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Press release
NS&I INTEREST RATE REDUCTIONS
02 April 2008
NS&I (National Savings and Investments) will be decreasing the interest rates on its fixed rate investments by up to 1.10% per annum on 2 April 2008.
This change follows significant decreases in the returns on gilt yields since NS&I last reduced interest rates on some of its fixed rate investments on 23 January 2008.
The rate changes will affect new investments only (and not current investments) in: Fixed Interest Savings Certificates, Index-linked Savings Certificates, Children’s Bonus Bonds, Guaranteed Income Bonds and Guaranteed Growth Bonds.
As a result of the rate change, new issues of the three and five-year terms of Index-linked Savings Certificates are now available.
How NS&I prices its investments
NS&I prices its fixed rate investments 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 its fixed rate investments.
There will be no change to NS&I’s variable rate accounts and investments which are priced in relation to the Bank of England base rate, and last decreased as a result of the base rate change on 7 February 2008.
ENDS
Notes to editors
|
New tax-free1 fixed rates
(New rates effective from 2 April 2008) |
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
41st Issue
Guaranteed compound rate over 2 years |
2.60% (-0.30%)
|
3.25.% |
4.33% |
| |
|
|
|
|
5-year Fixed Interest Savings Certificates
90th Issue
Guaranteed compound rate over 5 year |
2.70% (-0.30%) |
3.38% |
4.50% |
| |
|
|
|
|
Children’s Bonus Bonds
28th issue
Guaranteed compound rate over 5 years, including fifth anniversary bonus |
3.40% (-0.35%) |
4.25% |
5.67% |
| |
|
|
|
|
5-year Index-linked Savings Certificates
43rd issue
Guaranteed compound rate over 5 years |
Index-linking + 0.35% (-1.00%) |
Index-linking + 0.44% |
Index-linking + 0.58% |
| |
|
|
|
|
3-year Index-linked Savings Certificates
16th issue
Guaranteed compound rate over 3 years |
0.25% (-1.10%)
|
Index-linking + 0.31% |
Index-linking + 0.42% |
|
New fixed rates (gross rates4)
(New rates effective from 2 April 2008) |
New rate p.a.
(change in brackets) |
AER2 |
| |
|
|
|
1-year Guaranteed Income Bonds
Issue 42
£50,000+
£20,000+
£500+ |
3.40% (-0.45%)
3.40% (-0.45%)
3.40% (-0.45%) |
3.45%
3.45%
3.45% |
|
3-year Guaranteed Income Bonds
Issue 36
£50,000+
£20,000+
£500 |
3.45% (-0.45%)
3.45% (-0.45%)
3.45% (-0.45% |
3.51%
3.51%
3.51% |
| |
|
|
|
5-year Guaranteed Income Bonds
Issue 33
£50,000+
£20,000+
£500+ |
3.55% (-0.40%)
3.55% (-0.40%)
3.55% (-0.40%) |
3.61%
3.61%
3.61% |
| |
|
|
|
1-year Guaranteed Growth Bonds
Issue 42
£50,000+
£20,000+
£500+ |
3.50% (-0.45%)
3.50% (-0.45%)
3.50% (-0.45% |
AER same as gross
|
| |
|
|
|
3-year Guaranteed Growth Bonds
Issue 36
£50,000+
£20,000+
£500+ |
3.55% (-0.45%)
3.55% (-0.45%)
3.55% (-0.45%) |
AER same as gross
|
| |
|
|
|
5-year Guaranteed Growth Bonds
Issue 33
£50,000+
£20,000+
£500+ |
3.65% (-0.40%)
3.65% (-0.40%)
3.65% (-0.40%) |
AER same as gross
|
1. Tax-free means that interest and prizes are exempt from 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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