- High demands led NS&I to withdraw its one-year bonds from sale
- It could be time to lock in the best deals as interest rates are close to their peak
Savers can no longer buy National Savings & Investments' (NS&I) table-topping one-year bonds after almost a quarter of a million people invested them in just five weeks.
The institution has withdrawn its one-year ‘Guaranteed Growth Bonds’ and ‘Guaranteed Income Bonds’ from sale starting from today. The latest issue of the bonds launched on 30 August paying 6.2 per cent, which made it the highest-paying account on the market. More than 225,000 people have invested in the bonds since.
The highest paying one-year fixed rate accounts currently pay 6.1 per cent and are offered by Al Rayan Bank and Ahli United Bank via savings platform Raisin UK, as well as by Beehive Money and StreamBank.
Myron Jobson, senior personal finance analyst at Interactive Investor, warned the move from NS&I meant the "clock is ticking" for savers to cash in on high interest rates. He added: “The prevailing sentiment among economist is interest rates are close to their peak. If this is the case, the best deals will not be around for long."
NS&I brought back one-year bonds in February this year and repeatedly increased the interest rate in the following issues. They previously had not been on sale since 2019. NS&I told Investors’ Chronicle it did not know when it would issue them again, although it would keep options under review.
There are now no one or two-year fixed-rate bonds available to new customers via NS&I. The only bonds still on sale are the three-year green bonds, which offer a 5.7 per cent rate and fund green projects in sectors such as transport, renewable energy, energy efficiency and climate change adaptation. NS&I also provides a range of easy-access savings accounts.
All NS&I’s bonds are guaranteed by the Treasury. Unlike with NS&I's Premium Bonds, the interest received from other non-Isa savings products counts towards the saver’s personal savings allowance and is taxable if the allowance is breached.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said NS&I has to keep within the boundaries, so it made sense to stop issuing the bonds due to high demand. “Combine a market-beating rate and government backing with the NS&I brand and it's hardly a surprise that these products flew off the shelves,” she said.
