Bond market set to be shaken and stirred

Kevin Mountford, head of banking at moneysupermarket.com, said: "The consensus is that the Bank of England will cut base rate further over the coming months, and many savings providers are pre-empting this and pulling their top fixed rate bonds. A cursory glance at the best buy bond tables today, compared with those of just two months ago, confirms this.

"As recently as August the top 10 best-buys were populated entirely with seven per cent plus products, yet by the end of October only a small handful will offer rates of seven per cent or more. Currently perched at the top of this table is ICICI's HiSAVE bond at 7.20 per cent, but news that this rate will be reduced at the end of the month suggests that the bond market is about to enter into a downward spiral and for now Anglo Irish will remain the dominant player with 3 prominent products.

"The lack of non-UK banks in a table which was once full of the likes of Kaupthing and FirstSave demonstrates that the days when foreign banks continually trumped UK providers with headline grabbing rates could be numbered"

Kevin Mountford's top tip for savers: "If you want a solid rate, the sooner you lock in, the better as it's highly likely we'll see more rates disappearing. But be careful to spread any savings above £50,000 across a range of institutions, to ensure that your money is not at risk should another bank collapse. And remember to check the levels of compensation you'd be entitled to, and how you should claim it, should that institution fail."