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.