The Premium Bonds prize fund rate could potentially be in line for a boost after the National Savings and Investments (NS&I) fundraising target was hiked in the Budget.
The government-backed savings provider now has a net financing target of £13 billion for the 2025/26 financial year, within a plus or minus range of £4 billion.
Its previous target for the same financial year was £12 billion – £1 billion less.
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It means NS&I could raise as much as £17 billion from savings products without breaking its financial target.
NS&I has raised just £3.9 billion in the first half of this financial year, meaning it’s more than £9 billion away from hitting the target.
Mark Hicks, head of active savings at investment platform Hargreaves Lansdown, said the prize rate may “hold steady”, despite savings rates falling more widely.
Laura Suter, director of personal finance at AJ Bell, echoed this, adding: “The uplift to NS&I’s net-financing target is a clear sign that the government needs more money from savers this year, and that usually puts NS&I under pressure to increase its rates.
“When the funding target rises, NS&I tends to respond in the only way it really can: by making its products more appealing.”
Could falling interest rates lead to the Premium Bonds prize rate falling?
Interest rates could fall over the coming months and into 2026, meaning any hopes of an increase to the Premium Bonds prize rate will likely be short-lived.
The Bank of England believes inflation has peaked this year, and should fall back towards its 2% target over the next year or so, leading it to lower interest rates.
Hicks said: “Given the fact a Bank of England rate cut is expected in December, and rates are expected to trend downwards from here, we may see banks lower their savings deals in 2026, so there will be pressure on the prize rate to fall.
“We will need to wait and see whether the need for fundraising trumps this in the coming months.”
Dax Harkins, NS&I chief executive, said: “We are pleased to be able to support a further increase of £1 billion, taking the target to £13 billion.
“Our pricing is designed to meet this revised target and maintain market stability, and we expect our performance to continue steadily through the second half of the financial year.”
Are Premium Bonds worth it?
Premium Bonds offer savers the chance of winning tax-free cash in the monthly draw. There are no guaranteed returns, though.
Some people also like knowing their savings are being given to the government and invested in the UK.
That said, the chances of winning the monthly prize are relatively slim.
The odds of winning are currently 22,000 to one for every £1 Bond in the monthly prize draw.
Recent research from AJ Bell found almost two-thirds (63%) of Premium Bond holders have never won a prize.
Meanwhile, you might prefer to hold your money in a savings account which pays regular interest rather than relying on one with no guarantee of a return.