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Interest Rates Now 4% For 2 Year Bonds Not 0.5%!


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Fed up of threads claiming that savers are only getting 0.5% interest at the moment, this is BOE propaganda.

Base rate stopped reflecting reality and became a political tool many, many months ago.

July last year I took out a 2 year bond paying 6.7%

Last month I took out a 1 year ISA at 3.1%

2 year bonds are now available at 4%

Next year when my 2 year bond matures I expect to get another 2 year deal at 5%+ and probably same for ISA.

Now that base rate is effectively at zero, all the BOE can do now to influence sentiment is to claim that rates will remain this low for a considerable period of time.

This just desperate propaganda IMO - probably to try and back up talk of deflation in an attempt to justify further QE.

My view is that the difference between base rate and savings rates is now around 3.5% and given that base rate can't really be cut any further there is only one way interest rates can go - UP.

:blink:

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You don't think BoE can withhold substantiall increases from 0.5% base rate till atleast June 2010?

Don't think BOE base rate is really relevant anymore TBH.

The recent aggressive cuts were done for political not economic reasons IMO.

And now base rates are 0.5% they have ceased to have any effect on 'real' interest rates.

Building Societies are struggling to get capital, so their savings rates are going up.

And if inflation starts to rise at any point then the BOE will come under pressure to raise base rates.

Either way I personally think savings rates will go above 5% next year, but I am not an 'expert', that is just my gut feeling.

:)

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I find it so hard believe that CPI coming down so much - they obvously know something we don't.

CPI/RPI will be rising shortly once the effects of the VAT cut and last years fuel price peak and flowed out of the system.

The peak was at the start of July last year. Petrol prices are 20% cheaper now than the peak. This 20% drop in fuel prices is masking inflation in food etc.

CPI/RPI should spike to 6% by the end of the year.

In the meantime, CPI/RPI will possibly go negative as we approach the July 1st peak.

Edited by TaxAbuserOfTheWeek
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Fed up of threads claiming that savers are only getting 0.5% interest at the moment, this is BOE propaganda.

Base rate stopped reflecting reality and became a political tool many, many months ago.

July last year I took out a 2 year bond paying 6.7%

Last month I took out a 1 year ISA at 3.1%

2 year bonds are now available at 4%

Next year when my 2 year bond matures I expect to get another 2 year deal at 5%+ and probably same for ISA.

Now that base rate is effectively at zero, all the BOE can do now to influence sentiment is to claim that rates will remain this low for a considerable period of time.

This just desperate propaganda IMO - probably to try and back up talk of deflation in an attempt to justify further QE.

My view is that the difference between base rate and savings rates is now around 3.5% and given that base rate can't really be cut any further there is only one way interest rates can go - UP.

:blink:

http://www.bankofengland.co.uk/

Bank of England rate is indeed 0.5%. Look at the easy access savings rates too, craptastic.

You are lucky to have locked into your accounts when you did, but I wouldn't go celebrating a 3% return when inflation is near 10%....

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Fed up of threads claiming that savers are only getting 0.5% interest at the moment, this is BOE propaganda.

Base rate stopped reflecting reality and became a political tool many, many months ago.

July last year I took out a 2 year bond paying 6.7%

Last month I took out a 1 year ISA at 3.1%

2 year bonds are now available at 4%

Next year when my 2 year bond matures I expect to get another 2 year deal at 5%+ and probably same for ISA.

:

Agreed. I'm fed up, inflation notwithstanding, of claims that it's not worth saving as 'you get nothing on your money'.

You're just getting a bit less than last year, but what's left is still well worth having.

A 4% bond will do nicely for now.

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Fed up of threads claiming that savers are only getting 0.5% interest at the moment, this is BOE propaganda.

Base rate stopped reflecting reality and became a political tool many, many months ago.July last year I took out a 2 year bond paying 6.7%

Last month I took out a 1 year ISA at 3.1%

2 year bonds are now available at 4%

Next year when my 2 year bond matures I expect to get another 2 year deal at 5%+ and probably same for ISA.

Now that base rate is effectively at zero, all the BOE can do now to influence sentiment is to claim that rates will remain this low for a considerable period of time.

This just desperate propaganda IMO - probably to try and back up talk of deflation in an attempt to justify further QE.

My view is that the difference between base rate and savings rates is now around 3.5% and given that base rate can't really be cut any further there is only one way interest rates can go - UP.

:blink:

I think you're about 11 years out there mate.

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http://www.bankofengland.co.uk/

Bank of England rate is indeed 0.5%. Look at the easy access savings rates too, craptastic.

You are lucky to have locked into your accounts when you did, but I wouldn't go celebrating a 3% return when inflation is near 10%....

3% is on ISA for 12 months

2 year bond is 6.7% for 12 months

If inflation is 10% in 12 months then I should get 10%+ interest when 2 year bond matures, but I would only tie up for 1 year.

Averaging out all my investments I am currently getting just over 5% return.

NOT 0.5%

REAL savings rates are now around 3.5% for a 1 year bond and rising.

Abbey are doing a 1 year fix at 3.5% with a minimum deposit of only £1

http://www.which-savings-account-4u.co.uk/...CFReAkwodzHbTbg

Unless it goes up, BOE base rate is now irrelevant IMO.

:)

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I think you're about 11 years out there mate.

I actually agree with you on that, but I was trying to make it simpler.

When house prices dipped in 2005 then started to rise again, the BOE should have put up interest rates 0.5% every month until prices stopped rising, but it was an election year.

As far as I am concerned virtually all the BOE's interest rate decisions since it was made 'independent' have been politically motivated.

At the moment the BOE are just collaborating with Brown to try and stop the wheels coming off before the election, I don't think either of them cares what happens after that.

:blink:

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Agreed. I'm fed up, inflation notwithstanding, of claims that it's not worth saving as 'you get nothing on your money'.

You're just getting a bit less than last year, but what's left is still well worth having.

A 4% bond will do nicely for now.

Exactly,

Don't know what people have got against fixed rate bonds.

When I took out the 2 year fix at 6.7% I took the view that I was getting at least 6.7% and if interest rates were higher than that in 2 years, that would be a bonus because I would then be able to take out another bond at an even higher rate.

The BOE has just cut base rate to try and save Brown's Ass - not the economy

Interest rate of 0.5% is then used as propaganda to try and persuade the prudent to p*ss their savings up the wall to bail out debt junkie VI's and the Government.

Meanwhile, in the real world, Building Societies are so desperate for capital that they are putting up savings rates to 4%+ for 2 year bonds and rising.

:blink:

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It's not worth saving, and it's not worth buying a house, so I have decided to spend my STR fund on exotic holidays, prostitutes and cocaine and then die.

Put your money in a one year bond at 3.5% gross

Then when that matures tie it up for another year at probably 5%+

Meanwhile house prices will have fallen another 10-15%

Unless of course the BOE let inflation rip at some point by refusing to raise interest rates.

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