NS&I launches new range of British Savings Bonds for first time in 15 years

Savers can now benefit from two and five-year fixed-rate Guaranteed Growth Bonds and Guaranteed Income Bonds.

These Bonds were last on general sale to new investments in October 2009.

The two-year option offers savers 4.60 per cent AER (annual equivalent rate).

The five-year option offers savers 4.10 per cent AER.

The interest rate on the existing three-year British Savings Bonds has increased for new investors from Tuesday, offering 4.35 per cent AER, up from 4.15 per cent AER previously.

Dax Harkins, NS&I chief executive, said: “It is 15 years since we last had two and five-year fixed-term bonds on general sale to new investments.

"The two new issues, along with a rate increase for our three-year bonds, provide NS&I savers with increased choice and longer-term security in a changing market.

“Today’s changes will help us to meet our net financing target while continuing to balance the interests of savers, taxpayers and the broader financial services sector.”

The options available widen the choice for savers looking for guaranteed fixed rates.

The two, three and five-year fixed-rate Growth and Income Bonds are open to savers wishing to fix at a guaranteed rate for the whole term.

Savers can open an account with £500 and can invest a maximum of £1million in each issue.

After the fixed-term period, savers will have the choice to withdraw their cash or reinvest into a new term.

Analysis by Moneyfactscompare.co.uk of the wider fixed bonds market found that, at the start of August, the average two-year fixed-rate bond on offer was paying 4.33 per cent and the average five-year fixed bond rate on offer was 3.92 per cent, based on savers having £10,000 to put away.

The average three-year bond rate was 4.16 per cent.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk said savers should compare rates across the market.

She said: “The interest rates offered on fixed-rate bonds have come down in recent months, so any saver who wants to grab a deal to get a guaranteed return on their hard-earned cash may want to move quickly.

“Fixed bonds that hit their deposit targets can be withdrawn from sale, but those that stay on sale can also slash the rates offered, depending on how the rest of the market is moving.”

NS&I, whose products have 100 per cent security as it is backed by the Treasury, said it is 15 years since two and five-year fixed-term deals were on general sale to new investments.

The move follows a cut in the Bank of England base rate last week, prompting warnings among some finance experts that savers could expect to see the rates on offer edging down in the coming months.