Leeds Building Society to launch Inflation Buster Bond

Leeds Building Society is set to launch its new and innovative Inflation Buster Bond, which is guaranteed to deliver a return of 3.00% greater than inflation, based on the Retail Price Index (RPI).

The RPI is defined as the average measure of change in the prices of goods and services purchased by households in the UK and includes items such as food, clothing, education and child care, council tax, heating and lighting and mortgage interest payments. So far this year, the average RPI is 4.50%1 and this is largely due to the increased cost of heating and lighting, education and child care and mortgage interest payments. Furthermore, this figure of 4.50% does not include any increase in mortgage interest following the Bank of England’s decision to raise Bank Base Rate by a further 0.25% earlier this month.

Karen Wint, Head of Marketing & PR said, "This product provides excellent peace of mind with this inflation link, so no matter what happens, customers will receive a guaranteed real return. If RPI continues at this level over the product term customers will receive 7.50%, which is superior to the current best 2-year fixed rate deals available on the market at around 6.50%."

The Bond is directly linked to the RPI for two years with effect from 1 August 2007. Any early investment prior to this date will receive interest equivalent to the Bank of England Base Rate, credited on 31 July 2007.

Karen continued "The bond is ideal for investors looking for a competitive return and is available on a minimum operating balance of only £1,000. Although the Inflation Buster Bond was not available before today, it would have out-performed the average UK savings rate by 1.57% in 2005 and 2.08% in 20062.

"Customers also have the flexibility to operate this bond at any of our 70 branches or by post. I believe this as an excellent addition to any investor’s portfolio."