You are here: Home - Saving & Banking - News -

NS&I axes bonds and cuts rates

0
Written by:
02/09/2019
National Savings & Investments (NS&I) is withdrawing several fixed rate bonds from sale and cutting rates on others.

The government-backed agency is pulling its 1-year and 3-year Guaranteed Growth Bonds and Guaranteed Income Bonds with immediate effect.

It has also cut the rate on existing Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates by 0.25 per cent.

Savers who have a bond maturing on or before 5 October will get the old, higher rate if they roll over into a product with the same term.

NS&I said the changes were down to rates for similar competitor products falling as well as “exceptionally low gilt yields”.

Jill Waters, retail director at NS&I, said: “It is important that NS&I continues to balance the needs of our savers with taxpayers and the stability of the broader financial services sector.”

The news will come as a blow to customers who choose NS&I because of the 100 per cent government guarantee and the ability to roll deals over.

In June last year, NS&I slashed the maximum deposit on its growth and income bonds from £1m to just £10,000. Customers are able to roll over the full amount they hold into a new product.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “NS&I isn’t doing this for nefarious reasons: it’s caught between a rock and a hard place.

“When the government is weighing up whether NS&I is doing a decent job, it compares how much interest it pays to attract savers against how much it would cost to raise the money by issuing bonds instead.

“At the moment, the enormous uncertainty in the market means investors want bonds, and are willing to accept low yields in return, so raising money by issuing bonds is relatively cheap. It means NS&I is under pressure to raise money more cheaply by cutting the rate.”

The new rates

Guaranteed Growth Bonds

1 year   1.25%

2 years  1.45%

3 years  1.7%

5 years  2%

Guaranteed Income Bonds (gross)

1 year   1.2%

2 year   1.4%

3 year   1.65%

5 year   1.95

Fixed interest savings

2 year   1.3%

5 year   1.9%

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
The Hotel of Mum and Dad is costing parents dear

Adult children who move back home to save money typically cost their parents £1,640.

Close