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ns&i fixed rate bonds great for customers but a kick in the teeth for competitors
Published: 26/10/2009 |
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Customers looking to lock their savings away for a short term will welcome the news that NS&I has today launched a 1 year fixed rate paying a market leading 3.95% Gross/AER. This product has shot straight to the top of the one year fixed rate bond best buys and is a full 0.20% higher than its nearest rival. With a maximum investment level of £1 million and the added benefit of 100% security (courtesy of HM Treasury), regardless of balance, these products will be particularly appealing to those who have concerns regarding the standard £50,000 compensation limit available from most other institutions. The combination of a great rate and security of funds is sure to prove a big hit with UK savers. NS&I have really ramped up their rates, in some cases by almost 3% and look to have discovered their appetite for fixed rate retail savings. The 2 year rate of 4.25% Gross sits just below the top player in the 2 year market (AA is tops with 4.35%) whilst the longer term products at 3 and 5 years are less competitive. This aggressive attempt to attract retail savings will be a kick in the teeth for building societies that have been fighting hard to attract new customer funds as they seek an alternative source to the money markets. The mutuals still offer the best buys for longer term fixed rate bonds with Principality BS paying 5.10% for four years and Skipton BS 5.35% for five years, however customers may be reluctant to tie their funds up and risk missing out if rates pick up in a year or so down the line. ENDS |
