HSBC: Fixed rate bond investors face £1bn savings precipice


Fixed rate bondholders face an income shortfall of up to £1bn because of falling rates paid by the products, according to HSBC.

New analysis by the bank indicates that due to falling rates – with decreases of up to 2.47 per cent on some products – investors can expect lower income once their current investments mature.

All fixed rate products have been affected by the drop in rates and now offer lower returns if savers were to reinvest their money into the best-buy products currently available

Due to recent falls in rates, bondholders face a collective £1bn fall in income if they reinvest the proceeds into similar products. 

This year, £93bn of fixed rate products will reach maturity with 2.8m products maturing in the past six months. The largest number of fixed rate bonds will mature in November.

HSBC head of savings Bruno Genovese says: “As an increase in interest rates continues to look further into the distance, the knock on downward pressure being applied to saving rates is affecting the incomes of investors.

“Those who want to reinvest their savings from matured fixed rate products into comparable deals this year may find that their income drops significantly. ”