UK savings rate: NS&I launches one-year deal offering record 6.2% rate | Savings rate

The UK government savings bank, NS&I, has ‘thrown down the gauntlet’ to its competitors by launching a one-year fixed rate savings account with a rate of 6.2%.

Commentators said NS&I was likely to see strong demand from savers keen to get a decent return, as it means they will get a record rate backed by a 100% Treasury guarantee.

The government-backed bank on Wednesday put up for sale new issues of its one-year fixed rate guaranteed growth bonds and guaranteed income bonds paying 6.2% and 6.03% gross interest respectively .

These new rates – available to new and existing customers – are the highest ever offered for these products since they first went on sale in 2008, and mean NS&I has overtaken challenger banks and others to take the top spot in the table of the best savings purchases for one-year fixed rate offers.

The move comes after a crackdown on the UK savings marketwhich has seen many of the UK’s biggest banks come under heavy criticism for passing on only a fraction of interest rate rises to their most popular savings accounts, while sharply increasing rates on mortgages and loans. ready.

Sarah Coles, head of personal finance at investment platform Hargreaves Lansdown, said: “NS&I has gone for the rates on these one-year bonds, and savers are likely to pick them up. »

The organization typically offers rates “in the middle of the pack…so getting a rate at the top of the pile is quite a departure,” she added.

Myron Jobson, senior personal finance analyst at rival platform Interactive Investor, said the move was “a challenge to the big banks” and was “a real statement of intent from NS&I in a persistent pressure on the cost of living which has prevented many from saving.

However, the move also relates to the fact that the March Spring Budget set NS&I’s net funding target for this financial year at £7.5 billion. This compares to a target of £6 billion for the previous financial year. A positive net funding figure represents a positive contribution to government funding.

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Coles said the goal for this year was “quite ambitious”, given that many people’s finances were under such strain that they were spending their savings to make ends meet.

The minimum investment for each new issue is £500, while the maximum is £1 million. Once the year is over, savers will have the choice of withdrawing their money or reinvesting it.

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