhaps more my wife than me but...it can hold you back.

 

[SpokeyDokey]

I may have said this before but reading the above reminds me we have missed a trick over and over the years. We always saved as much as possible, and yet did nothing with it barring looking at a healthy savings account. Occasionally chucking a wad into a higher rate account but that's it.
We started married life with nothing, when I say nothing, anything we could cobble together, second hand, plus whatever personal possessions we had between us in a council house
We worked hard to climb out of ( reasonably minor In the scheme of things) debt and we're always quite conservative with money, averse to risk.
It's a very good strategy...but equally, sometimes it makes you too careful, perhaps more my wife than me but...it can hold you back.

I think there is a huge difference between speculative investment and active money management. Re the latter...

..for the last 25 years we have been continually shifting money around to capture higher rates. Mainly in ISA's and FRB's. We did this to ensure that we would have a large passive income generator in retirement ie maximising savings and having as much annual savings interest as possible to add to our other retirement income streams.

Our growth in savings via interest over the years has been substantial and obviously interest upon 'interest' continues to be compounded.

It shocks me when I hear of people lazily leaving money in low, or no, interest accounts. Utter madness.

PS I am not suggesting that this is what you have done.

Two other things (to save making a seperate post):

I do not understand why some savers are frightened of saving with so called Challenger Banks & non-UK banks. They often have much higher rates on offer than the mainstream UK banks. If they are FSCS protected then bite their arms off...

One 5 year lock from such a bank, made a few months ago is currently giving us over 6% pa on a substantial chunk of money.

Secondly, use long-term deals to lock away every scrap of money that you are not going to need for as far as you can estimate for your forseeable future.

We have a number of friends who fanny around investing substantial sums in <1 to 1 year deals simply because they are 'scared' to lock up cash for too long. FWIW we keep c10% of our entire investments in these short term deals. Another 10% is in 1-3 year deals and the 80% balance is in 3-7 year deals. Don't be shy to lock away 'un-needed' cash. This has worked well for us with only 1 small irritating 'mistake' over the years.

 

[gbb]

I think there is a huge difference between speculative investment and active money management. Re the latter...

..for the last 25 years we have been continually shifting money around to capture higher rates. Mainly in ISA's and FRB's. We did this to ensure that we would have a large passive income generator in retirement ie maximising savings and having as much annual savings interest as possible to add to our other retirement income streams.

Our growth in savings via interest over the years has been substantial and obviously interest upon 'interest' continues to be compounded.

It shocks me when I hear of people lazily leaving money in low, or no, interest accounts. Utter madness.

PS I am not suggesting that this is what you have done.

Two other things (to save making a seperate post):

I do not understand why some savers are frightened of saving with so called Challenger Banks & non-UK banks. They often have much higher rates on offer than the mainstream UK banks. If they are FSCS protected then bite their arms off...

One 5 year lock from such a bank, made a few months ago is currently giving us over 6% pa on a substantial chunk of money.

Secondly, use long-term deals to lock away every scrap of money that you are not going to need for as far as you can estimate for your forseeable future.

We have a number of friends who fanny around investing substantial sums in <1 to 1 year deals simply because they are 'scared' to lock up cash for too long. FWIW we keep c10% of our entire investments in these short term deals. Another 10% is in 1-3 year deals and the 80% balance is in 3-7 year deals. Don't be shy to lock away 'un-needed' cash. This has worked well for us with only 1 small irritating 'mistake' over the years.

One of your lines read... 'I'm not suggesting that's what you have done' (in low interest rate accounts)
It is (for too long)
It's fine, we are quite lazy and while it made no difference while rates were low, even I hot edgy as I realised there was money to be had, but my wife is even more cautious than me, it irked me somewhat but we're a team, I respect her overcautiousness.
That said, I did eventually convince her and it's paid off.
Need to make sure it's not an introductory one year rate now...and start convincing her again

 

[vickster]

Don’t forget to consider the tax implications of interest on non ISA savings

 

[Sterlo]

Is that on a variable rate ISA that's yet to complete or a renewal rate for one that's coming to an end? If it's the latter they're always trying to screw you... I have one with Sandander which is a bit over 4% currently; but the best rate they're offering on new ones is around 2%. I think they roll out the decent rates to fill the coffers, then cut them right back once they have enough capital.

The trend in inflation certainly suggests that rates need go no higher, although I think the BOE will be cautious about cuts in case it cranks the inflation up again; and let's not forget that 4-5% is the historic norm, so unless there's a fat recession (which admittedly we're due) there's no reason to drop them.. at least not significantly.

On top of that there are still plenty of potentially inflationary external threats - Russia, the middle east, the Baltimore bridge situation.... it's also interesting to note that Gold has gone to the moon recently (around 8% in a month to reach new highs) which, as a traditional hedge against risk and uncertainty suggests people aren't perhaps expecting a lot from the usual "investments"..

No, it's an easy access ISA. Saving up to move house so wanted to be able to get at it easily. I'm at the limit for non ISA savings without paying tax on them until the new tax year. I did have a fixed 1 yr ISA last financial year but put it in the easy access when it matured. It's not a real issue but it looks like the starts of reduced savings rates. Suppose we have to look on the bright side as we've no mortgage but it's been nice getting a reasonable return on savings for the past couple of years.

 

[DogmaStu]

Just out of interest…I use a Wise account for pretty much all daily banking nowadays.

I get 4.66% on my balance and very good exchange rates so can use the card all over the World.

My Lloyds and Barclays accounts have become almost obsolete.