Money markets could boost savings rates: Do not be too quick to tie your money down in these uncertain times, says Vivien Goldsmith

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----------------------------------------------------------------- Six of the best ----------------------------------------------------------------- Savings Min Type Account Term *0% *25% *40% (Pounds) ----------------------------------------------------------------- GIB Alico 1 year 8.7 8.7 7.40 50K B Soc Northern Rock BS Instant 10.95 8.21 6.57 20K Tessa Exeter Bank 5 yrs 11.46 11.46 11.46 100 ----------------------------------------------------------------- *Compounded annual rate except for GIB - guaranteed income bond ----------------------------------------------------------------- Source: Chase De Vere 071-404 5766 ----------------------------------------------------------------- Mortgages ----------------------------------------------------------------- Type Source Deal ----------------------------------------------------------------- Variable Halifax BS 8.5% incl 1st-time buyers' discount Fixed First Direct 9.99% for five years Capped Lambeth 9.9% to 31 May 1995 ----------------------------------------------------------------- Source: John Charcol 071-589 2626 -----------------------------------------------------------------

SAVINGS rates on offer in the high street may be on the way down, but in the City interest rates are edging higher, so savers should be wary of rushing into fixed-rate deals.

This could be a good time to fix mortgage rates, however.

The money markets are nervous about the parlous state of sterling, which is dipping down to the bottom of its rate band, and about the ERM holding together at all.

The key three-month interest rate rose from 10 per cent in the middle of the week to 10 3/8 per cent yesterday, while overnight money market rates hit 11 per cent.

Meanwhile, there is a raft of fixed rates on offer to tempt savers to lock into yesterday's rates as retail rates fall. National Savings 38th Issue savings certificates, which offer a tax-free 7.5 per cent after five years, Capital Bonds, which pay 10 per cent after five years, and Children's Bonus Bonds, which pay 10.1 per cent tax- free, all come on sale on Monday.

Investors can stock up on the new maximum holding of savings certificates - pounds 5,000 plus up to pounds 10,000 from maturing certificates. Capital Bond and Children's Bonus Bond both have overall limits so there is no opportunity to top up for those already at the maximum - pounds 100,000 on Capital Bonds and pounds 1,000 on the Children's Bond.

National Savings can now be bought by post as well as over the Post Office counter.

Cheltenham & Gloucester Building Society has led the way with its one-rate London Share account, which now pays 9.6 per cent gross (7.2 per cent net).

The London Fixed account at 10.4 per cent until October 1993 remains open until the close of business on Monday. Investors will be able to add to the account until the end of September.

C&G is launching a tiered postal account that will deliver better rates than the variable London Share account to those with more than pounds 10,000.

The new Deposit account pays 9.9 per cent on pounds 10,000 to pounds 25,000 and 10.2 per cent on larger sums.

But there are restrictions. The minimum transaction is pounds 250, and there is a seven-day interest penalty on all withdrawals.

Scarborough Building Society is launching a new postal account, Premier Post, with the rate fixed at 10.4 per cent until 11 January 1993. Investors can choose a variable 9.75 per cent if they want to take money out before this date. But Scarborough's First Post account paying a variable 10 per cent is still open, so that would be a better option while it lasts.

Northern Rock Building Society's instant access postal account, Go Direct, offers the best variable rates, with 10.95 per cent gross on a minimum of pounds 20,000.

Mortgage lenders are doing more of their business at fixed rates as borrowers opt for certainty, even if they forfeit the possibility of reduced payments.

Firstdirect has raised the rate on its five-year fixed loans from 9.85 per cent to 9.99 per cent. The conditions remain the same - a pounds 150 arrangement fee and the requirement to take out buildings insurance with the bank. Nottingham Building Society has a fix at 8.9 per cent for a year with a pounds 75 fee or a rate of 9.75 per cent fixed for two years with a pounds 100 fee.

Abbey National has fixed rates at 9.99 per cent until November 1995, with special deals for first- time buyers.

There are two new capped rates that give protection from rising rates but allow borrowers to benefit if rates should fall.

Lambeth Building Society's rate of 9.9 per cent until May 1995 requires a pounds 150 fee and insurance. The biggest drawback is a redemption penalty of three months' interest.

Leeds Permanent's cap at 10.65 per cent runs for five years. There is a fee of pounds 295 and buyers need to take out insurance. There are no redemption penalties.

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