NS&I cuts rates on new fixed-rate Income Bonds and British Savings Bonds

National Savings & Investments has reduced rates on its one-, two-, three- and five-year Income Bonds and British Savings Bonds; the one-year Income Bond now pays 4.00% and the one-year British Savings Bond 4.07%.

National Savings and Investments has announced reduced rates for new issues of its fixed-rate Income Bonds and British Savings Bonds. The changes apply to one-, two-, three- and five-year terms. NS&I said the adjustments reflect movements in the wider market and will help it meet its net financing target. The move follows wider cuts to savings rates after the Bank of England base rate was lowered in mid-December. Key details: - Income Bonds pay interest monthly and have a maximum holding of £1 million; the one-year Income Bond rate is now 4.00% (previously 4.13%). - The British Savings Bond (Guaranteed Growth Bond) pays interest at the end of the fixed term; the one-year rate is now 4.07% (previously 4.20%). - Two-year and five-year rates were also reduced: two-year Income 3.91% (from 4.03%), two-year British 3.98% (from 4.10%); five-year Income 3.98% (from 4.08%), five-year British 4.05% (from 4.15%). - NS&I said the changes "reflect changes in the wider market" and support its net financing target, and many banks and building societies cut savings rates after the Bank of England base rate cut. - Independent best-buy tables cited other providers with higher headline rates for some fixed terms, including a 4.33% example and five-year offers around 4.30%. - Existing British Savings Bond customers who have already received a 30-day maturity letter will receive the interest rate quoted in that letter. Summary: The reductions mean new NS&I fixed-rate offerings now pay less than some market best-buy accounts, while NS&I frames the move as a response to wider market conditions and its financing needs. Undetermined at this time.