Take 6 months fixed or 12 months ...or will ecb rate move?

[serotoninsid]

Have some cash that i don't need instant access to. Just wondering if i should take a 6 month deal or 12 month? Is it likely that rates will go up within 12 months?
Was lucky last time as got great rate from halifax fixed for a year before rates dropped...

 

[camlin90]

The general consensus seems to be that rates won't change over the next year. There could be a small move upwards towards mid 2010. I'd imagine most banks would absorb the ECB rate increase rather than passing it on - look at the margin above ECB that banks are currently paying for deposits - much more than historically.

This view seems to be backed up here
[broken link removed]

There's no great benefit to locking your money away in terms of reward. Best 1-year deal is 3.8% from Anglo, but you can get 3.50-3.55% on demand products. Is an extra 0.25% worth the hassle of not being able to access your money for a year?
Of course those demand rates could drop a few months down the line... no crystal ball unfortunately!

Personally, I am just sticking any of my lump sums that roll over into a demand account and feeding from there to a few regular savers.
I reckon I'll come out pretty much even over the year.

 

[Guest116]

I'd imagine most banks would absorb the ECB rate increase rather than passing it on - look at the margin above ECB that banks are currently paying for deposits - much more than historically.

There is no chance of the banks not passing on rate increases, for mortgages I mean.

 

[serotoninsid]

There is no chance of the banks not passing on rate increases, for mortgages I mean.

Well, in my case its a tracker so they have to pass it on - and i'd have to say i would be extremely surprised if any bank didnt anyways regardless. Must go back and check the list again for the highest demand rate...

 

[Lightning]

Have some cash that i don't need instant access to. Just wondering if i should take a 6 month deal or 12 month?

I would echo some comments above.

Choice 1: Lock at 3.5% with Investec for 6 months or Anglo at 3.8% for 12 months.

Pros: Rate fixed.
Cons: No access during period, ECB rates might go up in the next 12 months and are unlikely to go down.

Choice 2: On Demand at 3.55% with Nationwide UK.

Pros: On Demand
Cons: Chance Nationwide UK may drop the rate.

Personally, I don't think it is worth a 0.05% - 0.25% premium to lock when ECB rates might go up in the next 12 months.

 

[serotoninsid]

I would echo some comments above.

Choice 1: Lock at 3.5% with Investec for 6 months or Anglo at 3.8% for 12 months.

Pros: Rate fixed.
Cons: No access during period, ECB rates might go up in the next 12 months and are unlikely to go down.

Choice 2: On Demand at 3.55% with Nationwide UK.

Pros: On Demand
Cons: Chance Nationwide UK may drop the rate.

Personally, I don't think it is worth a 0.05% - 0.25% premium to lock when ECB rates might go up in the next 12 months.

Thanks for the info fungus. I am going to lock for 12 months with Anglo but it is a small amount so its not the end of the world if interest rates go up. I liked the idea of the 6 month lock but the amount is less than their minimum requirement.