NS&I sucked in records amounts of savers money last month as high street bank deposits faltered, according to the latest data for the Bank of England.
The Government-backed savings organisation had put its rates on some fixed-rate products up to as high as 6.2% in recent months, attracting some £7.7bn in September, the most in a month since August 2020.
Banks felt the pressure said the BoE with household M4, a measure of cash and money held in bank and building society accounts, up by just 0.8% over the last 12 months, the lowest rate of growth since data started to be monitored in 1998.
Household savings overall fell by £31.5 billion during September, as people dipped into savings to pay essential bills or pay down mortgages.
Mark Hicks, head of active savings at wealth platform Hargreaves Lansdown said: “A wall of money rushed into NS&I in September. It dominated the one-year-fixed rate market and hoovered up cash maturing from the dash into fixed rates a year earlier
“At a time when so many people are spending their savings, NS&I had a mountain to climb to hit its fundraising targets. This account has helicoptered them in near the summit.
“To put this in context, it took an extra £7.7 billion in September – its biggest month since August 2020, when it dominated the savings chart at a time when we were building our lockdown savings.
“Our research earlier this month found that one in four people (26%) have been forced to eat into savings because of rising prices – and one in 20 (5%) have emptied their accounts entirely.”
Myron Johson at Interactive Investor added: “The NS&I recent hikes in savings rates have paid off in a big way for the government-backed institution, with the uptick in its one-year fixed rate accounts at the end of August proving to be the cream of the crop.
“The sheer number of people who subscribed to the accounts is unheard of and is undoubtedly the key reason behind the sharp rise in cash moving into the NS&I last month.
“The NS&I became a victim of its own success and ultimately pulled the market-leading one-year fixed rate savings deals from the market at the start of October."