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Interest rates on some State savings products to rise
The interest rates on a range of medium to long-term State savings products are to increase, on foot of several hikes of European Central Bank interest rates since last July.
New issues of State Savings Fixed Rate, Savings Certificates, Instalment Savings and 10 Year National Solidarity Bond products are to take place.
Shorter term products with variable rates will remain unchanged.
“The rate increases today are focused on providing an increased return for savers on medium to long-term product offerings,” said the National Treasury Management Agency (NTMA), which manages State saving products.
“The NTMA constantly review rates to ensure that products remain competitive in the savings market generally, whilst providing good value to the Exchequer in terms of borrowing costs.”
The changes will mean a 10-year National Solidarity Savings Bond will yield a total return of 16%, versus the previous 10%.
While 6-year Instalment Savings will provide a total return of 5.5%, up from 3.5%.
The total return on 5-year Savings Certificates will increase from 3% to 5%.
It is the first time in 16 years that rates on the products have increased, with the last rise taking place in August 2007.
Since then the rates have been cut seven times, with the last cut coming in January of 2021.
In the interim period, the amount of money invested in State savings products has increased by around €2 billion to €24.8 billion.
“Over the last 2 years we have seen greater demand for our variable rate products – Prize Bonds and the Post Office Savings Bank compared to our fixed-term fixed-rate products,” said the NTMA.
“In 2022, for example, Prize Bond and POSB increased by €600m, whilst fixed-term products increased by €100m.”
Money placed in State Savings is guaranteed as it is placed directly with the Government and forms part of the national debt, managed by the NTMA.
Savings providers are coming under increasing pressure to pass on the ECB rate increases to depositors and savers in the same way as lenders are to borrowers.
Article Source: Interest rates on some State savings products to rise – Will Goodbody – RTE
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