NS&I has increased interest rates for savers, with new issues of its 1, 2, 3 and 5-year fixed-term bonds going on sale, alongside a new issue of its 3-year fixed-term Green Savings Bonds. The new issues are available to both new and maturing customers.
NS&I is different from a normal bank because it is effectively part of the Government’s funding machinery. Each year, the Treasury gives NS&I a Net Financing Target — the amount it wants NS&I to raise from savers. For 2026/27, that target has increased to £15 billion, up from £13.6 billion.
Increasing rates can help NS&I attract more money from savers and meet that target. But why raise rates now?
So why raise rates now?
There are a few possible reasons.
If money coming in is weaker than planned, NS&I can make its products more attractive by increasing rates.
Conversely, when money flows in too quickly, it often cuts rates. Historically, NS&I has adjusted rates specifically to manage inflows and outflows.
Although Bank Rate is now lower than its peak, many fixed-rate savings products, particularly online, offer attractive returns.
NS&I’s new bond rates, at around 4.55% to 4.69% depending on term, are more competitive than they were, though they may still not be market-leading.
However, NS&I offers 100% security because it is backed by HM Treasury. By contrast, deposits with UK-authorised banks, building societies and credit unions are generally protected by the Financial Services Compensation Scheme up to £120,000 per eligible person, per authorised firm.
A 3 or 5-year bond gives NS&I stable funding for several years.
From the Government’s perspective, attracting deposits at today’s rates may be preferable to relying more heavily on issuing more debt if market conditions become less favourable.
Does this mean NS&I expects rates to stay high?
Not necessarily.
When an institution offers relatively attractive longer-term fixed rates, it may be happy to lock in funding before market rates fall further. If the Bank of England cuts rates over the next couple of years, a 5-year bond paying 4.55% could look expensive for NS&I in hindsight.
What is more relevant is that:
All of those factors suggest the “normal” level of interest rates may remain higher than people became accustomed to during 2009–2021.
The Treasury clearly needs more funding, and these rate increases suggest NS&I is willing to pay a little more to attract it.
NS&I has also increased the Premium Bonds prize fund rate and explicitly linked this to both changes in the savings market and its financing target. That strengthens the case that this is primarily a fundraising decision rather than a macroeconomic forecast.
Are they worthy of consideration?
As of 23 June 2026, the following rates are on offer:
| Product | Previous interest rate | New interest rate from 23 June 2026 |
| Guaranteed Growth Bonds 1-year (Issue 90) | 4.50% gross/AER | 4.69% gross/AER |
| Guaranteed Income Bonds 1-year (Issue 90) | 4.41% gross / 4.50% AER | 4.60% gross / 4.69% AER |
| Guaranteed Growth Bonds 2-year (Issue 78) | 4.48% gross/AER | 4.67% gross/AER |
| Guaranteed Income Bonds 2-year (Issue 78) | 4.40% gross / 4.48% AER | 4.58% gross / 4.67% AER |
| Guaranteed Growth Bonds 3-year (Issue 80) | 4.45% gross/AER | 4.65% gross/AER |
| Guaranteed Income Bonds 3-year (Issue 80) | 4.37% gross / 4.45% AER | 4.56% gross / 4.65% AER |
| Guaranteed Growth Bonds 5-year (Issue 72) | 4.40% gross/AER | 4.55% gross/AER |
| Guaranteed Income Bonds 5-year (Issue 72) | 4.32% gross / 4.40% AER | 4.46% gross / 4.55% AER |
| Green Savings Bonds 3-year fixed-term (Issue 9) | 3.82% gross/AER | 4.45% gross/AER |
As all clients will know, we recommend that everyone holds a healthy cash reserve to meet both short-term income needs and planned capital expenditure, with a further contingency for additional peace of mind.
Some of that cash can realistically be committed to short-term fixed rates of up to three years. In some cases, for the very cautious investor, a longer-term rate might also be suitable, depending on their circumstances and tax position.
It is important to remember that interest on cash is subject to income tax at your highest rate. For additional-rate taxpayers and trusts, that can make fixed-term deposits less attractive than alternatives such as short-dated gilts, depending on market conditions.
As ever, please speak to us before taking the plunge. We can help you decide whether a fixed-term deposit fits with your wider planning.
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This article is for informational purposes only and does not constitute financial advice.