UK Fixed Interest Bond Rates Plummet

By: MoneyFacts

The Government’s Funding for Lending Scheme started in August 2012 and it took roughly a month for it to devastate the savings market.

As rates started to tumble, many people will have opted to invest their savings in fixed rate bonds to protect their returns.

If they were enticed into the one-year bond market, that bond will now be coming to maturity. If they don’t act smartly, it could be automatically rolled into a similar bond for another term.

The bond will be similar, but the interest won’t.

Research from Moneyfacts.co.uk reveals a sharp fall in returns in the bond market, which will obviously be felt most acutely by those leaving the safety of a five-year bond that enjoyed pre-crisis interest rates.

Sylvia Waycot, Editor at Moneyfacts.co.uk, said:

“Fixed rate bonds are the darling of the savings market and an excellent form of investment for many reasons. Though often quite similar, the interest can vary between bond providers and it is worth looking around.

“Anyone opting for an easy life by just rolling the bond into another term may have a shock when they get their interest due to the catastrophic fall in savings rates over the last year.

“The greatest difference will be noticed between the original rate of the longer-term bonds and today’s equivalent rate, making apathy doubly dangerous.

“Sadly, getting the architects of the Funding for Lending Scheme to acknowledge any culpability for the devastating situation savers are left with is about as probable as them suggesting a solution.”

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.