Fixed Interest Rate Savings Bonds At 13 Month High

By: MoneyFacts

High demand for savers’ money and expectations of a rise in bank base rate in the near future has pushed short term fixed bond rates to their highest level in more than a year.

The average rate on one year bonds fell to an all time low of 2.52% in August 2010, but has steadily risen since then.

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Michelle Slade, spokesperson for Moneyfacts.co.uk, commented:

“Savers prepared to lock their money away have been given a boost as rates on fixed rate bonds have increased to a 13 month high.

“Rates on fixed rate bonds have steadily risen since August 2010, when the average rate for a one year bond dropped to an all-time low of just 2.52%.

“The biggest increase in rates is on short-term deals, which are the most popular amongst savers.

“Most of the best deals are from smaller building societies. If savers want to make the most of their money they may need to look further afield than their local high street.

“The markets expect a rise in bank base rate in the not too distant future and this is being factored in to the rates being offered to savers.

“Most fixed rate bonds don’t allow access during the term or if they do there is a hefty penalty for doing so. Before committing funds savers need to ensure they won’t need access to their money.

“If savers want to benefit from rate rises as they happen and/or wish to maintain access to their money then they may be better off opting for a variable rate account.

“Rates on variable rate accounts have also been rising, albeit at a slower speed than fixed rate bonds.”

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