Fixed Rate Bonds: 7% rates freely available

The eagerness of banks and Building Societies to attract retail funds has resulted in a raft of fixed rate bonds offering rates of 7% or higher.

David Black, Principal Consultant of Banking for Defaqto says: "It's a rare event when fixed rate bonds paying 2% above the base rate are freely available. Last year, when the base rate was higher than it is now, a handful of 7% bonds were briefly offered but these were quickly withdrawn as investors piled in. The sheer volume available now suggests that some of the current crop will be around for sometime longer.

"Last time the bank base rate was at 5.00% the highest available fixed interest rate bond paid 5.90% which gives a good indication of how things have changed".