Savings rates falling

Commenting on the immediate withdrawal of Birmingham Midshires' 7.17 per cent AER and Bank of Cyprus' 7.15 per cent AER one year fixed-rate bonds, Kevin Mountford, head of savings at price comparison site moneysupermarket.com, said: "It had to happen sooner or later and it looks like things may have gone ‘pop' for fixed rate bonds. After months of providers outbidding each other to top the table, the top two, Birmingham Midshires and Bank of Cyprus, have withdrawn from the game by pulling their best rates, which is bitterly disappointing for savers.

"Swap rates have been falling in recent days, which is fairly unusual in an environment of rising inflation. This has put extra pressure on margins and makes it harder for providers to maintain such high rates. Birmingham Midshires and Bank of Cyprus are unlikely to be the only providers that decide enough is enough, and I fear that the days of seven per cent plus fixed rate bonds could be numbered. Savers wanting to take advantage of these fantastic rates therefore need to act fast - who knows when we might see savings rates at these levels again."