Fixed rate bond boom is over
Michelle Slade, analyst at Moneyfacts.co.uk, comments:
“Earlier this year, fixed rate bonds were paying some of the highest rates ever seen, but as the pressure in the money markets eases, rates have started to decline.
“Fixed rate bonds virtually guarantee that a provider will have your money for a set period of time, as the majority do not allow access during the term of the bond.
“As the cost of providing the funding for mortgages increased, a large number of providers looked to their savings book to provide some of the funding. Now that swap rates have been declining, many may be reverting back to more traditional methods.
“In the last week, Moneyfacts.co.uk has received over 30 changes to fixed rate bonds, with most either withdrawing their products or decreasing rates.
“Fixed rate bond best buy tables had for the first time been completely dominated by rte of 7% plus, but now such high rates have started to fade away.
“Some providers are withdrawing their bonds as they are fully subscribed, but others are doing so due to market conditions. As the fallout from the Lehman Brothers debacle continues, we may see further bonds being withdrawn.
“There are still fantastic rates available, but anyone hoping to secure a rate of over 7% needs to act fast. If the decline in fixed rate bonds in the last few weeks is anything to go by, these deals won’t be around for too much longer.
“Those that do remain are mainly from providers with their parent company based overseas, which may put off some savers. However, these companies are all registered by the FSA and are therefore covered under the Financial Services Compensation Scheme.”
Company |
Account |
Gross Rate |
Term |
Deposit |
ICICI Bank UK |
HiSave Fixed Rate |
7.20% |
1 Year |
£1,000 |
FirstSave |
Fixed Rate Bond |
7.10% |
1 Year |
£1,000 |
Icesave |
Fixed Rate Savings |
7.06% |
1 Year |
£1,000 |
Anglo Irish Bank |
Fixed Rate Bond |
7.05% |
1 Year |
£500 |
United Trust Bank |
6 Month Fixed Deposit |
7.00% |
6 Months |
£500 |
Anglo Irish Bank |
Fixed Rate Bond |
7.00% |
9 Months |
£500 |
Source: Moneyfacts.co.uk 16.9.08 |
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Moneyfacts Group
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