The prize fund rate for Premium Bonds will change to 4.15% for the December draw, down from 4.40%. The odds of winning will reduce from the current odds of 21,000 to 1 to 22,000 to 1.
Additionally, from Wednesday 20 November the interest rate for Direct Saver will fall from 4% to 3.75% gross/AER, and Income Bonds from 3.93% gross/4.00% AER to 3.69% gross/3.75% AER
A new two-year Issue of British Savings Bonds has also gone on sale today offering 4.10% gross/AER for the Guaranteed Growth Bond option and 4.02% gross/4.09% AER for the Guaranteed Income option.
Andrew Westhead, NS&I retail director, said: “As the savings market continues to change, we need to lower the rates on some of our products to help us meet our net financing target, while also ensuring we continue to balance the interests of our savers, taxpayers and the broader financial services sector.
“Even with the changes, we’re still expecting to pay out over 5.7 million prizes worth over £435m in the December Premium Bonds draw.
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“Our portfolio of both fixed and variable rate products, plus the unique position of Premium Bonds, continues to give savers the choices they need to help reach their savings goals, backed by the safety and security of our 100% HM Treasury guarantee.”
‘Savings market preparing for more cuts’
Laura Suter, director of personal finance at AJ Bell, said: “Amid further signs that the savings market is preparing for more interest rate cuts from the Bank of England, NS&I has today announced a series of reduced rates for a selection of its products.
“The Direct Saver and Income Bonds will see their rates fall to 3.75% AER from Wednesday 20 November, which brings them well below the current highest easy-access savings rate of 5%. Over the past three years savers have been able to benefit from higher interest paid on cash across a whole range of savings accounts, meaning it’s more important than ever to compare different providers to get the best rate.
“Despite the interest rate cuts, these accounts are still likely to continue to be very popular as they are backed by NS&I and many savers have huge brand loyalty to the organisation. But with another interest rate cut now expected at the next Bank of England monetary policy meeting in November, as well as potentially a further cut in December, savers should remain alert to the changes in the savings market and explore the best rates where they can.”