Falling Interest Rates Fail to Deter Savers

By: MoneyFacts

Latest figures from Moneyfacts.co.uk show that demand for fixed rate bonds has soared in the last few months.

In April, 26% of all savers visiting Moneyfacts.co.uk were searching for fixed rate bonds, but during August this had increased to 45%.

Despite increased demand amongst savers, the average rates paid on  fixed rate bonds have been falling since May.

Moneyfacts.co.uk figures show that the average amount invested in a fixed rate bond is £42,993.

Savers that invest this amount in the average five year bond in May 2011 will earn £763 more over the five year term than a saver investing today.

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

“Volatility in the stockmarket has led more people to consider cash savings as a safe haven for their money.

“Demand for savers’ money amongst providers has fallen in the last few months, leading to a reduction in the rates on offer.

“Lower money market rates mean that some providers are opting to raise funding through this method rather than through their savings book.

“If savers don’t need access to their money during the term, then despite the fall in rates fixed rate bonds still pay some of the most competitive rates in the market.

“The average one year fixed rate bond pays 2.76%, compared to just 0.92% on the average easy access account.

“Demand for best buy savings rates remains high, meaning the most competitive accounts are oversubscribed very quickly.

“If savers don’t act fast when a competitive deal is launched, they could miss out.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.