Slump in rates for long bond savers

THE rates paid by long-term fixed-rate bonds have fallen to a two-year low, delivering another blow to savers struggling to secure returns above inflation.

The average five-year fixed-rate deal now pays 3.74 per cent, compared with more than 4 per cent just six months ago, according to new data from Moneyfacts.

Average rates on other fixed-rate terms have also dropped after a number of providers pulled their best deals from the market. Four-year bonds now pay an average of 3.86 per cent, down from 4.05 per cent a year ago, while the interest rate on the average three-year bond has slipped from 3.59 to 3.43 per cent in the past six months.