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Premium Bond Winner ?
Comments
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Yes, point taken about outflows being net, but I'm still unconvinced that these are as significant as is being portrayed, especially the way the Fail characterises it as "the new rate and odds represent a sharp U-turn from NS&I, which saw money flood out of Premium Bonds when it cut the rate in April".
There's obviously a difference between correlation and causation, and a rate increase after a small drop in holdings isn't necessarily because of that, hence the point about the new financial year's net financing target, which is generally a significant driver of rate changes rather than these being kneejerk (over-)reactions to withdrawals.
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Considering the government is having to pay north of 5% on gilts, getting money in at 3.8% must seem like a bargain!
NS&I put up some of their other rates as well - so their financing target may well have gone up.
They have a balancing act though, pay too much and it will drain money from other banks / lenders who need it to lend to customers.
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Yes, the net financing target was originally £12bn for 2025/26 but was upped to £13bn in the autumn budget and set to £15bn for 2026/27 - in each case it's +/- £4bn so there's quite a bit of margin, but they don't want to overshoot (or undershoot) so rates can be shifted in either direction if the projected variance from target is outside of tolerances.
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You always give a great insight thanks.😁
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So a drop of £100m in one month in PBs is definitely significant, not so much the drop itself but that it's not making a contribution to the NFT they've been set. 3.8% is a good rate compared to easy access savings accounts from mainstream banks, especially considering PB winnings are tax free for everyone, so as MSE and the DM imply they're clearly worried about not hitting their targets.
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I think it's effectively two sides of the same coin - my point is that they'll be tweaking rates because of the new NFT (which is what NS&I say too) but I can see the argument that a small PB holdings drop in the first month is perhaps also a contributory factor to the size of the rate increase. Obviously £100m is indeed more significant relative to £12bn than it is to £137bn, but conversely there are plenty of other NS&I products contributing to the NFT…
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Oh, when will NS&I raise the £50,000 limit? That would address the NFT issue.
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If cash ISAs are anything to go by they will probably reduce it to £30k.
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or Rach from Accounts will make winnings taxable !
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Don't give them ideas
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