Savvy Investors Rush to Grab NS&I's 4.05% One-Year Fixed-Rate Bond, Hurry Before It Disappears, According to Sylvia Morris
Hurry! National Savings & Investments' Guaranteed Growth and Income Bonds are vanishing fast. These bad boys made a comeback a fortnight ago for the first time since last summer, but they ain't gonna stick around for long, folks.
Remember when I said they wouldn't last? Well, it looks like I called it. Given that other fixed-rate bond providers are slashing their rates, it's getting increasingly likely these babies are goners.
Last week was a bloodbath of rate cuts as finance peeps started panicking about the direction interest rates are heading. Market wizards are predicting up to three more cuts to the Bank of England base rate this year.
This move could help boost the economy after Donald Trump's tariff fiasco and worries that our economy will grow slower than anticipated. Easy-access accounts usually dip when the base rate drops, but fixed-rate bonds tend to tumble sooner, merely based on market predictions.
So, if you wanna grab one of those NS&I bonds, now's the time, partners. With a rate of 4.05% (or 3.98% if you take interest monthly), they look even more tempting than when they debuted.
Last week, the big High Street savings providers swiftly grabbed their red pens and hacked their top rates for new savers. Now, all but Santander at 4.05% pay less than NS&I. Halifax and Lloyds pay a miserable 3.9% for a year, while TSB pays 3.8%. NatWest and Barclays are stuck at 4%.
Even the big building societies have taken a hit. Nationwide and Coventry pay 4%, while Yorkshire, Leeds, and Skipton are down at 3.8% for new savers. The next largest, Principality, has dropped to 4.05% from 4.3%.
As a government-backed savings institution, NS&I needs to offer decent but not extraordinary deals. But with rates tumbling, they're closing in on the top of the pack. They don't wanna cough up more cash than necessary, and they don't want to spoil the market by offering better rates than competitors.
The top one-year bond from new banks is still up at 4.61% from Cynergy Bank, followed by Access Bank at 4.58%, Tandem Bank at 4.55%, and Hodge Bank's 4.53%. That's a respectable margin over the NS&I rate. But savers are head over heels for NS&I, which has a major selling point—all your dough is guaranteed by the government.
Banks and building societies only safeguard up to £85,000 under the Financial Services Compensation Scheme. Dig Out Your Old Isa Rate and Make Sure It Still Cuts the Mustard
Your old cash Isa rate might be one of the laggards. Given that the Bank of England has slashed the base rate three times in the past nine months, yours could be below par, and it may drop further if the Bank of England cuts the base rate next week.
Banks and building societies have a history of slicing rates for existing savers. For instance, last year's top-paying account was Kent Reliance Easy Access Cash Isa issue 50 at 4.86%. By last week, it had fallen to 4%.
Accounts that pay more include Charter Savings Bank at 4.59%, Ford Money at 4.35%, and even the Kent Reliance issue 56 account at 4.51%. If you can limit your withdrawals to a max of four a year, Vida Savings pays 4.63%.
Whenever you're transferring your Isa, always use your new provider's transfer process.
Good to Know:
- Market experts predict the Bank of England will ease its monetary policy gradually and maintain a hawkish stance. However, interest rates could end 2025 at around 3.75%. The UK's economic growth is anticipated to be moderate, with inflation exceeding the target but gradually decreasing.
- The yields on UK government bonds (gilts) have shown volatility. The 10-year gilt yield is significantly higher than last year, reflecting economic uncertainty and fiscal challenges. Fluctuations in bond yields could impact fixed-rate bond prices.
- As the Bank of England may reduce rates by the end of 2025, NS&I might adjust its rates accordingly. However, NS&I rates are often set to be competitive with other fixed-rate products available in the market, meaning they could remain attractive despite potential rate cuts.
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HOW THIS IS MONEY CAN HELP
- Can you find a better savings rate? Check our independent best buy tables
- Check the best cash Isa rates in our savings tables
- Given the market predictions, it might be smart to consider NS&I's Guaranteed Growth and Income Bonds, especially since they pay 4.05% at the moment, before they potentially adjust their rates.
- Considering the tumbling rates of fixed-rate bonds, investors could suggest looking at personal-finance options like NS&I, as they are backed by the government and offer relatively competitive rates compared to other providers.
- As the Bank of England prepares to reduce rates by the end of 2025, it could be beneficial to keep an eye on the adjustments that NS&I will likely make to their rates, as their competitive offerings might become even more attractive.
- As the economic growth and inflation are anticipated to moderate, it is crucial for investors to stay informed about the continuously evolving rates of personal-finance products like fixed-rate bonds from institutions such as NS&I, making proactive decisions for their savings and investments.
