Fixed-rate bonds starting to rally

The market for fixed-rate bonds is starting to bounce back, with the top five products now averaging 3.89 per cent, despite the base rate only being at 0.5 per cent. The only time in the past year when the margin between the base rate and the best one and two-year bonds has been wider was in November.

Kevin Mountford, head of banking at moneysupermarket.com, said: "Savers haven't had much to be cheerful about of late, but some green shoots could now be emerging. While the leading rates are far from last summer's giddy heights of seven per cent or more, providers are showing they are keen to draw in deposits to shore up their books.

"With market-leading deals from Bank Of Ireland and ICICI at 4.1 per cent, plus recent offerings from Principality and Birmingham Midshires, other providers are likely to follow suit in the coming weeks. With people knowing at least £50,000 of their savings will always be safe, rate is again becoming the key driver to lure them."