The NS&I has cut the rate on 2-year, 3-year and 5-year British Savings Bonds in a move that could impact millions of people.
The 2-year growth bond has been cut from 4.6% to 4.25%, the 3-year option is down from 4.35% to 4%, and the 5-year bond is down from 4.1% to 3.9%.
In response to the news, Mark Hicks, head of Active Savings at 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 1 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.
For anyone holding Premium Bonds this isn’t going to be a great sign. There’s every chance NS&I could cut its variable rates sooner rather than later, which could mean the Premium Bond prize rate gets less generous.
Anyone considering an NS&I fixed rate bond at these new rates needs to seriously consider whether it’s the right home for their money.” Hicks added that online banks and savings platforms offer much better deals.
Meanwhile, if you’re a Premium Bond holder, you can find out here what your true chances of winning are.