NTMA Cut State Savings Prize Bond Rate Significantly

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The NTMA have announced a rate change on their State Savings Prize Bond product.

The new 'rate' (total prize payouts as a percentage) is 0.50% variable (Previously 0.85%) effective 1 August 2017. The prizes haven been cut as a consequence.

No change to other State Savings products.

Unusual to see the NTMA make rate changes mid week, the NTMA normally make changes on the Sunday of a bank holiday weekend. Granted, they are not changing fixed rates this time.
 
Do you think the rate change will slow down the growth in the prize bond fund ??
 
I have noticed a fall off in the number of "wins" in the past year. I guess this will get worse now. It may be time to cash in and place the funds in one of the other State Savings Products.
 
Interesting -watch out for cuts on August bank holiday with Savings rates I would hazard a guess.
 
One thing to remember while the interest rate obviously has an effect on the prize fund and the win rate for bond holders, the amount of bonds in each draw also affects the number of wins you could expect
At the end of Oct 2011 there were aprox 213 million bonds chasing 7688 weekly prizes, Now if the interest cut was applied to this weeks draw it would be 491 million bonds chasing 3892 prizes
 
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I am an advocate for pb's but after this the game is up, it just might be time to look at that villa somewhere sunny.
 
12 couples came together some years back and bought a mansion in South Africa in a super area, they effectively timeshared it for years amongst themselves sharing costs so Cervelo my friend count yourself in, lets club together, we now have two, anyone else for a carribbean island...
 
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Palerider said:
I am an advocate for pb's but after this the game is up, it just might be time to look at that villa somewhere sunny.
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It's funny but the exact same thought has been playing on my mind for some time now. I even went looking on line at some prices in locations that I like. Also looking at "A place in the sun" type programmes has really got me thinking. Yesterday they did Tavira in Portugal. A place that I visited last April and loved. Count me in.
 
I have done the calcs. The annual prize fund is now approx €15.5m. After deducting the larger prizes there is about €10m distributed in €50 amounts. That's about .30% tax free. For a joint max holding of €500k that's €1,500 or 30 prizes per year. I think you can be reasonably sure of between 20 and 40 prizes per year.

Hardly worth the effort of getting into them but also hardly worth the effort of getting out if you are already in.

And I suppose there is always the slight chance of getting some of the .20% paid in large prizes.
 
theresa1 said:
watch out for cuts on August bank holiday with Savings rates I would hazard a guess.
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Yeah, possibly. Normally the NTMA change all State Savings rates at the same time. Maybe the NTMA wanted the prize bond rate changed before August and the others will wait till the bank holiday. Either that or the NTMA have chosen to only change the prize bond rate.
 
If you where to look at the Prize bond fund as an Interest only loan to the state, what rate should they be paying ??
 
Cervelo said:
If you where to look at the Prize bond fund as an Interest only loan to the state, what rate should they be paying ??
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The nearest term Irish government Bond matures in October and is yielding -50bp. Yes that's right. You would need to pay the Irish government .5% p.a. to keep your money safe, or at least as safe as the Irish government. So in a sense NTMA are paying about 1% over the odds for Prize Bonds.
 
So in a sense the 7 million+ bond holders should be paying the goverment €15.5 million a year for the privilege of holding Prize bonds while all other NTMA state saving products pay interest + capital
 
Duke of Marmalade said:
So in a sense NTMA are paying about 1% over the odds for Prize Bonds.
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Plus the admin costs are much higher on State Savings products than sovereign debt. It all begs the question as to why the NTMA are overpaying. The motivation is probably to ensure a larger base of domestic holders of sovereign debt and lessen reliance on foreign holders.
 
CiaranT said:
Yeah, possibly. Normally the NTMA change all State Savings rates at the same time. Maybe the NTMA wanted the prize bond rate changed before August and the others will wait till the bank holiday. Either that or the NTMA have chosen to only change the prize bond rate.
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I was in the post office today and note that new application forms/ brochures have been issued for Saving Bonds/ Certs and Solidarity Bonds, dated 1 August 2017. The ultimate rates are unchanged (1%, 5%, 2% and 16% respectively). The intermediate rates match those on their website, which says that the terms and conditions document has only been updated for the prize bond changes. It does look like the 2 year rate for Saving Certs which I checked this morning at 0.55% has been reduced to 0.5%. I don't know of others were also changed.

Would the NTMA go to the trouble of printing new paperwork and issuing it this week if they were going to change the rates at the weekend?
 
Thanks for the info paper-folder. Did you check if the issue number is changed e.g. saving certs were on issue # 22.
 
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Not sure what they were before, but today's leaflets have the following:
Savings Bonds are Issue 17
Savings Certs are Issue 22
National Solidarity Bonds are Issue 6 (both 4 and 10 year)
 
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