The record lows reached in the bond market are providing a clear signal that Irish interest rates could drop further than previously forecast. This is bad news for savers and will make it more difficult to generate income from funds on deposit, but it will be welcomed by borrowers.

If lending rates drop - and some economists are forecasting at this stage a fall of up to 2 per cent - anyone thinking about borrowing money will be able to do so at the cheapest rate to date.

Depositors are already turning to other financial products to boost the value of their investments in the current low interest rate environment. The most popular vehicles this year have been tracker bonds, Personal Investment Plans and Personal Equity Plans which are available from all the major financial institutions.