NS&I cuts rates amid savings rate downturn

2026 has barely begun, yet savers are already being reminded that the interest rate landscape is shifting. Following the base rate cut on 18th December last year, we’ve started to see savings rates tumble. Not just variable rates, but fixed rates too. And last week, National Savings & Investments (NS&I) was one of those providers to announce reductions.  

The new issues of the British Savings Bonds, which is another name for NS&I’s fixed rate Guaranteed Growth and Guaranteed Income Bonds, are now on sale at lower rates than those available since November 2025 as the table below shows. 

British Savings Bonds are available to new customers and to existing customers whose Bonds are reaching maturity. Savers can invest from £500 up to £1 million per person in each Issue but must be prepared to lock their money away for the full term, as early withdrawals are not permitted. At maturity, savers can either take their money or reinvest into a new term.

While this news will undoubtedly disappoint savers who value the security of having their money with the state-owned bank, it’s no real surprise as it reflects both changes in the wider savings market and NS&I’s unique role within it.  

Why is NS&I making this move?

It’s important to remember that NS&I does not operate like a traditional bank or building society. NS&I’s purpose is to raise a specific amount of money for the Government each year. This is measured through its Net Financing target, which represents the net change in funds raised after taking account of inflows, withdrawals and interest/Premium Bond prize funds payments.

For the current year, the Net Financing target stands at £13 billion plus or minus £4 billion, an increase from the previous year from £12 billion, as confirmed in the November 2025 Budget. Managing inflows is a delicate balancing act, as if NS&I pays rates that are too competitive, it risks attracting more money than it needs and overshooting its target.

As best buy fixed term rates elsewhere in the market started to fall following the base rate cut in December, some of NS&I’s Guaranteed Growth and Guaranteed Income Bonds found their way into the top five best buy tables. This is unusual: NS&I rarely features so prominently because it normally avoids leading the market on price.

When NS&I products become too attractive, one of the simplest ways to manage demand is to reduce rates on new Issues. That is exactly what we have seen recently. Whilst disappointing for savers, the move is entirely consistent with NS&I’s remit and past behaviour – and in line with market sentiment as a whole.

What is happening in the rest of the market?

This move by NS&I is part of a broader trend across the savings market due to expectations for future interest rate cuts. The markets are pricing in further base rate reductions during 2026. Fixed rate savings products are priced based on interest rate expectations over the full term of the bond, not just current conditions, which means that changes in outlook can have an impact on rates.

As we start 2026, overall rates have started to drift downwards, although longer term rates have edged down by less.  

Over the last year, the average of the top five best 5-year rates has fallen by less than 0.20 per cent, while the average of the top five best 1-year rates has dropped by around 0.34 per cent. This reflects how providers price fixed term products. Short term rates react more quickly to changes in base rate expectations, while longer term pricing smooths those movements over time.

There have been a few notable exceptions to the downward trend, which is encouraging for savers. Marcus (from Goldman Sachs) has introduced a market leading 1-year bond paying 4.55% - the highest rate we’ve seen since October last year.  

And OakNorth, via the Prosper app, recently launched a 1-year bond paying 4.30 per cent, placing it firmly near the top of the tables. Shawbrook Bank has followed with a 1-year offering at 4.27 per cent. These moves show that competition has not disappeared entirely and that attractive rates can still be found by those prepared to look beyond the most familiar names.

Take a look at our Best Buy tables for the latest top rates on offer.

Why would savers stick with NS&I?

For existing NS&I customers who have already received their 30-day maturity letters, there is some reassurance. They will still receive the interest rate quoted in their letter if they act within the specified timeframe. For them and for everyone else, the decision about whether to invest with NS&I now depends on priorities rather than headline rates alone.

Savers should be clear about the trade-off. NS&I’s rates are no longer among the best available. For those willing to shop around, there are higher paying options available.  

There will of course always be savers who value the unique security that comes with NS&I, as well as the comfort of familiarity. All funds deposited with the state-owned bank are protected in full by HM Treasury, regardless of the amount. You can deposit up to £1 million into each issue of the British Savings Bonds. For those with larger cash sums, that reassurance can outweigh the lower rates.

But, if you do have more than the £120,000 Financial Services Protection Scheme (FSCS) limit, cash platforms are another valuable option. They allow you to manage savings across multiple banks with just one login, often making it easier to stay within protection limits and to switch between products when better rates become available. This can be especially useful for those with larger cash holdings who want both convenience and competitive returns.

For a no-obligation illustration, take a look at our cash platform, Savers Hub powered by Insignis.

With interest rates starting to fall, it's really important for savers to keep an eye on the rates they are earning, and to ditch and switch if they are not being paid a competitive rate. Keep an eye on our Best Buy tables to see the top rates available.

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Rates correct as at 16/01/2026.

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning.