Fixed rate bonds and % rise.

A question about : Fixed rate bonds and % rise.

Hello. I'm thinking of getting a fixed rate bond for 1-2 yrs. Is it best to get one straight away or wait until the interest rises has finalised? Do interest rate rises affect fixed rate products or just variable? e.g Could the provider issue a new fixed rate bond due to the interest rate rise?
Thanks.

Best answers:

• Fixed Rate Bonds price in expected gains in interest rates. The issuers set their rate by trading off an attractive looking rate against other savings products against the long term interest rates available to them in the wholesale money markets. Issuers can and do issue new bonds when there are rises, but because they are looking at longer term interest rates they tend to be less volatile.
  Looking at Moneysupermarket this morning, you can currently get bonds of around 6% and higher for 2 to 3 years, against 5.5% ish maximum for instant access style products. This looks decent value to me - last year it was difficult to find anything much above 4.5%
  Fixed rate bonds are always a bit of a gamble, because you're never certain what is going to happen with interest rates. But the nice thing about them as a part of your savings strategy is that they can provide a bit of stability for longer term planning and are put away where you can't get at them - I use them to stash money intended to cover my endowment shortfall, for example.