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interest rates

Banks, Bonds, Checking & Savings, Financial, Financial Services, Interest Rate, Investment, Money, Personal Finance

National Savings And Investments (NS&I) Has Increased The Interest Rates On Its Income Bonds By 1%.

The revised interest rates came into effect from 20 May 2009 for Income Bond customers.

nsandi

Guaranteed Income Bonds are intended to provide investors with a100% secure monthly income at a competitive variable interest rate. This no risk guarantee to the investment capital is possible because National Savings and Investments is backed by HM Treasury. Income Bonds can be cashed in at any time with no notice and no penalty and income can be paid directly into a bank or building society account or into a NS&I Investment Account or Easy Access Savings Account.

The combination of complete security and the increased interest rates are expected to make NS&I Income Bonds especially attractive in the current economic climate.

NS&I constantly reviews savings products offered by other providers and has made this decision to take into account the rates available on other types of products which might be considered by Income Bond customers. NS&I continues to follow a pricing strategy designed to balance the interests of its savers, the taxpayer and the stability of the financial services market.

The interest rates on NS&I’s other savings products, including NS&I’s Guaranteed Income Bonds, will remain unchanged.

This brings the new Income Bonds variable gross rates* to 1.7% p.a. (1.71% AER**) for savings of £500 – £24,999 and 2% p.a. (2.02% AER) for savings of £25,000+.

*Gross means the taxable rate of interest without the deduction of UK Income Tax
**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

 

About NS&I
National Savings and Investments is one of the largest savings organisations in the UK, offering a range of savings and investments to almost 27 million customers. NS&I is best known for Premium Bonds, but also offers a range of savings accounts including easy access savings accounts, savings bonds, investment accounts, and children’s bonus bonds. All products offer 100% capital security, because NS&I is backed by HM Treasury. Further information and digital images are available from the NS&I media team. An ISDN line is available for interviews. 

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Banks, Bonds, CDs, Checking & Savings, Financial, Financial Services, Interest Rate

NS&I Changes Premium Bonds Prize Structure And Variable Rates On Savings

NS&I has announced that f r o m the April prize draw onwards one of the two monthly Premium Bond jackpot prizes of £1 million will be replaced by a wider mix of prizes in the monthly draws, allowing more people to win but still retaining the chance of winning the £1 million jackpot prize. Similarly, a new £25 Premium Bond prize will be introduced and used alongside the existing prizes (ranging f r o m £50 to£1 million). These changes have been introduced because Premium Bond holders say that maintaining the chances of winning tax-free prizes on a regular basis is particularly important to them.

In addition to these changes, NS&I is reducing the Premium Bond prize fund rate f r o m 1.8% to 1%. This rate will be held at least until the June 2009 draw even if there are further changes to the base rate. This is the first change NS&I has made to the prize fund rate since December last year – during which time the Bank of England base rate has fallen f r o m 3.0% to 0.5%. The revised prize fund rate will come into effect f r o m 1 April 2009.

The current odds of each £1 Premium Bond number winning any prize will remain unchanged at 36,000 to 1, so with average luck an investor with £30,000 in Premium Bonds could win 10 tax-free prizes a year. The unclaimed premium bond prizes range all the way f r o m £25 up to £100,000. NS&I gives away over one million tax-free* Premium Bond prizes each month.

NS&I is also reducing the interest rates on its other variable rate savings by up to 0.50%, following movements in the Bank of England base rate. The revised interest rates will come into effect f r o m 18 March 2009.

Peter Cornish, Director of Customer Offer, NS&I, said: “Premium Bonds are unique and are hugely popular with our customers. Replacing one of the £1 million jackpot prizes with a wider mix of prizes and introducing the new £25 prize category will help us maintain the frequency of tax-free prizes – something that we know is particularly important to Premium Bond holders. “

He continued, “We always aim to reward as many of our customers as possible f r o m the prize fund available, together with having the right mix of prizes. We continue to pay out hundreds of thousands of tax-free prizes each month and customers also benefit f r o m a 100% guarantee on their investment because we are backed by HM Treasury.”

As always, NS&I will communicate all of these changes to customers via a range of outlets, including press advertisements and NS&I’s website, as well as putting an updated Premium Bonds prize draw details leaflets in all Post Offices and updated interest rates leaflets in most branches of WH Smith throughout the UK.

* Tax-free means that interest and prizes are exempt of f r o m UK Income Tax and Capital Gains Tax Gross means the taxable rate of interest without deduction of UK Income Tax.

 

When interest rates are s e t on tax-free products, NS&I takes into account the amount of tax the Exchequer would have received if the product had been taxable.

About NS&I
NS&I is one of the UK’s largest financial providers with 27 million customers and over £94 billion invested. It is best known for Premium Bonds, but also offers inflation-beating savings account guaranteed equity bonds, savings bonds easy access accounts and children’s bonus bonds in its range. All products offer 100% security, because NS&I is backed by HM Treasury.

Out of hours above number diverted to staff mobile phone ISDN line for interviews: 020 7602 4522.

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Banks, Financial, Financial Services, Financial Solutions, Interest Rate, Loans, Money, Mortgage, Personal Finance

Think Money have welcomed the Bank of England’s shock base rate cut to 3%, commenting that the mortgage market could benefit as a result

Following the Bank of England’s shock base rate cut to 3%, financial solutions company Think Money have welcomed the news, commenting that firm action is more likely to encourage banks to consider cutting their interest rates accordingly. However, they added, there are still some factors that may prevent lenders from passing on the full 1.5% cut to their mortgages and loans.

The base rate cut, from 4.5% to 3%, is the biggest cut since the Bank of England lowered the rate by 2% in 1981. The base rate now stands at its lowest point since 1955.

Many economists had predicted an aggressive cut in base rates, but the extent of the cut was still unexpected. Most predictions in the run-up to the Bank of England’s announcement pointed towards a 0.75% or 1% base rate cut – and only a few days previously, 0.5% seemed a more realistic figure.

A spokesperson for financial solutions company Think Money said: “It would seem that the Bank of England are acting based on Mervyn King’s recent statements that the recession would be long and drawn-out, and rather than take the base rate down in small increments, they have ‘bitten the bullet’ and taken it down further than most people expected.

“Potentially, it’s very good news for people and businesses looking for loans, but not such good news for savers.”

However, the spokesperson stressed that as with previous base rate cuts, there is no guarantee that lenders will pass the full cut onto their mortgages and loans – although the extent of the cut could at least increase the impact on lenders’ behaviour.

“There will still be a lot of uncertainty with regards to what will happen in the economy in the future, as well as some apprehension amongst banks as to how much they might lose from things like defaults on mortgages as the recession takes hold,” she said.

“The base rate cut only affects how cheaply lenders can borrow funds from the Bank of England. It does not directly affect the LIBOR rate, which is the measure of how expensive inter-bank lending is. Since lenders rely heavily on borrowing from each other to fund their loans and mortgages, they may well be slow to bring their rates down.

“That said, the Bank of England will have no doubt had this in mind when deciding on their base rate cut – and it may well be that such a large cut is sufficient to encourage some lenders to bring their rates down to more competitive levels.”

However, a number of banks appeared to take defensive action even before the 3% base rate had been announced, with several lenders removing tracker mortgages from their product ranges on Wednesday and Thursday morning, while others upped their interest rate margins on tracker mortgages.

“This may just be a temporary measure by lenders in order to avoid any risks in the short term,” the Think Money spokesperson said. “A number lenders have said they will be taking some time to think about their next step, so it’s possible that we will still see some significant interest rate cuts in the next week or two.”

The spokesperson was also keen to emphasise the importance of good mortgage advice. “With so much uncertainty surrounding what will happen with mortgage rates in the next few months, it often pays to speak to a mortgage adviser who understands the market. They should be able to point you towards the best mortgage deals for your circumstances, which could save you a lot of money in the long run.”

Via EPR Network
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