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NS&I Cuts Bond Yields and Reduces Premium Bonds Prize Fund

The changes respond to recent Bank of England base rate cuts to maintain affordable government financing.

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Hargreaves Lansdown said the government-backed bonds would appeal to savers with large nest eggs
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Overview

  • NS&I trimmed fixed rates on new two-, three- and five-year British Savings Bonds to 3.85%, 3.88% and 3.84% AER respectively, down from around 4%.
  • The Junior ISA rate will fall from 4.00% to 3.55% AER on July 18, marking the first adjustment in nearly two years.
  • One-year British Savings Bonds remain unchanged at 4.05% AER for both Growth and Income options.
  • The Premium Bonds prize fund rate will drop to 3.6% for the August draw, cutting the number of high-value tax-free prizes while keeping overall odds of winning steady.
  • NS&I’s products stay fully Treasury-backed under its government funding mandate, but advisers warn further rate cuts may drive savers toward higher-yield ISAs and fixed-rate bonds.