Savers are finding fewer competitive places to stash their cash, as moneysupermarket.com has reported that almost half of all fixed rate bonds disappeared in a 24 hour period after the Bank of England cut interest rates by an unprecedented 1.5 per cent last week.
"We knew this was coming but this is unprecedented territory", commented Kevin Mountford, head of banking at moneysupermarket.com, "for over half of all fixed rate bonds
to just disappear is unheard of and will leave savers wondering where to turn."
Mr Mountford believes that using the cut in the base rate as a reason for removing 24 of the 54 fixed rate bonds
on the market is a "sorry excuse" by the banks which guarantee savers a fixed rate, in return for them agreeing to lock their money away for a certain period of time.
The banks are also being short-sighted, he said, shooting themselves in the foot by not competing for the £4billion belonging to customers of Icesave, the now defunct online savings account
provider, whose customers will be looking for somewhere else to put their money.
While Icesave, a once market leading provider in the UK, has gone under along with its Icelandic owner Landsbanki, the best fixed rate savings accounts
are still from overseas providers, moneysupermarket.com said.
Savings account providers started cutting rates almost immediately last Thursday after the Bank of England's
Monetary Policy Committee voted for a shock 1.5 per cent cut, bringing interest rates down to three per cent in an attempt to ease lending in the money markets and relieve some of the pressure on homeowners struggling to keep up with mortgage
While some mortgage lenders
have been slow to cut rates in line with the new base rate, banks and building societies have been quick off the mark to cut rates on their savings accounts, or, as moneysupermarket.com has found, remove the most competitive deals altogether, probably to be replaced with less competitive products, Mr Mountford predicts.
© Fair Investment