The government’s savings arm has confirmed a number of changes for customers from 24 November, after a previous u-turn on announced rate cuts earlier in the year.

Variable and some fixed term product rates will be cut while the odds of any £1 Premium Bonds number winning any prize will tumble from 24,500 to one, to 34,500 to one from the December draw.

This will take the Premium Bonds fund rate from 1.40% to 1% and will take the number of prizes down from 3.85 million in September’s draw to an estimated 2.85 million in the December draw.

Below, we outline the changes for customers.

Variable rate savings products

• Direct Saver: 1% AER to 0.15% AER
• Investment Account: 0.80% AER to 0.01% AER
• Income Bonds: 1.16% AER to 0.01% AER
• Direct ISA: 0.90% AER to 0.10% AER
• Junior ISA: 3.25% AER to 1.50% AER.

Fixed term savings products

The fixed terms savings products aren’t available to new customers; they’re only available to existing customers who want to renew an investment when it matures.

NS&I said it will write to holders of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates at least 30 days before the end of their term, outlining their options.

Those whose products mature on or before 24 November will automatically renew on to a new issue of the same term and will receive the previous higher rate.

After this date, the products will renew onto the same term but will receive the lower interest rate from 24 December 2020.

• 1-year Guaranteed Growth Bonds: from 1.10% AER to 0.10% AER
• 2-year Guaranteed Growth Bonds: from 1.20% AER to 0.15% AER
• 3-year Guaranteed Growth Bonds: from 1.30% AER to 0.40% AER
• 5-year Guaranteed Growth Bonds: from 1.65% AER to 0.55% AER
• 1-year Guaranteed Income Bonds: from 1.05% AER to 0.06% AER
• 2-year Guaranteed Income Bonds: from 1.16% AER to 0.11% AER
• 3-year Guaranteed Income Bonds: from 1.26% AER to 0.36% AER
• 5-year Guaranteed Income Bonds: from 1.61% AER to 0.51% AER
• 2-year Fixed Interest Savings Certificates: from 1.15% AER to 0.10% AER
• 5-year Fixed Interest Savings Certificates: from 1.60% AER to 0.50% AER.

NS&I said it “must strike a balance between the interests of savers, taxpayers and the broader financial services sector” with the changes ensuring its interest rates are “aligned appropriately against those of competitors”.

In February this year, it announced rate cuts would come into effect in May but this decision was then scrapped in a bid to support savers during the coronavirus pandemic.

However, this meant that the NS&I products were riding high at the top of the best buy tables for beleaguered savers. As such, it saw inflows of near £20bn in the three months to June, leading to its net financing target being revised from £6bn to £35bn (plus or minus £5bn).

It added that demand for NS&I products have remained at similarly high levels in the three months to September.

Ian Ackerley, NS&I chief executive, said: “Reducing interest rates is always a difficult decision. In April we cancelled interest rate reductions announced in February and scheduled for 1 May. Given successive reductions in the Bank of England base rate in March, and subsequent reductions in interest rates by other providers, several of our products have become ‘best buy’ and we have experienced extremely high demand as a consequence. It is important that we strike a balance between the interests of savers, taxpayers and the broader financial services sector; and it is time for NS&I to return to a more normal competitive position for our products.”