British Savings Bonds are fixed-term issues of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds.
The new interest rate on the two-year growth option is 3.6% gross/AER, and the income option is 3.54% gross/3.6% AER.
The new interest rate on the three-year growth option is 3.5% gross/AER, and the income option is 3.44% gross/3.49% AER.
The rates are lower than those previously offered for the same fixed rate terms, which paid 4.1% for the two-year version and 4% for the three-year version.
The five-year options are no longer on sale to new customers.
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NS&I said that the lower rates reflect “changes in the wider market” and that the new rates will “help NS&I to meet its net financing target”.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The savings boom has a sting in the tail for loyal NS&I savers. A solid period for savings culminated in a golden October, which saw us tucking money away in accounts at a faster rate than any other month on record outside the pandemic. Today’s news indicates that our enthusiasm for saving endured through November – when typically we’d be spending every penny on Christmas – and NS&I may have filled its coffers.
“NS&I has an obligation not to be too far ahead of its competitors, so cuts right across the savings market were always going to put it under pressure to reduce rates. However, the rates weren’t much to write home about in the first place. There are still a huge number of accounts paying more than 4.5% over two years, and seven offering the same over three years, so even at 4.1% and 4%, these bonds were well below the best on offer. Now they’re downright disappointing.”
Savers looking for a better return on their money away from NS&I can currently earn more than 5% interest on easy-access savings, up to 4.8% on one-year bonds, and 4.6% over two, three and five years.
