The UK’s state-backed savings bank has upped the rates on its key products, adding to the pressure on commercial lenders to improve their offerings.
(Bloomberg) — The UK’s state-backed savings bank has upped the rates on its key products, adding to the pressure on commercial lenders to improve their offerings.
The National Savings and Investments, or NS&I, is releasing new one-year fixed rate bonds that pay 6.2%. That follows the launch of a three-year green savings bond last week, at a rate of 5.7%.
The latest offering turns up the heat on lenders, after the Financial Conduct Authority said last month that banks including HSBC Holdings Plc, Barclays Plc and NatWest Group Plc have only passed through about a quarter of interest rate rises to savers.
Since the end of 2021, the Bank of England has raised rates from near zero to 5.25%, and investors are pricing in at least two further quarter-point hikes.
NS&I’s new offer “throws down the gauntlet to high street banks,” said Myron Jobson, a senior personal finance analyst at Interactive Investor. It’s the “most competitive one-year fixed rate savings accounts on the market.”
Other countries have said they are raising the rates on offer in retail government bonds in order to push commercial banks to increase theirs.
“It’s vital that savers are able to benefit from recent interest rate rises,” Andrew Griffith, economic secretary to the UK Treasury, said in a statement released by the NS&I.
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