Record £2.16 billion more saved in Premium Bonds in a month - MSE News 9 March 2021 at 7:43PM in Savings & investments 19 replies 1.9K views

Former_MSE_Callum

Read the full story:
Record £2.16 billion more saved in Premium Bonds in a month - but could their popularity lead to a rate cut?

eskbanker

I'd missed the Budget announcement that NS&I's 2021/22 net financing target is only £3-9bn, so would have to agree that monthly net increases of over £2bn of Premium Bonds aren't going to be sustainable (assuming other NS&I products don't change significantly) so the conclusion that rate cuts may follow does seem realistic, although it would take a massive cut to drop the expected rate below current easy access rates if that's the benchmark....

colsten

Hang on, where are the sunny uplands we have been promised?

djhworld

I don't think it's any surprise, premium bonds are a good deal (as far as the current savings landscape goes...) if you have a significant sum in there.

Thrugelmir

NSI Green bonds will be the next switch of funds. 

masonic

Thrugelmir said:

NSI Green bonds will be the next switch of funds. 

I wouldn't be surprised if the main reward to those holding green bonds will be the knowledge they are making the world a better place (at least in theory). Perhaps someone will organise a clap, but I doubt they will see much of a return.

ratechaser

masonic said:

Thrugelmir said:

NSI Green bonds will be the next switch of funds. 

I wouldn't be surprised if the main reward to those holding green bonds will be the knowledge they are making the world a better place (at least in theory). Perhaps someone will organise a clap, but I doubt they will see much of a return.

Well if a clap is involved, 1% would probably be the highest rate that the government could afford...

Thrugelmir

masonic said:

Thrugelmir said:

NSI Green bonds will be the next switch of funds. 

I wouldn't be surprised if the main reward to those holding green bonds will be the knowledge they are making the world a better place (at least in theory). Perhaps someone will organise a clap, but I doubt they will see much of a return.

Future infrastructure spending for the UK is going to be enormous. No theory in that. Hard cash reality. 

cricidmuslibale

eskbanker said:

I'd missed the Budget announcement that NS&I's 2021/22 net financing target is only £3-9bn, so would have to agree that monthly net increases of over £2bn of Premium Bonds aren't going to be sustainable (assuming other NS&I products don't change significantly) so the conclusion that rate cuts may follow does seem realistic, although it would take a massive cut to drop the expected rate below current easy access rates if that's the benchmark....

However it may also be notable that NS&I is now predicted to raise 'only' £20 billion in net finance for 2020/21 when the Government set for them a revised target of £35 billion (within a range of £30 billion to £40 billion). So if this comes true NS&I will have fallen at least £10 billion short of the lowest amount in that range! Will this mean that NS&I will wish to raise the £10 billion to £15 billion that they are likely not to achieve in 2020/21 during 2021/22 as well as the further £6 billion? (within a range of £3 billion to £9 billion) If so, that may mean that the current Premium Bond interest rate is retained for longer than would otherwise be the case. Or is the shortfall of at least £10 billion for 2020/21 just written off and disregarded completely as far as 2021/22 is concerned?

eskbanker

cricidmuslibale said:

However it may also be notable that NS&I is now predicted to raise 'only' £20 billion in net finance for 2020/21 when the Government set for them a revised target of £35 billion (within a range of £30 billion to £40 billion). So if this comes true NS&I will have fallen at least £10 billion short of the lowest amount in that range! Will this mean that NS&I will wish to raise the £10 billion to £15 billion that they are likely not to achieve in 2020/21 during 2021/22 as well as the further £6 billion? (within a range of £3 billion to £9 billion) If so, that may mean that the current Premium Bond interest rate is retained for longer than would otherwise be the case. Or is the shortfall of at least £10 billion for 2020/21 just written off and disregarded completely as far as 2021/22 is concerned?

I don't know the answer but would strongly suspect the latter, i.e. that the 2021/22 net financing target is a standalone measure and that there is no requirement to play catch-up to recover a 2020/21 shortfall, which, after all, is only a notional shortfall against a fairly arbitrary target rather than a meaningful financial reconciliation issue as such.  If there was an expectation of raising an extra £10-20bn on top of the stated £3-9bn, that's a significant enough variance to warrant restating the 2021/22 target to be more realistic....

masonic

Thrugelmir said:

masonic said:

Thrugelmir said:

NSI Green bonds will be the next switch of funds. 

I wouldn't be surprised if the main reward to those holding green bonds will be the knowledge they are making the world a better place (at least in theory). Perhaps someone will organise a clap, but I doubt they will see much of a return.

Future infrastructure spending for the UK is going to be enormous. No theory in that. Hard cash reality. 

It certainly needs to be (especially with the level of corruption in this Government, as much of it will probably be paid out to party donors and mates of ministers who have no experience of running infrastructure projects and probably won't deliver anything), but what minimum rate would NS&I need to offer to secure its funding target, and why would it pay more?