Is it time to lock in medium to long-term savings rates?
While there has been a return of competition, albeit very light competition, in the UK savings market there are some with nest eggs who are considering locking in savings rates for the medium to longer term. However, is it the right time to lock in to current rates?
The main factor which will impact upon the value of savings and savings rates in the UK in the short term is the rate of inflation. This increased significantly in December hitting a high of 2.9% which surprised many analysts and was well above expectations. As a consequence unless inflation is subdued in the short term we could see UK base rates begin to move higher which would in turn push UK savings rates higher. However, the situation is not as clear cut as some may have you believe!
If UK inflation does fall, as the Bank of England expects, we could see base rates remain at 0.5% for the majority of 2010 purely and simply to increase liquidity and support the economy. The forthcoming ending of the quantitative easing program is another factor which could influence UK base rates with some concern that the economy could weaken when this support is taken away. On the whole, as the UK economy improves UK base rates will move higher but when this will be is anybody's guess!
Share this..
Related stories
Why is inflation bad news for your savings?
Over the last few months we have heard concerns about inflation pushing ahead in the short to medium term and the potential impact this could have on the UK savings market. So why is inflation such bad news for your savings? The truth is that we are in a relatively unique situation in the UK, and indeed around the world, where base rates are only just above zero which has led to very low saving...
Read MoreMoneysupermarket.com: Be wary of attractive savings account offers
Savings accounts with headline grabbing rates of interest may not be as attractive as they appear, a price comparison site has warned. Latterly, the savings account market has seen a rash of savings accounts being launched with appealing interest rates, as banks look to garner more of their funding from customer deposits. However, many of these offers are dependent upon opening a current account w...
Read MoreWhat can savers expect in the forthcoming budget?
As Gordon Brown and Alistair Darling continue to suggest that UK savers will be "looked after" in the forthcoming budget many people are now wondering exactly what is in store. As UK base rates have fallen from over 5% to the current level of under 1% we have seen savings rate in the UK collapse. This has led to many people having to dig deep into their deposits even though just 12 months ago many...
Read MoreCurrent accounts
With a current account you'll get easy access to your money, and will usually be offered a debit card and a cheque book, but if not, you will probably be able to request one. You can manage your bills easily and effectively by setting up direct debits and standing orders. You will probably be able to arrange an overdraft facility if you need to borrow money. More and more current accounts are b...
Read MoreNS&I predicts savings downturn
Savings levels are likely to drop over the months to come, according to National Savings & Investments (NS&I).The government-backed accounts provider said that the proportion of income saved averaged 6.4 per cent over the summer and autumn.This is down on 2005's figure of 7.16 per cent - taken at a time when the economy was still booming.NS&I said that 47 per cent of people are still saving regula...
Read More