Lloyds Bank escalates the bonds race

LLOYDS Bank has joined the race to launch escalator bonds with a three-year scheme instead of the more usual five-year account.

Rates start at 5.25 per cent gross in the first year, paid annually, rising to 10 per cent in the final six months.

Newcastle Building Society has launched a five-year stepped bond with the highest annual gross rate to date, starting at 7 per cent in year one and rising to 11.25 per cent in the final year.

Partial withdrawals can be made with the loss of 50 days' interest, compared with other bonds that penalise savers more heavily.

----------------------------------------------------------------- SIX OF THE BEST ----------------------------------------------------------------- Savings ----------------------------------------------------------------- Type Account Term *0% *25% * 40% Min pds GIB Eurolife 5 years 7.6 7.6 6.46 10,000 B Soc Nottingham Instant 6.60 4.95 3.96 25,000 Tessa Market Harborough 5 years 7.60 7.60 7.60 9,000 ----------------------------------------------------------------- *Compounded annual rate except for GIB (guaranteed income bond) ----------------------------------------------------------------- Source: Chase De Vere 071-404 5766 -----------------------------------------------------------------

----------------------------------------------------------------- Mortgages ----------------------------------------------------------------- Type Source Deal Variable Northern Rock* 2.94% discounted rate on 90% loans Fixed First Mortgage Securities** 7.85% for 4.5 years on 75% loans Capped Royal Bank of Scotland 8.99% for 5 yrs on 95% loans ----------------------------------------------------------------- *Arrangement fee of pounds 150. Household insurance through Northern Rock. ----------------------------------------------------------------- ** pounds 275 fee ----------------------------------------------------------------- Source :John Charcol 071-611 7000 -----------------------------------------------------------------