Media centre /
Press release
NS&I INTEREST RATE REDUCTIONS
23 January 2008
NS&I (National Savings and Investments) will be decreasing the interest rates on a range of its fixed rate savings offers by up to 0.50% per annum on 23 January 2008.
This change follows significant decreases in the returns on gilt yields since NS&I last reduced interest rates on some of its fixed interest offers on 28 November 2007.
The rate changes will affect new investments, only in; Fixed Interest Savings Certificates, Fixed Rate Savings Bonds, Children’s Bonus Bonds, Capital Bonds and Pensioners Guaranteed Income Bonds.
How NS&I prices products
NS&I prices its fixed rate products according to a number of factors, the principal factor being the return on gilts. Because the return on nominal gilts has fallen significantly since its last rate change, largely due to the instability in the credit and sub-prime mortgage markets, NS&I will now offer lower rates on most of its fixed rate products.
There will be no change to NS&I’s variable rate products which are priced in relation to the Bank of England base rate, and last decreased as a result of the base rate change on 6 December 2007.
ENDS
Notes to editors
| New tax-free1 fixed rates |
Rate p.a./ AER2 (change in brackets) |
Equivalent grossed up rate for basic rate taxpayers3 |
Equivalent grossed up rate for higher rate taxpayers3 |
| |
|
|
|
| 2-year Fixed Interest Savings Certificates |
2.90% (-0.30%) |
3.63% |
4.83% |
| 40th Issue |
|
|
|
| Guaranteed compound rate over 2 years |
|
|
|
|
(new rate effective from 23 January 2008) |
|
|
|
| 5-year Fixed Interest Savings Certificates |
3.00% (-0.15%) |
3.75% |
5.00% |
| 89th Issue |
|
|
|
| Guaranteed compound rate over 5 years |
|
|
|
|
(new rate effective from 23 January 2008) |
|
|
|
| Children’s Bonus Bonds |
3.75% (-0.30%) |
4.69% |
6.25% |
| 27th issue |
|
|
|
| Guaranteed compound rate over 5 years, including fifth anniversary bonus |
|
|
|
|
(new rate effective from 23 January 2008) |
|
|
|
|
|
|
|
| New fixed rates (gross rates4) |
New rate p.a. (change in brackets) |
AER2 |
|
| |
|
|
|
| 1-year Pensioners Guaranteed Income Bonds |
3.85% (-0.50%) |
3.92% |
|
| Series 37 |
|
|
|
| 2-year Pensioners Guaranteed Income Bonds |
3.85% (-0.35%) |
3.92% |
|
| Series 43 |
|
|
|
| 5-year Pensioners Guaranteed Income Bonds |
3.90% (-0.25%) |
3.97% |
|
| Series 51 |
|
|
|
| 1-year Fixed Rate Savings Bonds |
|
|
|
| (new rate effective from 23 January 2008) |
|
|
|
| Issue 40 |
|
|
|
| £50,000+ |
4.05% (-0.50%) |
AER same as gross |
|
| £20,000+ |
3.85% (-0.50%) |
|
|
| £500+ |
3.70% (-0.50%) |
|
|
| monthly interest option |
|
|
|
| £50,000+ |
3.95% (-0.50%) |
4.02% |
|
| £20,000+ |
3.75% (-0.50%) |
3.82% |
|
| £500+ |
3.60% (-0.50%) |
3.66% |
|
| |
|
|
|
| 3-year Fixed Rate Savings Bonds |
|
|
|
| (new rate effective from 23 January 2008) |
|
|
|
| Issue 34 |
|
|
|
| £50,000+ |
4.10% (-0.30%) |
AER same as gross |
|
| £20,000+ |
3.90% (-0.30%) |
|
|
| £500+ |
3.75% (-0.30%) |
|
|
| monthly interest option |
|
|
|
| £50,000+ |
4.00% (-0.30%) |
4.07% |
|
| £20,000+ |
3.80% (-0.30%) |
3.87% |
|
| £500+ |
3.65% (-0.30%) |
3.71% |
|
| 5-year Fixed Rate Savings Bonds |
|
|
|
| (new rate effective from 23 January 2008) |
|
|
|
| Issue 31 |
|
|
|
| £50,000+ |
4.15% (-0.20%) |
AER same as gross |
|
| £20,000+ |
3.95% (-0.20%) |
|
|
| £500+ |
3.80% (-0.20%) |
|
|
| monthly interest option |
|
|
|
| £50,000+ |
4.05% (-0.20%) |
4.13% |
|
| £20,000+ |
3.85% (-0.20%) |
3.92% |
|
| £500+ |
3.70% (-0.20%) |
3.76% |
|
| |
|
|
|
| Capital Bonds |
3.95% (-0.25%) |
AER same as gross |
|
| (new rate effective from 23 January 2008) |
|
|
|
| Series 31 |
|
|
|
| Guaranteed compound rate over 5 years |
|
|
|
1. Tax-free means that interest and prizes are exempt of UK Income Tax and Capital Gains tax
2. AER stands for Annual Equivalent Rate and enables the comparison of interest rates from different financial institutions and across different products on a like-for-like basis. It shows what the notional annual rate would be if interest was compounded each time it was credited or paid out. Where interest is credited once a year the rate quoted and the AER will be the same
3. At current tax rates
4. Gross means the taxable rate of interest without the deduction of UK Income Tax
Media team
NS&I has a number of spokespeople available for interviews and our experienced radio team is available via our ISDN line: 020 7602 4522.
The numbers below are for media use only.
Customers
wishing to contact NS&I can find details here.
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