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Fixed rate bond popularity unsurprising

17 November 2009 / by Andy Davies

Fixed rate bonds is where the 'savings action is' according to Moneynet.co.uk, following the news that the average bond is only available for 23 days before it becomes fully subscribed.

Research by Moneyfacts.co.uk has claimed that the average shelf life for a fixed rate bond is less than a month as "savers look to maximise" their returns.

Commenting, Andrew Hagger, spokesman for Moneynet.co.uk, said he is not surprised by this announcement.

"This is a symptom of a very active and competitive market and a desire amongst providers to retain best buy status in order to attract maximum levels of retail deposits," he said.

Research by Moneynet.co.uk has revealed that the most competitive fixed rate bond deals are offering interest rates of more than four per cent above the Base Rate in an attempt to attract more savers.

For example, Skipton Building Society's five year fixed rate bond is on offer at a rate of 5.35 per cent, which represents a 1.15 per cent increase on April's best available bond.

Meanwhile, NS&I's one year fixed rate bond offers a rate of 3.95 per cent, which is 3.45 per cent above the current Base Rate.

Mr Hagger believes providers are now "paying more attention to this sector of the savings market".

"After all, knowing you have access to funds for a fixed term of between 1 and 5 years is far more worthwhile than an instant access account where the funds can be withdrawn the next day," he said.

Before adding: "The big high street players are not so competitive and don’t often offer best buy fixed rate deals – the exception being Barclays until it recently re-priced and Halifax which is particularly competitive over four and five years at the moment."

© Fair Investment Company Ltd

 

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