Savers who are coming to the end of fixed-rate bonds and looking for a similar bond in which to invest for a further fixed rate period will receive up to 23.3 per cent less interest than they would have nine months ago, according to
Moneyfacts, the UK's leading independent provider of personal finance information.
With the average amount invested in a fixed rate bond standing at £36,872, figures from Moneyfacts show that 29 per cent of savers looking to invest in fixed-rate bonds are also looking to fix their interest rate.
Savers investing the average amount nine months ago would have received £1,209 in interest a year, compared to just £978 today, says
Moneyfacts.
"Providers are focused on mortgage lending and as they strive to attract new business by reducing mortgage rates, they are in turn cutting savings rates to balance the books,” said Michelle Slade, Spokesperson for
Moneyfacts.co.uk.
"Uncertainty over when bank base rate will rise means most savers are only taking a short term view, but they are being punished by the biggest reductions in rates.
"At 2.62 per cent, the average rate on a one year bond stands at an all time low. Prudent savers who rely on the interest from their savings to supplement their income continue to be hit the hardest.
"Inflation also continues to take its toll on savers and is effectively depreciating the value of savers' capital.
"Savers hoping for incentives from last month's Budget were left bitterly disappointed and many continue to feel their needs have been forgotten during the credit crisis. With a change in bank base rate still predicted to be a little way off, the situation for savers is likely to get worse before it gets better.
"To limit the effects of falling rates, savers need to review their portfolio regularly to ensure they are receiving competitive rates."
|
Term
|
Average Rate Nine Months Ago
|
Average Rate Today
|
% Loss
|
|
1 Year
|
3.23%
|
2.62%
|
23.3%
|
|
2 Years
|
3.75%
|
3.16%
|
18.5%
|
|
3 Years
|
4.16%
|
3.52%
|
18.2%
|
|
5 Years
|
4.77%
|
4.12%
|
15.8%
|
|
Source: Moneyfacts.co.uk 5.7.10
|
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