Rates on fixed bonds have “free-wheeled” down to new lows after taking a positive turn in 2015, according to figures from Moneyfacts.
Research showed that since the start of the year, there have been 222 rate cuts to fixed bonds, with the highest reduction being 0.74 per cent.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said the figures support the view among some that the cuts will never end.
“It’s been a winter of discontent for savers,” she said, suggesting there are currently no signs of an end to this downward path.
“Fixed rate bonds are often looked to as the best place to get a decent interest rate, and given that rates were starting to creep upwards last year, this new turn of events is extremely disappointing.”
| 1 Year Ago | 6 Months Ago | 1 Month Ago | Today |
Average One-Year Fixed Bond | 1.47% | 1.50% | 1.38% | 1.34% |
Average Two-Year Fixed Bond | 1.77% | 1.80% | 1.72% | 1.60% |
Average Three-Year Fixed Bond | 2.05% | 2.09% | 2.02% | 1.86% |
Average Four-Year Fixed Bond | 2.16% | 2.39% | 2.34% | 2.24% |
Average Five-Year Fixed Bond | 2.56% | 2.64% | 2.59% | 2.46% |
Source: Moneyfacts.co.uk | | Compiled: 1.3.16 |
In 2015, new entrants to the savings market kick-started some competition, but Ms Nelson said this competitive spirit was short-lived now the newcomers have begun to establish themselves.
“This is, in part, due to oversubscription of these highly attractive deals, which has prompted the new brands to reduce their offers,” she said.
Ms Nelson said the main banks are failing to compete with the new players and boost competition and rates.
“The challengers make up only a small portion of the market, so their positive impact on the market was always going to be fleeting if the main players didn’t get on board.”
She said savers “inevitably feel as though they are caught in a downward spiral of misery” with the prospect of a base rate rise now on the sidelines.
“However, with April bringing the new Personal Savings Allowance, now is a great time for savers to re-evaluate their savings pot to try and get the best returns they can.”
katherine.denham@ft.com
