NS&I, the government-backed savings providers, has today cut rates on some of its fixed term products.

New Issues of its 2-year, 3-year and 5-year British Savings Bonds have lower interest rates, “reflecting the changing savings market”, the provider says.

The 2-year bond will be cut by 35 basis points from 4.6% to 4.25% and the 5 year bond from 4.1% to 3.9%.

British Savings Bonds are fixed-term issues of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds. 

The new interest rate on the 2-year Growth option is 4.25% gross/AER (previously 4.6%). The new interest rate on the 2-year Income option is 4.17% gross / 4.25% AER (previously 4.6% AER). 

The new interest rate on the 3-year Growth option is 4.00% gross/AER (previously 4.35%). The Income option is 3.93% gross / 4.00% AER. 

The new interest rate on the 5-year Growth option is 3.90% gross/AER (previously 4.1%). The Income option is 3.83% gross / 3.90% AER. 

A number of savings providers have begun reducing interest rates following the Bank of England’s recent reduction in the base rate and the likely trend of interest rates downward.

NS&I chief executive, Dax Harkins, said: “Our 2, 3 and 5-year fixed-term bonds continue to offer savers increased choice, a fair return and longer-term security in a changing market. 

“These changes ensure our interest rates are set at an appropriate position and continue to balance the interests of savers, taxpayers and the stability of the broader financial services sector.” 

Source: NS&I