NS&I’s Big Shift Brings New Hope for Premium Bond Savers
So, there’s been a pretty significant update from NS&I, and if you hold Premium Bonds — or you’re thinking about getting some — this is one of those moments to tune in. A major change has just been announced, and it’s actually landing as a bit of good news after what’s felt like a tough year for Prize Fund rates.
Premium Bonds holders have watched the prize fund rate fall three times already in 2025, dropping to 3.6 percent after cuts in January, April, and again in August. Naturally, this left a lot of savers wondering if another reduction was around the corner. After all, the base interest rate has been sitting at 4 percent, and the wider savings market has been slowly drifting downward.
But now, NS&I has made a move that could steady the waters. The Government has increased NS&I’s net financing target for the 2025/26 tax year from £12 billion to £13 billion. This is important because that target influences the rates NS&I offers — and with a higher fundraising goal, the organisation is more motivated to keep the Premium Bonds prize fund rate attractive enough to draw in new money.
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So even though NS&I has only brought in £3.9 billion so far in the first half of the financial year, this bigger target signals that they want to stay competitive. Historically, the second half of the year tends to bring more customer activity anyway, so the timing lines up with their expectations.
To back this up, NS&I has already boosted some of its other products. Rates on British Savings Bonds were raised in July and again in November, which shows they’re gearing up to encourage more savers to come through the door. Their chief executive, Dax Harkins, even pointed out that their pricing strategy is now tied closely to meeting this revised target while keeping the market stable.
Financial experts are interpreting all this as a solid reason to believe the Premium Bonds prize rate might hold where it is for a while — even if other savings accounts begin to slip. With the cash ISA limit set to tighten from 2027 for most people under 65, competition in the savings market is expected to intensify, which could actually help Premium Bonds stay appealing.
Of course, nothing is guaranteed. A Bank of England rate cut is expected in December, and if that happens, banks will likely bring their savings deals down in 2026. That would put fresh pressure on NS&I. But for now, the need to attract more savers gives Premium Bonds a bit of protection.
Still, anyone holding Bonds is being reminded of a simple truth: in an average month, the average saver wins nothing. For some, that chance of a life-changing prize is worth it. For others, the reliability of a fixed-rate account or a strong cash ISA will feel much more comfortable.
Either way, this new £1 billion boost to NS&I’s financing target has shifted the outlook — and for once this year, the shift leans in Bondholders’ favour.
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