NS&I offers savers a late Christmas gift

Savers are to receive a belated Christmas present from National Savings & Investments, with the government-backed agency offering a December 29 increase in interest rates.

NS&I announced this week that it will raise interest on its Direct Saver and Income Bonds from 0.15 per cent to 0.35 per cent and in its Direct Isa from 0.10 per cent to 0.35 per cent.

The deposit-taker is trying to raise more money from savers at a time when it is falling far short of its target for the 2021-22 financial year. But the increases leave it well below the market-leading rates it offered going into the pandemic. It slashed the rate on the popular income bond from 1.15 to 0.01 per cent in 2020.

The rise will still leave NS&I lagging behind the market. The top easy access account offers include 0.71 per cent from Investec Bank and 0.70 per cent from Cynergy Bank. But the change puts NS&I ahead of the big high street banks. Barclays, Lloyds and HSBC all offered 0.01 per cent this week on easy access accounts.

NS&I said its net financing target for 2021-22 was £6bn, with a £3bn-£9bn range. In October it said it had raised just £600m in the year to date.