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Savers to lose out on £1 billion when bonds mature

Savers to lose out on £1 billion when bonds mature

Category: Savings

Updated: 29/07/2013
First Published: 17/07/2013

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 It is now over 6 months old so the content may be out of date.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 bondholders will see their income drop by a collective £1 billion this year when their savings accounts mature.

HSBC's analysis of Moneyfacts.co.uk data reveals that almost 5.3 million fixed rate savings accounts (worth nearly £93 billion) will mature in 2013, with the largest number due to mature in November (568,455).

Yet due to falling savings rates, investors will have no hope of achieving anywhere near the savings returns they were getting a few years ago if they invest their savings pot into similar products.

Savers with investments held in two, three, five year bonds will see the greatest falls in income, dropping 52%, 50% and 45% respectively, while holders of one year and 18 month bonds will see falls of 39% and 38% respectively.

As well as the biggest drop in overall income, holders of three-year bonds will suffer the biggest drop in individual income. The average investment in these bonds currently stands at £22,333, and if this were to be reinvested in the current best-buy products on offer, investors can expect a return of £3,037 – a fall of £1,576 compared to their last investment three years ago.

The situation is made even worse by rising inflation, with Moneyfacts.co.uk research yesterday revealing that there is not a single ISA or non-ISA savings accounts that negates the impact of inflation on savings.

"Many savers value the guaranteed income and security offered by fixed rate products. However, those who want to reinvest their savings from matured fixed rate products into comparable deals this year may find that their income drops significantly," said HSBC head of savings, Bruno Genovese

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