Falling rates fail to deter savers - Savings - News - Moneyfacts

News

Falling rates fail to deter savers

Falling rates fail to deter savers

Category: Savings

Updated: 29/09/2011
First Published: 29/09/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The demand for saving into fixed rate bonds has soared over the past few months, despite average rates falling.

Figures from Moneyfacts.co.uk show that in April 26% of all savers were looking to invest their funds into fixed rate savings accounts.

However, that number has increased significantly since, with almost half (45%) of savers in August searching for fixed rate bonds.

This upturn comes despite a fall in average rates since May.

Currently, the average one year bond pays a rate of 2.76%, down from 2.94% in May, while a two year product rate has dropped from 3.52% to 3.34% over the same period.

The most pronounced fall has come from long term bonds, with five year fixed accounts paying 4.05% on average, compared with 4.34% in May.

Michelle Slade, spokesperson for Moneyfacts.co.uk, said the figures show the average amount invested in a fixed rate bond is £42,993.

Savers that invested this amount in the average five year bond in May 2011 will earn £763 more over the five year term than a saver investing today.

"Volatility in the stockmarket has led more people to consider cash savings as a safe haven for their money," added Ms Slade.

"Demand for savers' money amongst providers has fallen in the last few months, leading to a reduction in the rates on offer.

"Lower money market rates mean that some providers are opting to raise funding through this method rather than through their savings book.

"If savers don't need access to their money during the term, then despite the fall in rates, fixed rate bonds still pay some of the most competitive rates in the market.

"The average one year fixed rate bond pays 2.76%, compared to just 0.92% on the average easy access account."

Find the best savings rates for you - Compare savings accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Savings being used as a festive financial buffer

Good news from RCI Bank UK – its latest research shows that many of us are saving more than we were a year ago, but the question is, will you be dipping into that buffer to cover the cost of Christmas?

6 of the best easy access savings accounts

Easy-access savings accounts are as simple as they sound – they allow you to access your money whenever you need it, without having to give advance notice, and they also allow you to pay into them at any time. Here are six of the best.

Start saving for Christmas… 2017!

Christmas is just around the corner and our annual festive splurging is starting to step up, but are you prepared? It may be too late to start saving for this year’s festive spend, but it’s never too early to start for next year’s!
 
Close