- NS&I sees £7.7 billion into its one-year fixed rate bonds in September
- This means it hit its fundraising target for the entire year in one month
- £5.3 billion flowed into fixed rate bonds with banks and building societies in September – down from £8 billion in August
Laura Suter, head of personal finance at AJ Bell, comments on the latest Bank of England Money and Credit data:
“NS&I’s plan to top the best buy tables to boost its previously lacklustre inflows did the trick, and the government-backed provider saw its highest inflows in more than three years. Customers rushed to lock in the 6.2% one-year fixed rate bonds, with £7.7 billion of money put into the accounts in September. More than £250 million was paid into the accounts each day in September – which makes up the majority of the five weeks the bonds were on sale*.
“The inflows of £7.7 billion mean NS&I hit its entire annual fundraising target of £7.5 billion in one month – which is a sharp turnaround from the outflows we saw from the provider in the summer. Having clinched its fundraising needs, it’s now unlikely we’ll see another bumper interest rate from NS&I this tax year. Unless it suffers heavy outflows or the government changes its targets, it won’t need to offer a market-beating rate to draw new customers in.
“NS&I has clearly been eating some of the other banks’ lunch, as flows into fixed rate bonds with banks and building societies slowed in September. The month saw £5.3 billion of money flow into the accounts, a sharp drop from £8 billion in August.
“Interest rates on new fixed rate accounts hit their highest level since the Bank of England’s records began almost eight years ago – at 5.21% on average. But as we near peak interest rates many savers are worried that this is the highest level they will reach, before either plateauing or dropping. The Bank of England’s decision to hold interest rates towards the end of September is likely to have a knock-on effect on October’s savings rate figures.”
*NS&I’s one-year Guaranteed Growth Bonds and one-year Guaranteed Income Bonds were on sale from August 30th to October 5th 2023.
