Savers advised to take up fixed rate deals before rates fall
February 6, 2008
With interest rates widely expected to fall twice by the middle of this year savers are being warned that fixed rate accounts that offer good rates of interest could soon disappear, and therefore they are being urged to start looking around for a high fixed rate account before it is too late. Some banks and building societies have already cut the fixed rates on their one and two year accounts with the expectation that the base rate will be cut in February.
The base rate currently stands at 5.5%, having been cut by 0.25% in December. Economists and analysts are now predicting that the base rate could fall as low as 4.5% this year with a series of interest rate cuts.
Although higher energy and food prices are fuelling expectations of a sharp rise in inflation, which would normally deter the Bank of England from cutting the base rate, the slowdown in the economy is also causing concern, and this is likely to fuel the need to cut rates.
One industry official stated that the Bank of England will now be most likely to focus on the effects of the credit crunch than on inflation, which is expected to fall at the end of the year. He said: ‘The Bank of England has switched from worrying about inflation to the credit crunch.’
Although this will spell good news for borrowers who will see their repayments fall as the interest rate comes down, those looking for high rates of interest on their savings could suffer unless they lock themselves into a good fixed rate deal now, whilst there are still good rates on offer.
Experts state that whilst these fixed rate deals are not as good as they previously were with many banks and building societies there are still some competitive ones out there at the moment.
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