Premium Bonds savers frustrated to see their prize fund rate dropping in recent months could soon see a pleasing change in direction for the rate.
The rate stands at 3.8%, having dropped from 4% from the April draw, following reductions in the rate in December and January, as interest rates across the savings market are also falling.
But in a glimmer of hope for customers, NS&I has raised a raft of the rates on its British Savings Bonds this week, and reintroduced two previous Bond products.
Some experts believe an increase in the prize fund rate could also be on the cards. Matthew Parden, CEO and co-founder of savings provider Marygold & Co., said: “NS&I has a history of adjusting the prize fund rate in response to market demand and funding requirements.
“If these newly improved guaranteed-rate products start to divert savers’ attention away from Premium Bonds, it wouldn’t be surprising to see the prize rate rise later this year to retain their appeal.”
He said the provider has likely increased the rates on its British Savings Bonds in efforts to meet its Net Financing target for 2025-2026, as set by the Government in the recent Spring Statement for 2025–26. The figure is £12billion, an increase of 33% on the previous year.
NS&I has increased the rates on these Bonds:
- Guaranteed Growth Bonds 2-year (Issue 73) – 4% (up from 3.6%)
- Guaranteed Income Bonds 2-year (Issue 73) – 4% (up from 3.6%)
- Guaranteed Growth Bonds 3-year (Issue 75) – 4.1% (up from 3.5%)
- Guaranteed Income Bonds 3-year (Issue 75) – 4.1% (up from 3.49%).
These products have also been reintroduced with increased rates:
- Guaranteed Growth Bonds 1-year (Issue 84) – 4.05% (up from 3.95%)
- Guaranteed Income Bonds 1-year (Issue 84) – 4.05% (up from 3.88%)
- Guaranteed Growth Bonds 5-year (Issue 67) – 4.06% (up from 3.4%)
- Guaranteed Income Bonds 5-year (Issue 67) – 4.06% (up from 3.39%).
Mr Parden said: “NS&I’s decision to increase rates across eight of its Bond products and relaunch the 1 and 5-year British Savings Bonds, marks a significant shift in the UK’s savings landscape.
“With returns now reaching up to 4.1%, these fixed-term options are far more competitive, especially for cautious savers looking for guaranteed income during a time of ongoing economic pressure.
“The return of the 1 and 5-year terms, not available together since 2010, gives savers greater flexibility to align products with their financial goals.”
