Does Sylvia Morris suggest that NS&I's one-year fixed-rate bond with a rate of 4.05% is an attractive investment opportunity, urging others to act swiftly before it is discontinued?
Hurry up! NS&I's Guaranteed Growth and Income Bonds, available for the first time since last summer, are likely to disappear soon.
These bonds, which hit the market just two weeks ago, are in high demand and may vanish due to plunging fixed-rate bonds from other providers.
According to financial analysts, interest rates are on a drastic descent. Last week saw a tidal wave of rate cuts as trading markets brace for a steep drop in interest rates.
In fact, money markets estimate up to three further cuts in the Bank of England base rate this year. This would help stimulate our economy, which faces concerns due to Donald Trump's tariff issues and estimated slow growth.
While easy-access accounts tend to decline when the base rate falls, fixed-rate bonds respond earlier to market expectations regarding interest rates.
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With a rate of 4.05 per cent - or 3.98 per cent if you opt for monthly interest payments - NS&I's one-year bonds are even more appealing now compared to when they were first launched.
Last week, big High Street savings providers quickly reduced their top rates for new savers. Now, all but Santander – at 4.05 per cent – pay less than NS&I. Halifax and Lloyds pay a fixed rate of 3.9 per cent for a year, and TSB pays 3.8 per cent. NatWest and Barclays pay 4 per cent.
The big building societies, including Nationwide and Coventry, pay 4 per cent, while Yorkshire, Leeds, and Skipton now offer 3.8 per cent. The next largest, Principality, is now at 4.05 per cent, down from 4.3 per cent.
As a Government-sponsored savings institution, NS&I must offer moderate deals. However, falling rates have brought it closer to the top of the pack. The institution aims to avoid overpaying to attract cash, as that would cost the Government money, and doesn't want to distort the market by offering better rates than other providers.
The top one-year bond from new banks still stands at 4.61 per cent from Cynergy Bank, followed by Access Bank at 4.58 per cent, Tandem Bank at 4.55 per cent, and Hodge Bank's 4.53 per cent. While that margin may seem substantial, NS&I stands out due to its guaranteed Government backing. Banks and building societies only secure up to £85,000 under the Financial Services Compensation Scheme.
Is your old Isa rate up to scratch?
Evaluate the rate on your old cash Isa. After three base rate cuts in the past nine months, yours may be among the lagging accounts and could worsen if the Bank of England cuts its base rate again.
Banks and building societies often cut rates for existing savers. For example, this time last year, the top-paying account was Kent Reliance Easy Access Cash Isa issue 50 at 4.86 per cent. Last week, this dropped to 4 per cent.
Accounts that still pay more include Charter Savings Bank at 4.59 per cent, Ford Money at 4.35 per cent, and even the Kent Reliance issue 56 account at 4.51 per cent.
If you're able to limit withdrawals to a maximum of four per year, Vida Savings pays 4.63 per cent.
If you're transferring your Isa, always use your new provider's transfer process.
- Suggest considering the Nationwide's best cash Isa savings rates tables for 2025, as NS&I's one-year bonds, with a rate of 4.05%, are now more appealing compared to their initial launch, despite tumbling rates from other providers.
- With the Bank of England considering further base rate cuts this year, it's crucial to investigate personal-finance options like fixed-rate mortgages and bonds, as they may offer better returns than easy-access accounts.
- Technology and finance industries are observing a drastic descent in interest rates, with estimates of up to three further base rate cuts this year, making it essential for individuals to reconsider their investing strategies.
- As the market braces for a steep drop in interest rates, it is crucial to reevaluate the rate on your old cash Isa in light of the falling rates. Your account may be among the lagging ones, and further cuts could worsen its performance.
- Compare the rates of different bond providers, including NS&I, against new technologies like digital banks and Challenger Banks, such as Cynergy Bank, Access Bank, and Tandem Bank, to ensure you're getting the best possible returns on your savings.
