Fixed rate bond boom is over

Category: Savings
Date: 9/16/2008 10:37:08 AM

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 As the fallout from the Lehman Brothers debacle continues, we may see further bonds being withdrawn.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.

Related links:

• Compare Savings Accounts
• Guide to Savings Accounts