National Savings and Investments lowers interest on savings bonds

25 November 2004
The interest paid on National Savings and Investments fixed rate savings bonds has been lowered.

The reduction was blamed on declining yields in the bond market.

"Since the summer, the downward trend on gilts [state-backed bonds] has continued and while we have tried to keep our fixed rates as they were, further falls in November have demanded that we make these changes," said National Savings and Investments sales director John Prout.

"This trend has meant that many of our competitors have also had to reduce rates over the past two to three months and the rates offered in the summer are unlikely to return in the immediate future."

Between June and November this year yields in the gilt market have dropped by between 0.54 per cent and 0.67 per cent

National Savings and Investments points out that it has kept interest rates high since August, but after other banks - including Halifax, Abbey, Lloyds TSB, Woolwich, Nat West, Barclays, Royal Bank of Scotland and Birmingham Midshires - it too lowered the interest it pays on fixed rate products.

But Mr Prout reassured savers that, should things change, there would be a rosier future for investors.

"We always price our offers fairly and consistently in line with movements in the market and, if gilt yields rise again, we would aim to increase our fixed rates," he added.

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