Fixed rate bond boom is over - Savings - News - Moneyfacts

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Fixed rate bond boom is over

Fixed rate bond boom is over

Category: Savings

Updated: 31/10/2008
First Published: 16/09/2008

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 It is now over 6 months old so the content may be out of date.
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. 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 rate 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 As the fallout from the Lehman Brothers debacle continues, we may see further bonds being withdrawn.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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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 Any products featured may be withdrawn by their provider or changed at any time.

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