In addition, interest rates on new Issues of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates for customers with maturing investments will be reduced by 25 basis points across all terms, the provider says.

A 1 year Guaranteed Growth Bond will pay 1.25% gross AER (down -0.25%) as of 2 September while a 5 year Guaranteed Growth Bond will pay 2% gross AER (down 0.25%). Rates for Guaranteed Income Bonds and Fixed Income Savings Certificates are slightly less.

NS&I, which serves 25m customers, says the changes are due to a number of factors including rates for competitor products declining as well as the measure that NS&I uses for raising cost-effective finance for the Government being lower than target, due to exceptionally low gilt yields.

Current holdings will be unchanged until they mature.

NS&I will contact holders of Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates at least 30 days before their investments reach the end of their term to explain their options.

Customers holding Guaranteed Growth Bonds, Guaranteed Income Bonds and Fixed Interest Savings Certificates and whose products mature on or before 5 October 2019 and who automatically renew into a new issue of the same term, will receive the previous, higher interest rate.  

However, any customers who choose to renew into a new issue but a term of a different length will receive the reduced rate effective from 2 September.