Leeds BS Fixed Rate Bond Paying 4% pa

alanq

Have you been tempted by Skipton BS and SecureTrust Bank's offers of around 3.5% pa for losing all access to your funds for 7 years? Well how about 4% pa from Leeds BS for tying up your funds for TEN years+?

Minimum £10,000. Matures 31st December 2023. (Why do they do this? Is the BS going to be open for business on 1st January 2024? So why chose such a daft date?)
http://www.theguardian.com/money/2013/nov/20/interest-account-leeds-building-society-savings

I think I'll pass on this kind offer.

Update: http://www.leedsbuildingsociety.co.uk/savings/10-year-no-access-income-bond.html

Ifts

alanq wrote: »

I think I'll pass on this kind offer.

I think you're right there 10 years is too long to tie your money up with no early access offered.
Early access albeit with a penalty would have been better but I think they know they don't have to worry about getting people to take up this offer:

Despite these hurdles, the account is likely to prove popular, particularly with older savers desperate to boost their savings income. (from the above guardian article)

If I have any fixed rate bonds currently maturing the max I'm willing to lock it up for is 2 years or 3 at a push at current rates being offered on FRB's.

Old_Slaphead

Ifts wrote: »

I think you're right there 10 years is too long to tie your money up with no early access offered.
Early access albeit with a penalty would have been better but I think they know they don't have to worry about getting people to take up this offer:


If I have any fixed rate bonds currently maturing the max I'm willing to lock it up for is 2 years or 3 at a push at current rates being offered on FRB's.

I think it's quite an interesting proposition for those looking for income and who don't have the time or interest in frequently checking and switching to best available rates.

Like you, Ifts, I'm only looking at 2 or 3 yr fixed rates as who knows what the scenario wll look like in a few years.....although 1.7% gross (on non Santander dosh) at moment is pretty painfull

SnowMan

If nothing else it is interesting to see such a product as it gives an indication as to the relative attraction of fixed rate savings accounts against government gilts of the same term.

Looking at the latest gilt redemption yields (figures at time of posting) and comparing with best buy savings account rates

5 year: 3% (e.g. Newcastle) vs 1.51% (gilt)
7 year: 3.5% (e.g. Skipton or Secure trust) vs 2.06% (gilt)
10 year: 4% (Leeds BS) vs 2.73% (gilt)

That suggests to me that gilts continue to look poor value, and savings should always be considered as an alternative to gilts (where practicalities allow).

A 10 year tie in is not appealing (who can predict 10 years ahead), so I am talking purely about comparative rates here.

I've just taken out a 3% 5 year ISA with Newcastle BS (for existing memebers only), that allows me to exit with 120 days interest penalty. You can think of that as a 1 year fixed rate account paying 2%, with an option to continue at 3% for up to 4 years.

If I keep that Newcastle account full term then I will need to get 5% pa over the subsequent 5 years to break even with the Leeds product. That may (or may not) be tough to achieve but the flexibility that the shorter term (exit option) account gives wins every time for me.

alanq

SnowMan wrote: »

That suggests to me that gilts continue to look poor value, and savings should always be considered as an alternative to gilts (where practicalities allow).

Bearing in mind that funds can be obtained before maturity by trading gilts (possibly with a capital loss). With the above bank / building society fixed term accounts, and most other non-ISA fixed term accounts, funds are completely inaccessible.

Rinoa

.... but 10 year fix. Could be OK for some.

http://money.aol.co.uk/2013/11/22/leeds-building-society-launches-ten-year-savings-bond/

Ifts

alanq posted about this offering the other day:

Leeds BS Fixed Rate Bond Paying 4% pa -
https://forums.moneysavingexpert.com/discussion/4825393

Rinoa

Ifts wrote: »

alanq posted about this offering the other day:

Leeds BS Fixed Rate Bond Paying 4% pa -
https://forums.moneysavingexpert.com/discussion/4825393

Sorry, didn't realise. Page 5 now but hey, not everybody reads the forum every day.

And view count suggests it's still news to many, so no harm done eh?

kidmugsy

Why didn't they do an ISA version?

Ifts

Rinoa wrote: »

And view count suggests it's still news to many, so no harm done eh?

Sorry I wasn't having a go, just letting you know about the other thread!

theGrinch

4% for 10 years is a horribly long bet at a not particularly commensurate rate for savers. 4% for 2-years, now that would be something to consider and something available not too long ago, but thanks to funding for lending no longer visible. Thanks Mr Osborne et al