NS&I interest rate reductions

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.