New two and five-year British Savings Bonds now on sale from NS&I

This is the first time in 15 years two and five-year bonds from the Government-backed brand have been on general sale.

New two and five-year British Savings Bonds from the Government-backed brand, National Savings and Investments (NS&I) are now on sale, widening the choice available to those looking for guaranteed returns on their hard-earned cash.

From a minimum of £500, savers can apply online for either the two-year NS&I Guaranteed Income Bonds Issue 69 or NS&I Guaranteed Growth Bonds Issue 69 which pay 4.60% AER monthly or on anniversary, respectively. Meanwhile, those wanting to secure a fixed rate for longer could consider their five-year counterparts; the NS&I Guaranteed Income Bonds Issue 64 and Guaranteed Growth Bonds Issue 64 each pay 4.10% AER.

Alongside releasing the new products, NS&I also increased rates paid by its existing three-year British Savings Bonds; the NS&I Guaranteed Income Bonds Issue 72 and NS&I Guaranteed Growth Bonds Issue 72 both now offer 4.35% AER.

“It is 15 years since we last had two and five-year fixed term Bonds on general sale to new investments,” explained Dax Harkins, NS&I Chief Executive. “The new issues, along with a rate increase for our three-year Bonds, provide NS&I savers with increased choice and longer-term security in a changing market.”

Are British Savings Bonds competitive?

Products from NS&I usually prove popular among savers as, unlike other providers, the brand is backed by HM Treasury. Because of this, it doesn’t necessarily need to offer the most competitive rates in order to attract customers.

That being said, its new two and five-year British Savings Bonds offer above-average returns. At the start of August, a typical two and five-year fixed bond paid gross rates of 4.33% and 3.92%, respectively, according to Moneyfacts’ data.

Nevertheless, higher rates are available, particularly if you’re willing to consider mutuals and challenger banks. For instance, at the time of writing, Harpenden BS offers the market-leading two-year fixed rate with its 2 Year Fixed Rate Bond (Issue 5) paying 4.96% AER.

As for the best five-year fixed rate, Al Rayan Bank’s Raisin UK – 5 Year Fixed Term Deposit pays an expected profit rate of 4.55% AER. This Shari’ah-compliant account is accessible via the third-party savings platform, Raisin UK.

However, savers may need to act quickly to take advantage of an attractive deal before it disappears – especially as fixed rates have fallen over recent months.

“Fixed bonds that hit their deposit targets can be withdrawn from sale, but those that stay on sale can also slash the rates offered depending on how the rest of the market is moving,” Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, explained.