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Press release

NS&I INTEREST RATE INCREASES

18 June 2008

NS&I (National Savings and Investments) will be increasing the interest rates on its fixed rate investments by up to 0.75% per annum on 18 June 2008.

This change follows increases in the returns on gilt yields since NS&I last changed interest rates on some of its fixed rate investments on 21 May 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 real and nominal gilts has increased since its last rate change NS&I will now offer higher 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 changed as a result of a change to the Bank of England base rate on 10 April 2008.

ENDS

Notes to editors

New tax-free1 fixed rates (New rates effective from 18 June 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 43rd Issue Guaranteed compound rate over 2 years		3.50% (+0.60%)		4.38.%		5.83%
5-year Fixed Interest Savings Certificates 92nd Issue Guaranteed compound rate over 5 years		3.50% (+0.55%)		4.38%		5.83%
Children’s Bonus Bonds 30th issue Guaranteed compound rate over 5 years, including fifth anniversary bonus		4.45% (+0.70%)		5.56%		7.42%
5-year Index-linked Savings Certificates 45th issue Guaranteed compound rate over 5 years		Index-linking + 1% (+ 0.30%)		Index-linking + 1.25%		Index-linking + 1.67%
3-year Index-linked Savings Certificates 18th issue Guaranteed compound rate over 3 years		Index-linking + 1% (+ 0.30%)		Index-linking + 1.25%		Index-linking + 1.67%

 

New fixed rates (gross rates4) (New rates effective from 18 June 2008)	New rate p.a. (change in brackets)	AER2
1-year Guaranteed Income Bonds Issue 44	4.65% (+ 0.75%)	4.75%
3-year Guaranteed Income Bonds Issue 38	4.65% (+0.75%)	4.75%
5-year Guaranteed Income Bonds Issue 35	4.65% (+0.70%)	4.75%
1-year Guaranteed Growth Bonds Issue 44	4.75% (+0.75%)	AER same as gross
3-year Guaranteed Growth Bonds Issue 38	4.75% (+0.75%)	AER same as gross
5-year Guaranteed Growth Bonds Issue 35	4.75% (+0.70%)	AER same as gross

 

1. Tax-free means that interest is 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.

Gill Stephens		020 7348 9449
		gill.stephens@nsandi.com
Iman Asante		020 7348 9301
		iman.asante@nsandi.com
Angela Mason		020 7348 9433
		angela.mason@nsandi.com
ISDN for interviews		020 7602 4522
Out of hours		All numbers above diverted to staffed mobile phones

 

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