2014/5 Cash ISAs

[davepoth]

It's that time of year again. My current ISA provider sent me an email telling me that my ISA interest rate will drop to a rate equivalent to the square root of fk all as from April, so I'm shopping around for a better rate. Has anyone seen anything better than the Islamic Bank of Britain's 1.8%?

Interestingly a few banks are offering better rates on longer term fixes (Virgin is saying 3% fixed until 2019) and I'm wondering whether that might be a better idea?

Failing that I suppose it's the old fallback of coke and hookers.

[Smiffack993]

I'm frantically looking too and noticed the Islamic bank. 3% for 3 years is rubbish though really. I'm hoping there will be a flurry of activity from the banks and building societies next month trying to be competitive. In short, I'm holding out.

Do post if you see anything interesting though!

[Smiffack993]

I'm frantically looking too and noticed the Islamic bank. 3% for 3 years is rubbish though really. I'm hoping there will be a flurry of activity from the banks and building societies next month trying to be competitive. In short, I'm holding out.

Do post if you see anything interesting though!

[The Leaper]

I'm not frantic. My experience over the past 3-4 years is that rates are crap and there's nothing that can be done. The fact is that the banks have no motivation to attract ISA money with interest rates being so low and there's no competition. They have far more important matters to be concerned with. I suspect for 2014/15 that getting a fixed cash ISA for three years at around 2% will be the norm.

Meanwhile, everyone with a mortgage on a typically extremely low rate will make hay while the sun shines and do nothing about taking advantage of current rates to pay off their mortgage on an accelerated basis. We know what they will be posting in a year or two....

R.

[43034]

The Leaper said:

Meanwhile, everyone with a mortgage on a typically extremely low rate will make hay while the sun shines and do nothing about taking advantage of current rates to pay off their mortgage on an accelerated basis. We know what they will be posting in a year or two....

R.

Apologies for the o/t posting but I have a quick few questions (that don't warrant a whole other thread).

I'm 19 so have little knowledge on mortgages but I am hoping to have one in < 5 years so apologies if my questions are a little obvious to some.

But...

What are current interest rates on mortgages, what were they 5 years ago and what do we expect them to be in 5 years time.

Thank you.

[Crafty_]

I was pondering this years ISAs too, mine has been with Santander for the last couple of years, 3% and then 2.5% last year. If rates are going to st I might just move the money to my current account that is paying £% interest (up to £20k anyway), I think it works out to be something like 2.4% net ?

I'm already plugging away at the mortgage and think I might increase this further next year instead of saving.

For the poster above - mortgage rates vary depending on the details of the deal - the up front fee, the lock in period, and the loan to value. For example there are a few mortgages around the 1.6% mark, which is pretty good, but you need something a 40% deposit and the fee is £1500. If you only have a 30% deposit the rate is 1.99%, 15% deposit is 2.59%. Figures taken from here: http://www.thisismoney.co.uk/money/mortgageshome/a...

To be honest I can't really remember what the market was doing 5 years ago, The BOE rate was dropping quite quickly, but there was a credit crunch so lending got tightened up quite a lot.
5 years time ? firmly in crystal ball territory there, no-one can say.

The best thing you can do is save like a mad man, bigger deposit will always mean better rates.

[mathmos]

It all seems pretty poor really, best I've seen for instant access is 1.7 from first direct.

It may be worth waiting until late March/early April though, I seem to remember that some banks wait until the last minute before they release some with better rates.

[RizzoTheRat]

Crafty_ said:

I was pondering this years ISAs too, mine has been with Santander for the last couple of years, 3% and then 2.5% last year. If rates are going to st I might just move the money to my current account that is paying £% interest (up to £20k anyway), I think it works out to be something like 2.4% net ?

I had a letter from Santander yesterday saying my direct access one is dropping to 1.5%. Still 0.1% higher than my mortgage but it may be time to open another 123 account (2.4/1.8/1.65% depending on your tax rate)


Re. the question on comparative mortgage rates, mine was about 4.5% with a 25% deposit on a 3 year fixed rate in 2006.

[GrizzlyBear]

The Leaper said:

I'm not frantic. My experience over the past 3-4 years is that rates are crap and there's nothing that can be done. The fact is that the banks have no motivation to attract ISA money with interest rates being so low and there's no competition. They have far more important matters to be concerned with. I suspect for 2014/15 that getting a fixed cash ISA for three years at around 2% will be the norm.

Meanwhile, everyone with a mortgage on a typically extremely low rate will make hay while the sun shines and do nothing about taking advantage of current rates to pay off their mortgage on an accelerated basis. We know what they will be posting in a year or two....

R.

Well, 2 years ago you could get 3.5% on an instant access ISA, the fall in rates have mostly been due to the governments funding for lending scheme (basically lending the banks loads of taxpayers money and charging practically no interest) this removed the need to be competitive for savers funds and ruined rates on savings accounts, funding for lending is allegedly over for mortgage lending, but I suspect the banks are trying to resist increasing rates for savers. As a saver the best thing you can do is get the best rate you can and try to switch out if they cut rates, hopefully if enough of us do this we can force rates back up.

Don't just rely on the best buy tables, some providers offer accounts that are only on offer in certain postcodes and existing customers, or for larger balances, the best buy tables sometimes miss these. So have a good look round.

[rolex]

There may be some relief now the governments funding for lending is ending but I won't hold my breath

http://www.saveoursavers.co.uk/interest-rates/endi...

[KTF]

Pick the one that meets your criteria from this list:

http://forums.moneysavingexpert.com/showthread.php...

[RizzoTheRat]

Looks like most of the decent rates are for existing customers only. Seems crazy that you can earn better interest on a taxed current account than you can on an ISA. Looks like the Mrs will opening a 123 account.

[KTF]

43034 said:

What are current interest rates on mortgages, what were they 5 years ago and what do we expect them to be in 5 years time.

Thank you.

Depends on the product - fixed, tracker, etc., LTV and a host of other things.

What difference does that make?

No-one knows

[PhilboSE]

RizzoTheRat said:

I had a letter from Santander yesterday saying my direct access one is dropping to 1.5%.

I got that too. Got to love the way they said "Interest rates remain at a historic low, so we're dropping the rate on your ISA". If interest rates REMAIN low, then why can't my ISA rate REMAIN at what it was?

1.5% is just insulting. Even tax free the money is devaluing against inflation. I'm going to transfer into a low risk stock ISA, cash ISAs have just become a huge pisstake in the industry, just like CTFs.

[RizzoTheRat]

My ISA is instead of overpayment on my mortgage, so as long as the rate's above my mortgage I'm not quite so worried about inflation eating away at it. Hopefully moving house in the next year or so so I don't really want to tie it up in anything more profitable but less easily accessible either.