Savings rates begin to fall
Moneysupermarket has reacted to the withdrawal of the top two fixed-rate bonds, suggesting it could signal the bursting of the savings bubble.
After Birmingham Midshires withdrew its 7.17% AER and Bank of Cyprus pulled its 7.15% AER product, Kevin Mountford, head of savings at Moneysupermarket, 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months of providers outbidding each other to top the table, the top two, Birmingham Midshires and Bank of Cyprus, have withdrawn from the game by pulling their best rates, which is bitterly disappointing for savers.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 7% 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.”