Return of top NS&I bonds paying 1.5 pc

NS& I has put its Guaranteed Growth and Guaranteed Income Bonds on sale for the first time in eight years.

But unlike last time, you can’t buy them over the phone — only online. The one-year fixed-rate version pays 1.5 pc — or 1.45 pc if you take income monthly rather than annually.

If you tie money up for three years, rates are 2.2 pc and 2.15 pc respectively. Only Ikano Bank’s 2.21 pc beats this three-year annual deal. The NS&I one-year rate is attractive compared with big banks and building societies where the top rate is 1.35 pc from Virgin Money or 1.3 pc from Leeds BS. But newer banks, such as Charter Savings Bank at 1.81 pc, pay higher rates.

NS&I said it is not attracting as much money as it expected due to ‘changes in the savings market’. It almost halved the amount it expects to come in for this financial year from £13 billion (allowing for anything between £10 billion and £16 billion) to £8 billion (£5 billion to £11 billion).

In the first half of its financial year — which started in April — it attracted £3.4 billion of new money, less than half its £11.8 billion take for the whole of last year.

It could face an outflow at the start of next year as the first three-year 4 pc 65+ Bonds mature, as more than 885,000 customers invested £9 billion.