Poor Long-Term Savings Rates

Belgian_Angel

Given that interest rates over a 5 year time horizon are more likely to rise, why are current 5 year fixed-rate bond returns so poor (less than 4.5%).

The differential from 2 and 3 years fixed (and even from ready access) seems disproportionately low.

Are there any signs or comments in the market suggesting that long-term returns might improve, given that retail funding is presumably attractive compared to wholesale funding sources in the present, uncertain, economic climate ?

opinions4u

The European economy is screwed.

Central banks have provided cheap and long term funding to prop up the banks.

The outlook for rates is no increase for the foreseeable future.

Very Japanese. They've had these low rates for years as their economy stalled.

Ifts

Fixed-rate massacre: Banks and building societies chop rates as savers' options dwindle

Read more: http://www.thisismoney.co.uk/money/saving/article-2145207/Fixed-rate-massacre-best-buy-savings-cut.html#ixzz1vQrwI0V6

Masomnia

Banks aren't lending much, they don't need your savings.

yangptangkipperbang

Masomnia wrote: »

Banks aren't lending much, they don't need your savings.

........not when the Government takes your money off you and GIVES it to the banks..............

opinions4u

Masomnia wrote: »

Banks aren't lending much, they don't need your savings.

I'd suggest that as they ween themselves off wholesale funding they desperately need savings balances.

Just not at a price that costs them profits.

Lokolo_2

opinions4u wrote: »

I'd suggest that as they ween themselves off wholesale funding they desperately need savings balances.

Just not at a price that costs them profits.

Indeed, I was surprised to see that the best rate for a 5yr Fixed-Rate ISA is now only 4.25%, so I am glad I managed to fix for 4.5% back in April, although at the time I thought even 4.5% was meagre as previous years had at least 5% on offer for 5yr FRISA's!