Savers have been dealt a blow as NS&I launched new issues of its British Savings Bonds with lower interest rates.
The move reflects “changes in the wider market”, the Treasury-backed provider said.
In December, the Bank of England base rate was cut from 4% to 3.75%, in a boost to some mortgage borrowers but a blow to savers.
NS&I is set annual net financing targets and money invested in it contributes towards government spending.
It also has a duty to balance the interests of savers, taxpayers and financial services.
The provider said the changes to its rates will help it to meet its net financing target while continuing to balance the interests of savers, taxpayers and the broader financial services sector.
British Savings Bonds are fixed-term issues of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds.
They are available to people wanting a guaranteed rate for a fixed-term of one, two, three or five years.
Funds cannot be withdrawn early with fixed-term accounts.
Savers will need a minimum investment of £500 and can invest a maximum of £1 million per person in each issue.
One-year versions of the bonds, which had previously been on sale with a rate of 4.20% AER (annual equivalent rate), will now be available at 4.07% AER.
Two-year deals, which had been offered at 4.10% AER, are now being offered at 3.98% AER.
Three-year versions, which had been available at 4.16% AER are being offered at a rate of 4.02% AER.
Five-year versions, which were previously offered at a rate of 4.15% AER, will now be available at 4.05% AER.
The bonds are available to new customers, and those with existing bonds which are due to mature.
NS&I said that existing British Savings Bonds customers who have already received their 30-day maturity letter will receive the interest rate quoted in the letter.
In November, NS&I had increased rates on British Savings Bonds, bucking trends seen elsewhere in the savings market.
NS&I offers a range of savings and investments to more than 24 million customers.
All products offer 100% capital security due to the provider being backed by the Treasury.
Credit card borrowing grows at fastest annual rate in nearly two years
Who should save money in Premium Bonds - and who should definitely avoid them
Premium Bonds prize checker: How to find out if you’ve won January’s NS&I draw
Top financial resolutions for 2026 revealed in survey
Shop price inflation driven up by rising food costs
Are you a landlord? These are the costly mistakes you could be making
