THISISMONEY.CO.UK – SYLVIA MORRIS
With hints from the governor of the Bank of England that base rates could drop CEO Giles Hutson gave an interview with Sylvia Morris of www.thisismoney.co.uk where he urged savers to fix their interest rate.
“Savers could earn an extra £50 over the next year by using a fixed-rate bond to protect against falling interest rates. Last week, Mark Carney, governor of the Bank of England, hinted that the base rate could drop to 0.25 per cent. The cut could come as soon as next week, after the meeting of policymakers — though some experts think the bank might wait until August.
For years, savers have turned their backs on fixed-rate bonds in favour of easy-access accounts as they wait for the base rate to rise from its historic 0.5 per cent low. In the past two years, they have pulled a huge £40 billion out of bonds. But that strategy has been turned on its head now that we are on course to leave the EU. In a fixed-rate bond, you are cushioned from any fall in rates, whereas with easy-access accounts, you are at the mercy of banks and building societies, which are highly likely to cut your rate, too.
Giles Hutson, chief executive of Insignis Asset Management, says: ‘Interest rates are going to stay lower for longer following Brexit. If you are comfortable locking up your money, fixed-rate bonds make a lot of sense.’”
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