NS&I to cut premium bond rate and other accounts

t0rt0ise

Just a heads up for those wondering. When I closed my Income Bonds account just now it said to keep my account details  because I'll need them to open an account in the future. So no need it seems to keep an account open.

thorley

Hi folks, I'd just opened an NS&I account before this news was announced. Is it worth just closing this account and moving to the new best interest flexible savings (Principailty I think?)  or will all the others follow?
Thanks,
[Edited by Forum Team]

lr1277

I am not sure the banks and building societies would cope if most of the money in the Income Bonds and the Direct Saver were shifted to them. Take Principality BS for instance, according to Google, its current assets are £10 billion. How much money would transfer to them if they kept their relatively high interest rate?

Also lets not forget, for a bank and building society, an asset is a mortgage, loan or some other form of lending. A liability is the money that customers keep with them.

So if they received an influx of money, they would need to write mortgages to match their liabilities.

So if another £10 billion were to flow to Principality (thereby doubling their liabilities), could they in a a reasonable timescales write mortgages/loans to 'use' up that additional £10 billion?

So either they will move their rates down close to NS&I rates, or they will stop offering accounts (like Skipton BS).

As someone said earlier, perhaps it is time to invest in companies making safes and mattresses.

Paenymion

Wooow, there goes the support pillar that savings rates had.  1.15% down to 0.01%?

Thrugelmir

lr1277 said:

I am not sure the banks and building societies would cope if most of the money in the Income Bonds and the Direct Saver were shifted to them. Take Principality BS for instance, according to Google, its current assets are £10 billion. How much money would transfer to them if they kept their relatively high interest rate?

Also lets not forget, for a bank and building society, an asset is a mortgage, loan or some other form of lending. A liability is the money that customers keep with them.

So if they received an influx of money, they would need to write mortgages to match their liabilities.

So if another £10 billion were to flow to Principality (thereby doubling their liabilities), could they in a a reasonable timescales write mortgages/loans to 'use' up that additional £10 billion?

So either they will move their rates down close to NS&I rates, or they will stop offering accounts (like Skipton BS).

As someone said earlier, perhaps it is time to invest in companies making safes and mattresses.

Lenders set rates and offer products that meet their requirements. Ford money (car leasing) taps the market by having leading fixed rates then disappears totally. 

polymaff

bowlhead99 said:

polymaff said:

lhsecons said:

Firstly the rates haven’t just been cut, they’ve been decimated. ...

If only !

The income bonds have gone from paying over 10x base rate to 1/10th base rate, so have lost over 99/100ths of the rate they were paying, somewhat worse than just losing a tenth!

You do realise that gross misunderstanding/misuse of the term "decimated" was the point I was making?

ffacoffipawb

Not great rates now but gone with a 6 month fix at 0.95% and a 12 month fix at 1.30% using Hargreaves Lansdown Active Savings.

When the rest of the NSI funds arrive I will try a 2 year fix and a 3 year fix for the rest.

No way was I staying for 0.01% - that is a joke.

bowlhead99

polymaff said:

bowlhead99 said:

polymaff said:

lhsecons said:

Firstly the rates haven’t just been cut, they’ve been decimated. ...

If only !

The income bonds have gone from paying over 10x base rate to 1/10th base rate, so have lost over 99/100ths of the rate they were paying, somewhat worse than just losing a tenth!

You do realise that gross misunderstanding/misuse of the term "decimated" was the point I was making?

Yes, that's why I put a smiley face.

polymaff

Now NS&I can concentrate on how to poison the well of Inflation-Linked Saving Certificates. ...

wizdoc

What are others' experiences in terms of the time taken for income bond withdrawals to hit their bank accounts? According to the NS&I website, withdrawals up to including £50,000 should clear by the next working day, but this doesn't always seem to be the case in my experience.