National Savings and Investments (NS&I) has announced it will be reducing its interest rate for new customers purchasing three-year Guaranteed Growth Bonds (GGBs).
Jill Waters, Retail Director at NS&I, said demand for the bonds in the first three months has been high.
A new issue of 3-year GGBs will be available at 1.95 per cent gross/AER, while a new issue of Guaranteed Income Bonds (GIBs) will pay 1.9 per cent gross (1.92 per cent AER).
This is compared to 2.2 per cent for the GGB and 2.15 per cent for the GIB previously.
NS&I says the rate on the 1-year terms of both products will remain unchanged.
“NS&I was delighted to bring these highly popular Bonds back onto the market at the start of December and demand for the Bonds in the first three months has been high,” said Mr Waters.
“It is always a difficult decision to reduce rates but these changes will allow us to manage demand in order to achieve our Net Financing target, while continuing to deliver positive value to taxpayers.
“Additionally customers may still invest in the special Issue of Investment Guaranteed Growth Bonds for three years at 2.20 per cent on investments up to £3,000 until 10 April 2018.”
As the change only applies to new issues, savers invested into existing bonds will see no reduction in their rates.
NS&I, an Executive Agency of the Chancellor of the Exchequer, raises money for the Government and offers 100 per cent security on all deposits, making it an attractive option for savers.