Fixed savings rates take a nose-dive - Savings - News - Moneyfacts

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Fixed savings rates take a nose-dive

Fixed savings rates take a nose-dive

Category: Savings

Updated: 03/10/2012
First Published: 03/10/2012

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 It is now over 6 months old so the content may be out of date.

Fixed rate bonds, dubbed the 'darling of the savings world', appear to be losing some of their charm, according to latest research by Moneyfacts.co.uk.

Often considered a safe bet to achieving a good return on savings, fixed bond rates have begun to reduce over the past two years. In fact, the current top paying five-year bond rate is the lowest ever recorded.

The average rate paid on a five year bond is currently 3.58%, significantly lower than the 4.10% paid this time two years ago.

This latest revelation will be yet further bad news to savers, burdened by low savings rates and the crippling effects of inflation on their returns.

Sylvia Waycot, of Moneyfacts, said: "Moneyfacts research has shown the scale of the fall in bond rates. This will come as a blow to savers who have relied on these accounts paying higher returns in exchange for tying money up for a set period of time.

"Today, we still get to tie up our money but receive less in return for the privilege.

"It is easy to get frustrated at the fall, as we all know that BoE base rate has not moved since 2009.

"However, in October 2008, the BoE base rate was 5.00% and the average five-year bond only paid 5.06%.

"The difference between today's BoE base rate and the average five-year bond is 3.08%, a staggering difference by comparison and a clear indication that providers are trying to remain competitive and credible in a difficult market."

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