ISA deposits hit record, says Bank of England | Business News

The amount of money deposited into ISAs has reached a record high, according to new official figures.

Households put an additional £11.7 billion into savings accounts last month – the highest figure since records began in April 1999, the bank of england he said.

This comes amid the highest interest rates in 16 years, which have been maintained at 5.25% since August.

However, the Bank stated that the “effective” interest rate – the interest actually paid – on new deposits with banks and credit companies increased by 3 basis points, to 4.40% in April.

The “effective” interest rate on newly contracted mortgages was 4.74%, according to data released on Friday.

Authorities said mortgage approvals fell slightly to 61,100 – below the 61,300 recorded in March, which had been the highest level since September 2022, amid signs of increased property market activity.

This came after mortgage rates rose slightly in April as some lenders eased expectations of when the Bank would make its next cut. interest rate.

Approvals for remortgaging also declined to 29,900 for the month, from 33,500 in March.

However, there was an increase in net mortgage debt in the month. The Bank reported net mortgage debt of £2.4 billion in April, up from £0.5 billion the previous month.

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Meanwhile, consumer credit fell from £1.4 billion to £0.7 billion in April as households spent less on credit cards.

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Inflation fell to 2.3% in April – the lowest level in almost three years.

Karim Haji, head of financial services at KPMG, said the latest figures “showed that many families still feel unable to struggle”.

He added: “We continue to see reports that default rates on credit cards and unsecured loans have increased in recent months. This suggests we still have a way to go before lending markets normalize.

“Lenders should remain cautious about the financial situation of customers when looking to borrow – especially as the cost of borrowing does not look set to decrease any time soon.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Mortgage approvals for new purchases were broadly consistent with the previous month, perhaps reflecting rising mortgage rates, which may have raised concerns from borrowers in in relation to accessibility and trust”.

Separate figures from across the country on Friday said month by month house prices increased 0.4% in May.

The building society’s chief economist Robert Gardner said the market appears to be showing “signs of resilience in the face of continued affordability pressures”.