Your support helps us to tell the story
As your White House correspondent, I ask the tough questions and seek the answers that matter.
Your support enables me to be in the room, pressing for transparency and accountability. Without your contributions, we wouldn’t have the resources to challenge those in power.
Your donation makes it possible for us to keep doing this important work, keeping you informed every step of the way to the November election
Andrew Feinberg
White House Correspondent
NS&I has launched new versions of its British Savings Bonds – with reduced interest rates.
The provider said the interest rates on the new issues of its two, three and five-year British Savings Bonds reflect “the changing savings market”.
The Bank of England base rate was recently cut by 0.25 percentage points, to 5%.
NS&I, which also provides Premium Bonds, said the changes to its British Savings Bonds will ensure its interest rates are positioned appropriately in the wider market and help it in its duty to balance the interests of savers, taxpayers and the broader financial services sector.
British Savings Bonds are fixed-term issues of NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds.
Guaranteed Growth Bonds are a lump sum investment that earns a fixed rate of interest over a set period of time. Interest is added to the bond on each anniversary of the investment.
Guaranteed Income Bonds are also a lump sum investment and they pay out a monthly income at a fixed rate of interest over a set period of time.
From Wednesday, the new issue of the two-year Guaranteed Growth Bonds and Guaranteed Income Bonds will pay 4.25% AER (annual equivalent rate), down from a previous rate of 4.60%.
The new three-year versions will pay 4.00% AER, down from 4.35% previously and the new five-year issues will pay 3.90% AER, down from a previous rate offered of 4.10%.
NS&I chief executive, Dax Harkins, said: “Our two, three and five-year fixed-term bonds continue to offer savers increased choice, a fair return and longer-term security in a changing market.
“These changes ensure our interest rates are set at an appropriate position and continue to balance the interests of savers, taxpayers and the stability of the broader financial services sector.”
Mark Hicks, head of active savings, Hargreaves Lansdown, said: “It was always a matter of when these cuts were going to come, rather than if.
“However, the fact NS&I is cutting rates today demonstrates that it’s not desperately keen to fill its boots, so it isn’t going to be comfortable with paying over the odds. This doesn’t bode well for Premium Bond savers.
“These fixed-rate cuts mirror the falls that we’ve seen in the rest of the saving market.
“While rates have headed downhill, the NS&I has shifted gear in order to stay in the middle of the road. Last year, NS&I distorted the market with a market-leading one-year rate, but these moves imply that NS&I isn’t in any rush to do the same again. It’s not desperate to raise significant funds by paying more than it needs to.”
