Average shelf life of a fixed-rate bond plunges as providers reprice deals
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The average shelf life of a fixed-rate bond has nearly halved in the space of a month, according to a financial information website.
Looking at the market on December 1 2024, deals typically remained on the market for 57 days before being pulled, based on activity over the previous month, Moneyfacts found.
But when the same research was carried out at the start of January, based on activity over the previous month, the typical shelf life of a fixed-rate bond had shrunk to just 33 days.
Providers have been watching the markets very closely, and in December repricing activity was prevalent
Rachel Springall, Moneyfacts
The website said it was the biggest fall in the average shelf life of a fixed-rate bond since July 2020 and the lowest number of days deals were remaining on the market since March 2024.
By January 2025, the average one-year fixed-rate bond on the market had a rate of 4.18%, down from 4.87% in January 2024.
Someone putting £5,000 away for a year could potentially get £209 in interest with a 4.18% rate, but a year earlier, with a typical 4.87% rate they could have received £243.50 in interest.
The average longer-term fixed-rate bond meanwhile paid 3.91% in January 2025, down from 4.46% in January 2024.
Longer-term fixed bonds were defined by Moneyfacts as those with terms over 550 days. It calculated average interest rates based on someone having a £5,000 deposit.
The Bank of England base rate was cut twice last year, and further reductions are expected at some point in 2025.
Rachel Springall, a finance expert at Moneyfacts, said: “Savers may be concerned about the expectations for interest rates to come down this year, so a longer-term fixed bond could become more desirable.
“However, their popularity hinges on whether savers hunting for a guaranteed return feel content to lock their cash away for longer. It is worth noting that one-year bonds have been paying higher rates on average than longer-term bonds since July 2023.”
She added: “It’s impossible to make predictions on interest rate moves, but providers have been watching the markets very closely, and in December repricing activity was prevalent.”
