Holly's blog: Where there are bandits there is alpha
11 July, 2017
Yesterday the only people to get excited by the Bank of England’s decision to raise interest rates to 0.75% were PRs. My Inbox filled up with the opinions of the industry’s great and good. None of which were very interesting.
However the summary remains - interest rates, which were stuff all, went up by stuff all, to stuff all.
I’m being a bit flippant - More than 3.5 million residential mortgages are on a variable or tracker rate – the average is 4.72%. This suggests an average increase of about £300 for those affected. And savers shouldn’t hold their breath – there is no rule that banks need to increase what they pay on cash accounts. The best deal for a one year fix is currently with Atom Bank, paying 2.05%. Notable for a call out is Skipton, which has passed on yesterday’s rise to savers, including those in their Lifetime ISA which will pay 1%.
I think the more interesting thing about yesterday is that nothing dramatic happened, because we all knew this was going to happen. Markets had already priced it in. PRs had already written their releases. The speed and availability of information in 2018 has changed financial markets, and this also impacts our investments.