National Savings & Investments, the government-backed savings fund, has increased interest rates on its Direct Saver and Income Bonds from 0.35 per cent to 0.5 per cent.
The increases, which follow recent rises in the Bank of England’s base rate, will modestly improve NS&I’s competitive position in the savings market putting it above big high street banks but below the top rates offered by new entrants of up to 0.71 per cent for easy-access deposits.
It leaves NS&I a long way off its dominant market position before the pandemic, when it provided some of the best rates available to retail savers.
NS&I chief executive Ian Ackerley said: “The new interest rates will ensure that our products are priced in line with the broader savings sector.” He added that the increase would also help the organisation meet its 2021-22 net financing target of £6bn, though analysts pointed out that at the half-year mark it had raised only £600mn.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “It is hugely positive to see NS&I boosting rates on these products, but they still remain some way off meeting the best rates available on the market.”