NS&I reduces rates on its variable savings products

7th February 2017

NS&I is reducing interest rates on four of its variable rate products. It says this follows reductions in interest rates across the savings market after the Bank of England’s reduction of the base rate by 25 basis points, to 0.25% in August 2016.

Variable rate changes will apply to premium bonds, Direct ISA, Direct Saver and income bonds, coming into effect on 1 May 2017.

In the spring, NS&I will also be launching investment guaranteed growth bonds – a new market leading 3-year savings bond – announced by the Chancellor of the Exchequer in the last Autumn Statement. The new bonds will be available at nsandi.com for 12 months from spring 2017 with an indicative interest rate of 2.20% gross/AER. NS&I says the precise rate will be confirmed nearer to launch. The bonds will be open to people aged 16 and over and will have a minimum investment of £100 and a maximum investment of £3,000.

Steve Owen, acting chief executive, NS&I, said: “We have taken the time to absorb the impact of the Bank of England base rate reduction and subsequent changes across the savings market. The new rates reflect current market conditions and allow us to continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector.

“We appreciate that savers will be disappointed, but we believe that the new rates present a fair offer to customers, who will continue to benefit from our 100% HM Treasury guarantee on all holdings, as well as tax-free prizes for premium bonds.”

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