NS&I cuts rates on a range of its fixed rate bonds | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 03/09/2019

NS&I has reduced rates on all terms of its Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates by 0.25%, as well as withdrawing its one-year and three-year Issues of Guaranteed Growth Bonds and Guaranteed Income Bonds.

According to NS&I, these changes have been made in response to a fall in rates by its competitors and exceptionally low gilt yields, which has resulted in the state-owned bank needing to rebalance the interests of savers and taxpayers.

Savers with these bonds, and that are due to mature before or on 5 October, will automatically be renewed into a new Issue of the same term where they will receive the same, higher, rate. However, those who decide to renew onto the same issue but a different term will receive the lower rate.

The new rates from NS&I are:

Guaranteed Growth Bonds

These are no longer for general sale and are for existing customers with maturing bonds only:

  • 1-year Issue 65 – 1.25% gross/AER
  • 2-year Issue 57 – 1.45% gross/AER
  • 3-year Issue 60 – 1.70% gross/AER
  • 5-year Issue 53 – 2.00% gross/AER

Guaranteed Income Bonds

These are no longer for general sale and are for existing customers with maturing bonds only:

  • 1-year Issue 65 – 1.20% gross/1.21% AER
  • 2-year Issue 57 – 1.40% gross/1.41% AER
  • 3-year Issue 60 – 1.65% gross/1.66% AER
  • 5-year Issue 53 – 1.95% gross/1.97% AER

Fixed Interest Savings Certificates

These are no longer for general sale and are for existing customers with maturing certificates only:

  • 2-year Issue 55 – 1.30% tax-free/AER
  • 5-year Issue 105 – 1.90% tax free/AER

Commenting on these rate changes, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “While savers may well prefer to invest in NS&I, a trusted brand, it is important to note that interest rates on new issue bonds can be dropped depending on market conditions. Fixed rate bonds in the savings market have generally been falling, including those from challenger banks and Islamic banks, so this puts pressure on NS&I to adjust its market position.

“Needless to say, it was inevitable for NS&I to make a move as a reaction to market conditions, and this may not be the only time they are forced to make changes in the months to come.

“Savers would be wise to decide what bond length they want to reinvest in and when their bond is going to mature before they commit very soon, as their rate could pay 0.25% less interest than they were expecting. These changes may not deter some though, as NS&I is considered a safe bet by many savers looking for a reasonable return and a safe home for their cash.”


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