Fixed rate bonds are back, hitting "007" per cent

Commenting on bonds bucking the interest rate trend, Kevin Mountford, head of savings at price comparison site moneysupermarket.com, said: "Fixed rate bonds are making a comeback with a barrage of new launches, and competitive rates even hitting seven per cent AER.

"While the current rate environment would suggest customer pricing should start to come down, this is yet to be seen. This week Alliance & Leicester took fixed rate bonds back to the dizzy heights of seven per cent AER with a one year product. Nationwide too has launched a range of bonds ranging from 5.75 to 6.25 per cent AER – and with its recent commitment to greater transparency, this could prove to be a wholesome proposition where service and trust is concerned.

"The interbank rate has also reduced, but this hasn't dampened providers' desire to attract retail inflow, where competition is as strong as ever. Easy access accounts have featured heavily of late, but funds there can leave as quickly as they arrived. Fixed rate products, which command a level of consumer commitment and therefore limit providers' exposure to risk, now have very strong one and two year rates.

"I would suggest anyone interested in these bonds moves quickly – who knows how long they will last for."