Interest rates

[DealorNoDeal]

I've got a 1-year fixed rate savings bond maturing in a few weeks. I have a couple of options to reinvest:

1-year fixed at 2.9%
2-year tracker at bank base + 0.55% (currently 2.3%)

Not sure which to go for.

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FWIW, I'm expecting the base rate to peak around 3.5-4% early next year. But then I'm guessing they'll have to start bringing it down before the end of 2023 to stop the economy going down the crapper.

What do you reckon?

[WTFH]

FWIW, I'm expecting the base rate to peak around 3.5-4% early next year. But then I'm guessing they'll have to start bringing it down before the end of 2023 to stop the economy going down the crapper.

What do you reckon?

I reckon that it all depends on who the next leader is, and whether they use Boris' law on parliament.
I don't expect anything to start coming down until mid 2024, and more likely closer to Christmas that year, if we were to actually have a full fixed term.
https://www.legislation.gov.uk/ukpga...ntents/enacted

[northernladuk]

Not sure which to go for.

Tiny flats over kebab shops is where the money is at.

[ladymuck]

For savings, I'd go for a base rate tracker. I think interest rates should be around the 5% mark personally.

[TheGreenBastard]

For savings, I'd go for a base rate tracker. I think interest rates should be around the 5% mark personally.

Why 5%? Why not 4.8%?

Personally I could see a peak of 3% from the central banks (at least UK/US, less maneuverability for ECB). I think the Brits and Yanks are merely raising them to able to re-introduce rate decreases as a tool against a recession - I would not be surprised if they drop back down to near-zero territory when inflation has been curtailed and a recession induced.

[ladymuck]

Why 5%? Why not 4.8%?

No logical reason TBH.

I'm not saying that's where it will end up, more that it's a reasonable rate to have that doesn't make lending too cheap and gives a return to savers.

[DealorNoDeal]

In the end, I went for a 2-year tracker, bank base + 0.85% (paying 3.1% from 1st Oct).

Should work out ok this year and next. Perhaps not so well in 2024 but we'll see.

[NowPermOutsideUK]

In the end, I went for a 2-year tracker, bank base + 0.85% (paying 3.1% from 1st Oct).

Should work out ok this year and next. Perhaps not so well in 2024 but we'll see.

Which lender is this with and are there penalties for with-drawl ?

[jamesbrown]

with-drawl ?

Say what, now?

[ChimpMaster]

If you have a bit of cash in bank and want some interest, 2 year govt bonds give you 4.7% interest right now. You have to hold it for 2 years to guarantee that yield (but if you want it back earlier you may lose or make money, that depends on the market price at the time).

That also gives some indication of where base rates and mortgage rates are headed.

This isn't good for anyone here in the UK.