National Savings and Investments (NS&I) has raised interest rates on its fixed-term savings bonds by up to 0.31 percentage points, bucking the downward trend in the savings market. The Treasury-backed provider increased rates on its one-year bonds from 4.04% to 4.2%, two-year bonds from 3.85% to 4.1%, three-year bonds from 3.88% to 4.16%, and five-year bonds from 3.84% to 4.15%.
The move comes despite the Bank of England holding interest rates at 4% and speculation of future cuts, which has led other providers to reduce rates. NS&I, with over 24 million customers, said the higher rates apply to new customers and those rolling over maturing bonds. Investments range from £500 to £1 million, but early withdrawal is not permitted.
Sarah Coles, head of personal finance at Hargreaves Lansdown, noted that NS&I's increase is counter to the market trend and likely driven by a need to meet funding targets. She said the timing coincides with many fixed-rate deals maturing, and the new rates may encourage customers to stay or attract new savers.
Despite the rise, Coles pointed out that better deals exist elsewhere. For example, LHV Bank offers 4.46% on one-year bonds, JN Bank pays 4.39% on two- and three-year bonds, and Chetwood Bank provides 4.35% on five-year fixed-rate accounts. NS&I's retail director Andrew Westhead highlighted the security of a 100% government guarantee as a key benefit.
