National Savings and Investments (NS&I) has recently increased interest rates on its fixed-term savings accounts, contrasting with a general trend of declining rates across the savings market. The adjustments, which range up to 0.31 percentage points, are most substantial for the five-year accounts.
On the same day, the Bank of England announced that it would maintain interest rates at 4%, although there is speculation that a decrease may occur after the upcoming budget. This anticipation has led many other savings providers to lower their rates in recent months.
Specifically, NS&I has raised the interest rates on its one-year guaranteed growth and income bonds from 4.04% to 4.2%. The two-year bonds have increased from 3.85% to 4.1%, and the three-year bonds from 3.88% to 4.16%. Rates for five-year bonds have also gone up from 3.84% to 4.15%. These new rates are available to both new customers and existing ones looking to roll over their savings after their current terms end.
Despite these increases, analysts note that NS&I’s move may be driven by a need to attract more customer deposits to meet funding targets, especially as numerous fixed-rate deals are set to mature during this period. NS&I allows investments ranging from £500 to £1 million in these bonds, with restrictions on early withdrawals for the specified terms.
While NS&I’s adjustments may appeal to some savers due to the government-backed security, other financial institutions, like LHV Bank and JN Bank, are offering higher returns. For instance, LHV Bank has a rate of 4.46% for investments starting at £1,000. The variance in interest rates may lead some savers to explore options beyond NS&I for potentially higher returns. Reports also suggest discussions around reducing the annual cash ISA allowance could be happening at the Treasury, with potential changes to the current £20,000 limit.
Source: https://www.theguardian.com/money/2025/nov/07/nsi-increases-interest-rates-on-fixed-term-savings-accounts