More interest on savings account: Medium-term bonds again in high demand

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Medium-term bonds are a popular investment vehicle for savers looking for higher interest income than the savings account can handle. As the Moneyland comparison service wrote, citing statements from several banks, demand for medium-term bonds and similar fixed-rate products such as time deposit accounts has increased significantly since last year – and the negative rate phase has ended.

Medium-term bonds are issued by banks and – like all bonds – offer more security than stocks. However, real negative interest rates continue with the expectation of 2.4 percent annual inflation in 2023 – depending on the maturity. However, if the Central Bank takes inflation under control in a short time, there will be real positive interest income again with longer maturities.

Average interest rates are currently 1.32 percent for two-year, 1.43 percent for five-year and 1.61 percent for ten-year medium-term bonds, according to the survey published by the Moneyland.ch comparison portal on Tuesday.

In contrast, savings accounts for adults offered an average interest rate of only 0.53 percent, according to the study description.

However, interest rates vary greatly from bank to bank. Interest rates on two-year medium-term bonds hover between 0.125 percent and 1.95% in a survey of more than 50 banks – the highest rate is in Hypo Vorarlberg.

The range of interest rates offered for five-year medium-term bonds is between 0.5 percent and 2.25%, and for ten-year medium-term bonds between 0.8 percent and 2.75 percent – the highest rates for both maturities. in .

Medium-term bonds, mostly sought after by private individuals, are considered relatively safe investments and are also subject to deposit protection of up to CHF 100,000. However, unlike savings accounts, money is blocked for the selected maturity.

Unlike savings accounts, interest rates on medium-term bonds have always responded quickly to changes in the Swiss National Bank’s (SNB) prime rate.

Moneyland points out that the small interest rate differential between the long and short maturities of medium-term bonds is currently striking. This indicates that the interest rate level will soon stabilize and fall again in the coming years.

It is not yet clear whether the SNB’s rate hikes will be enough to keep inflation below 2 percent in the long run. In May, inflation in Switzerland was 2.2 percent. (SDA/koh)

Source :Blick