Jump to content
House Price Crash Forum

Recommended Posts

My first thought was inflation to plummet! My second thought was interest rates to rise!?

or, coupled with :

- Bin Laden pantomime,

- increase in margins,

- short attack when London closed,

maybe just another attempt to forestall the flocking of disillusioned savers into real money?

Link to post
Share on other sites
  • Replies 90
  • Created
  • Last Reply

Top Posters In This Topic

My first thought was inflation to plummet! My second thought was interest rates to rise!?

I thought the same, but in reverse order. A hike in interest rates is coming, which (or is supposed to) reduces inflation. I'll keep my powder dry.

Link to post
Share on other sites

My first thought was a new house price index included in RPI instead of food, fuel and energy costs.

Good thinking. Given how they pulled the 'inflation proof' savings just before inflation really took off we can be pretty sure that they aren't re-introducing them because they want to give savers a safe option to maintain the value of their savings.

Once prices start to drop appreciably it's almost a cert that the official inflation measure will be adjusted to include them, conveniently ignoring the fact that they were kept out of inflation figures during the boom. This should give plenty of scope to keep base rates low whilst ignoring soaring costs of food and energy.

Link to post
Share on other sites

I thought the same, but in reverse order. A hike in interest rates is coming, which (or is supposed to) reduces inflation. I'll keep my powder dry.

i thought this but have gone with some anyway.

at best we're going to see IR at 1.5% within a year and inflation at 2%.

plus the 0.5% i'll keep the ns&i deal.

Link to post
Share on other sites

My first thought was inflation to plummet! My second thought was interest rates to rise!?

Yes, I am reading it as you having to keep your money in it for 5 years. So what does the BOE do, gets people to move into these now... and then in a month or two they begin the rise of IRs?

Link to post
Share on other sites

Yes, I am reading it as you having to keep your money in it for 5 years. So what does the BOE do, gets people to move into these now... and then in a month or two they begin the rise of IRs?

AIUI, you only need to keep them for a year to earn RPI on them (tax free). You get the full benefit of the extra 0.5% if you keep them for the full term.

Edit:

5-year Index-linked Savings Certificates 48th Issue

Purchase price + index-linking for year 1+ 0.25% of purchase price

= 1st anniversary value

1st anniversary value + index-linking for year 2 + 0.35% of 1st anniversary value

= 2nd anniversary value

2nd anniversary value + index-linking for year 3 + 0.40% of 2nd anniversary value

= 3rd anniversary value

3rd anniversary value + index-linking for year 4 + 0.65% of 3rd anniversary value

= 4th anniversary value

4th anniversary value + index-linking for year 5 + 0.86% of 4th anniversary value

= maturity value

Edited by the.ciscokid
Link to post
Share on other sites

AIUI, you only need to keep them for a year to earn RPI on them (tax free). You get the full benefit of the extra 0.5% if you keep them for the full term.

Edit:

5-year Index-linked Savings Certificates 48th Issue

Purchase price + index-linking for year 1+ 0.25% of purchase price

= 1st anniversary value

1st anniversary value + index-linking for year 2 + 0.35% of 1st anniversary value

= 2nd anniversary value

2nd anniversary value + index-linking for year 3 + 0.40% of 2nd anniversary value

= 3rd anniversary value

3rd anniversary value + index-linking for year 4 + 0.65% of 3rd anniversary value

= 4th anniversary value

4th anniversary value + index-linking for year 5 + 0.86% of 4th anniversary value

= maturity value

Interesting, these are different figures from the ones I originally posted that I got from the NS&I site earlier. Yours appear to be correct.

Link to post
Share on other sites

Inflation product in the uk is [email protected] as the pension funds hoover up anything the government sells as they have made a load of inflation linked promises they cant keep ..

In oz and nz you can get inflation + 4% on gov bonds and you are dealing with a government with almost no debt so a hell of a lot safer than the uk crowd , ie you get your index linking and a decent cash return on top and its a hell of a lot safer than the uk backed by a load of coal, gas, gold, iron ore and sheep ....

Link to post
Share on other sites

AIUI, you only need to keep them for a year to earn RPI on them (tax free). You get the full benefit of the extra 0.5% if you keep them for the full term.

Edit:

5-year Index-linked Savings Certificates 48th Issue

Purchase price + index-linking for year 1+ 0.25% of purchase price

= 1st anniversary value

1st anniversary value + index-linking for year 2 + 0.35% of 1st anniversary value

= 2nd anniversary value

2nd anniversary value + index-linking for year 3 + 0.40% of 2nd anniversary value

= 3rd anniversary value

3rd anniversary value + index-linking for year 4 + 0.65% of 3rd anniversary value

= 4th anniversary value

4th anniversary value + index-linking for year 5 + 0.86% of 4th anniversary value

= maturity value

So I could hold some for say 6 months earning RPI, then for arguments sake say an account became available beating RPI after tax I could cash the certificates in and move into the savings account?

Basically what I'm saying is could you hold then until an account becomes available that beats it, even if less than one year?

Also how is RPI calculated and paid?

Link to post
Share on other sites

So I could hold some for say 6 months earning RPI, then for arguments sake say an account became available beating RPI after tax I could cash the certificates in and move into the savings account?

Basically what I'm saying is could you hold then until an account becomes available that beats it, even if less than one year?

Also how is RPI calculated and paid?

I looked at their blurb an hour ago and on the first page was this:

Withdrawal arrangements

Can be cashed in early, but no index-linking or interest paid if cashed in during the first year

http://www.nsandi.com/savings-index-linked-savings-certificates

So you get no interest if you take it out within a year.

Link to post
Share on other sites

My first thought was a new house price index included in RPI instead of food, fuel and energy costs.

Houses aren't a retail price so they won't be included in a Retail Prices Index. RPI does include mortgage payments as part of is housing costs element though. If house prices go down, then monthly mortgage payments will go down as well, but interest rates will almost certainly go up at some point, and that will likely more than offset the reduced capital cost.

If house prices are included in future inflation targeting, then it is likely that a new inflation index would be created for that purpose.

Link to post
Share on other sites

Houses aren't a retail price so they won't be included in a Retail Prices Index. RPI does include mortgage payments as part of is housing costs element though. If house prices go down, then monthly mortgage payments will go down as well, but interest rates will almost certainly go up at some point, and that will likely more than offset the reduced capital cost.

If house prices are included in future inflation targeting, then it is likely that a new inflation index would be created for that purpose.

I am pretty certain the RPI includes some form of house price numbers as well within it's housing costs section. Can't be arsed wading through the details to check though.

Link to post
Share on other sites

Their remit is to raise £14bn this tax year. Do you think there was £14bn sitting in current accounts looking for a home?

3.6bn is the amount put into isas last year

and lloyds said they had 5bn put into savings last year too.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.