British Savings Bonds now pay 4.69% AER on the one-year issue after NS&I raised rates across its fixed-term range. The changes apply to new British Savings Bonds issues available to both new and maturing customers, and they come as savers weigh Treasury-backed security against the best rate on the market.
Andrew Westhead on rate changes
4.69% AER is the new one-year rate, up from 4.50%, while the two-year bond rose to 4.67% from 4.48%, the three-year to 4.65% from 4.45%, and the five-year to 4.55% from 4.40%. Andrew Westhead said, "We regularly review our products to ensure they reflect current market conditions, and today’s increases respond to changes in the fixed-term savings market."
4 fixed terms now sit at higher levels across British Savings Bonds, and the structure stays simple for savers who want a set return over a set period. Westhead also said, "Our fixed-rate bonds offer savers the choice of different term lengths with the certainty of knowing the interest rate they will receive over the full term, alongside the reassurance that all money invested with NS&I is 100 per cent secure."
Sarah Coles on competition
3 years is where the separate Green Savings Bonds move stands out, with NS&I releasing a new issue at 4.45% AER from 3.82%. Sarah Coles said, "The savings market is impressively competitive right now, and NS&I has entered the fray." She added that banks are "pulling out all the stops to compete, keeping fixed-rate deals higher and forcing NS&I to raise rates again to attract the cash it needs."
1-year pricing still matters most for quick money flows, and Coles said NS&I is still offering the best rate on its one-year fix. She also said, "The hike in the Green Bonds is a separate decision, because it doesn’t count towards the net financing target," which leaves the green product moving on a different commercial logic from the ordinary fixed-rate range.
Green Savings Bonds 4.45%
4.45% AER on the Green Savings Bonds narrows the gap with the ordinary three-year bond, which is now also 4.65% AER for British Savings Bonds. Coles said, "The gap between these bonds and the ordinary three-year bonds is much narrower now, so the price you pay for knowing your money is funding green projects has fallen."
100 per cent security sits behind the NS&I offer, and Treasury backing keeps that part of the pitch intact while the pricing shifts. For savers deciding where to place cash, the immediate choice is between the one-year rate at 4.69% AER, the longer fixed terms, and the green issue at 4.45% AER.
