State-backed provider National Savings and Investments (NS&I) raised interest rates on its fixed-term British Savings Bonds on Tuesday, October 6, 2026. This move pushed its two, three, and five-year fixed products above the 5% threshold.
The updated rates apply to newly launched issues of both Guaranteed Growth Bonds and Guaranteed Income Bonds. These new issues are available to new investors and existing customers with maturing accounts. They require a minimum deposit of £500, up to a maximum of £1 million per person.
Updated Rate Structure and Term Options
Under the revised rate structure, the five-year option offers the highest return at 5.17% AER, up from 4.85% AER. The three-year bond rate increased to 5.10% AER from 4.83% AER, while the two-year option rose to 5.07% AER from 4.81% AER. The one-year bond rate climbed to 4.99% AER from 4.82% AER.
Guaranteed Income Bonds pay interest monthly into a nominated bank account. Guaranteed Growth Bonds calculate interest daily and pay it out when the product matures. Funds deposited in these fixed-term accounts cannot be withdrawn early.
Strategic Intent Behind the Rate Increases
Andrew Westhead, NS&I Retail Director, noted that the rate adjustments respond directly to shifts in the wider savings market. He emphasized that the updates will help the institution meet its Net Financing target while balancing the interests of savers, taxpayers, and the broader financial services sector.
“Today’s increases mean savers can now choose from improved fixed-term rates across our 1, 2, 3 and 5-year British Savings Bonds, with the certainty of knowing exactly what return they will receive over their chosen term,” said Andrew Westhead. “Alongside that certainty, customers continue to benefit from the reassurance that all money invested with NS&I is 100% secure and backed by HM Treasury.”
HM Treasury set the Net Financing target for NS&I for the 2026-27 financial year at £15 billion, with a variance of plus or minus £4 billion.
Market Context and Competitor Position
Financial experts have responded to the adjustments by positioning NS&I’s new rates within the broader UK economy. Rachel Springall, a finance expert at Moneyfactscompare, stated that the rate rises reflect a wider uplift in savings rates and future interest rate expectations.
However, Springall pointed out that despite breaking the 5% barrier for multiple terms, NS&I products still sit outside the top-rate tables found elsewhere on the open market. Savers should weigh guaranteed, HM Treasury-backed security against top-of-market yields offered by other commercial providers.
Summary of New NS&I British Savings Bond Rates
- 1-year Bond: 4.99% AER (previously 4.82% AER)
- 2-year Bond: 5.07% AER (previously 4.81% AER)
- 3-year Bond: 5.10% AER (previously 4.83% AER)
- 5-year Bond: 5.17% AER (previously 4.85% AER)
Investors looking to capitalize on the new issues can access them directly through the NS&I platform, provided they meet the initial £500 investment minimum and stay within the £1 million per person cap.
