When will NS&I increase premium bond prize fund rate?

S_uk

They last increased it 1.00 to 1.40% back in May in time for the June draw, but as interest rates on savings accounts have since continued to increase it's becoming less competitive, especially as those with the average luck will achieve less than the 1.4%. The prizes being tax free is a benefit, but as Paragon has now increased my cash ISA rate to 1.85% it's making me consider if/when NS&I will move and to what degree? Any predictions?

refluxer

The Premium Bond prize fund rate isn't connected with the BoE base rate so they have no need or obligation to make any adjustments and you're right - as savings rates increase, they're looking less and less attractive to many people as a way of saving as time goes on.

MX5huggy

If you look at the historic rates with the exception of the last 2 years they have never been close to market leading rates. https://www.nsandi.com/historical-interest-rates

Albermarle

refluxer said:

The Premium Bond prize fund rate isn't connected with the BoE base rate so they have no need or obligation to make any adjustments and you're right - as savings rates increase, they're looking less and less attractive to many people as a way of saving as time goes on.

Although I would guess some increase on the 1.4%, will be forthcoming at some point.

eskbanker

NS&I decisions about the PB prize rate are typically driven by their net financing target, which is £6bn +/- £3bn for 2022-23.

As they achieved £1.3bn of this in Q1, towards the end of which they increased the PB rate (plus further increases to other products subsequently), this would seem to suggest that it's unlikely that any further changes will be made in the near future.

RG2015

eskbanker said:

NS&I decisions about the PB prize rate are typically driven by their net financing target, which is £6bn +/- £3bn for 2022-23.

As they achieved £1.3bn of this in Q1, towards the end of which they increased the PB rate (plus further increases to other products subsequently), this would seem to suggest that it's unlikely that any further changes will be made in the near future.

Not sure I agree.

I am seriously considering selling my Premium Bonds and am sure many others have either already done this or are thinking about it.

A massive outflow must affect the rates they set.

Futuristic

RG2015 said:

eskbanker said:

NS&I decisions about the PB prize rate are typically driven by their net financing target, which is £6bn +/- £3bn for 2022-23.

As they achieved £1.3bn of this in Q1, towards the end of which they increased the PB rate (plus further increases to other products subsequently), this would seem to suggest that it's unlikely that any further changes will be made in the near future.

Not sure I agree.

I am seriously considering selling my Premium Bonds and am sure many others have either already done this or are thinking about it.

A massive outflow must affect the rates they set.

A lot of people in PB are likely to be high rate tax payers and unlikely to move. 

RG2015

Futuristic said:

RG2015 said:

eskbanker said:

NS&I decisions about the PB prize rate are typically driven by their net financing target, which is £6bn +/- £3bn for 2022-23.

As they achieved £1.3bn of this in Q1, towards the end of which they increased the PB rate (plus further increases to other products subsequently), this would seem to suggest that it's unlikely that any further changes will be made in the near future.

Not sure I agree.

I am seriously considering selling my Premium Bonds and am sure many others have either already done this or are thinking about it.

A massive outflow must affect the rates they set.

A lot of people in PB are likely to be high rate tax payers and unlikely to move. 

There are lots of decent ISA rates currently available.

El_Torro

I’m keeping an eye on my Premium Bonds, which is where most of my emergency fund is sitting. Currently I don’t feel much of an urge to move, being a high rate tax payer. Also I’m not too fussed about moving for the sake of 0.1% or 0.2%. If the gap widens enough I’ll definitely do it though.

eskbanker

RG2015 said:

eskbanker said:

NS&I decisions about the PB prize rate are typically driven by their net financing target, which is £6bn +/- £3bn for 2022-23.

As they achieved £1.3bn of this in Q1, towards the end of which they increased the PB rate (plus further increases to other products subsequently), this would seem to suggest that it's unlikely that any further changes will be made in the near future.

Not sure I agree.

I am seriously considering selling my Premium Bonds and am sure many others have either already done this or are thinking about it.

A massive outflow must affect the rates they set.

Well, yes, a massive outflow would probably have an effect, but there has been no sign of any sort of outflow just yet, with bond numbers continuing to grow month on month - a billion new ones bought between March and May and another billion added since then through another three months of further increases.

And as above, other products contribute to NS&I achieving their net financing target too, and there was a conscious decision to increase rates on those last month while leaving the PB rate unadjusted.

RG2015

eskbanker said:

RG2015 said:

eskbanker said:

NS&I decisions about the PB prize rate are typically driven by their net financing target, which is £6bn +/- £3bn for 2022-23.

As they achieved £1.3bn of this in Q1, towards the end of which they increased the PB rate (plus further increases to other products subsequently), this would seem to suggest that it's unlikely that any further changes will be made in the near future.

Not sure I agree.

I am seriously considering selling my Premium Bonds and am sure many others have either already done this or are thinking about it.

A massive outflow must affect the rates they set.

Well, yes, a massive outflow would probably have an effect, but there has been no sign of any sort of outflow just yet, with bond numbers continuing to grow month on month - a billion new ones bought between March and May and another billion added since then through another three months of further increases.

And as above, other products contribute to NS&I achieving their net financing target too, and there was a conscious decision to increase rates on those last month while leaving the PB rate unadjusted.

As ever I am indebted to you for providing such meaningful facts. I had not remotely imagined that there would have been such an increase in NS&I deposits in recent months.