Local lenders are making long-term fixed-rate bonds available at competitive rates, propping up a subdued market.
Monmouthshire Building Society and the Newcastle Building Society have launched highly competitive bonds for those who are keen to lock away their cash for better rates.
Monmouthshire’s new 5 year bond for existing members pays 3.00%, which sees the bond compete towards the top of the tables for this term.
The society also offers a monthly interest option for a small sacrifice in interest (2.94% AER).
The Monmouthshire bond matches Aldermore Bank and Skipton Building Society’s 5 year bonds, though Monmouthshire does restrict access to existing customers and requires a larger minimum investment (£2,500) than its rival lenders.
The Monmouthshire bond is also outgunned by Vanquis Bank’s impressive 5 year bond at 3.11%.
No additions are allowed to the Monmouthshire bond during the term, and early closure will incur a penalty of one year’s worth of interest.
Customers who may require access to their cash over the coming years may consider a shorter term to lower the risk of an unnecessary penalty.
Monmouthshire has launched a competitive 5 year fixed-rate bond.
Newcastle has launched an even longer 7 year bond. Offering 3.50% until June 2021, this enters as the market leader for this term.
The bond matches the returns offered by FirstSave, but a low minimum investment of just £500 makes Newcastle’s the most accessible for this 7 year term.
Like Monmouthshire, Newcastle offers a monthly interest option at a slightly reduced rate of interest (3.44%) for those wanting to supplement their income.
But Newcastle also offers some much-needed flexibility, as users will be able to access up to a quarter of the investment without penalty.
While it is positive to see the entry of new bonds towards the top of their respective markets, it is debatable whether the returns are sufficient to warrant the loss of access to funds for years at a time.
Savers who fix at this juncture are at particular risk of losing out if a rise in the Bank of England base rate due next year is passed on to savers.
Some of the best options currently available for interest returns are available through current accounts – unlikely as this may seem. But it comes with the added bonus of easy access to cash.
With Nationwide and TSB offering up to 5% on deposits up to £2,500, Halifax offering a £100 joining bonus and monthly supplements, and Santander offering up to 3% on deposits up to £20,000, current accounts are now providing savers with a practical solution until interest rates normalise and savers begin to see stronger returns again.