You are here: Home - Saving-Banking - News -

NS&I savers ‘unlikely’ to see best buy rate hikes soon

0
Written by:
01/11/2022
NS&I released its quarterly figures, revealing it’s on course to meet its funding target which means savers are ‘unlikely to see rate surges rock the boat any time soon’.

The government’s savings arm – NS&I – has 25 million people who save and invest with it, with all products offering 100% capital security as they are backed by HM Treasury.

NS&I has already upped rates across a number of products this year while it also boosted the odds of winning a Premium Bonds prize last month.

As part of its Q2 2022/23 figures, NS&I revealed it delivered £2.1bn of net financing, giving a half year total of £3.4bn.

Its net financing target for 2022/23, set at the March 2022 Spring Statement remains unchanged at £6bn, plus or minus £3bn.

As such, these latest results reveal it is more than halfway towards its full-year target.

NS&I chief executive, Ian Ackerley, said: “In a competitive market, we’ve increased interest rates across a range of our products, including boosting the prize fund rate for Premium Bonds, to ensure we continue to support our millions of customers across the country, while also successfully delivering finance for the government.”

Still hope for NS&I savers

For Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, the past six months has been relatively “plain sailing” for NS&I.

She said: “It means we’re unlikely to see rate surges rock the boat any time soon. In fact, as savers batten down the hatches for tougher economic times, and put more cash aside, we could see it fall further behind its competitors.”

Coles explained that in order to keep savings “relatively steady”, NS&I had to boost rates in both July and October, “to remain within sight of its rivals”

“But it’s only prepared to play a reluctant catch-up”, she said.

“We can see how inflows have persuaded it to boost rates over this period. They were well below half a billion for the first few months of the financial year, before jumping to £1.1bn in August after the first raft of rate changes. It took a much smaller proportion of savings in September, as the rest of the market moved ahead, so it boosted rates again in October,” Coles added.

Savings market sees ‘notable move’

She said that the savings market “saw a notable move in September”, drawing in £8.9bn, compared to a six-month average of £5.3bn, according to yesterday’s Bank of England Money and Credit report.

Coles noted: “There’s every chance that those who have any wiggle room in their budget are preparing for even tougher times ahead by building any savings buffer they can afford. If the trend continues, and October’s rate rise brings more of this cash to NS&I, it could see bigger inflows without having to raise rates to keep pace with the rest of the market.

“There’s still hope for NS&I savers, because part of its remit is to offer value to savers, so it shouldn’t let rates fall too far behind. However, it will be keen not to pay too much more than it absolutely has to in order to stay on target.”

While millions stick with NS&I, for those looking for the best rates, they may need to look further afield. The current top easy access rate is offered by Al Rayan Bank paying an expected profit rate of 2.81% (minimum £5,000), while the best buy in the one-year category is from RCI Bank paying 4.6% on a minimum £1,000.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week