UK savers pour record amount into ISAs, Bank of England data shows

UK savers poured a record amount into ISAs in April, with £11.7 billion poured into the savings accounts, figures published by the Bank of England today show.

The figure was the highest since records began in April 1999. While April is often a popular month for ISA investing because it’s the first month after the tax threshold for investments resets, this year’s figure was much higher than any previous April. It was up by almost 30% compared to April 2023, and the highest figure for any month since records began in April 1999.

The ISA surge almost single handedly meant that overall household deposits in interest-bearing accounts rose by about 250% to its highest since September 2022.

BestInvest personal finance analyst Alice Haine said: “Savers took advantage of their £20,000 ISA allowance in April, with most of the deposits are likely to have happened in the run-up to the end of the tax year at midnight on April 5, as savers rushed to beat the deadline before their allowance for the 2023-24 tax year expired. 

“Savers are increasingly at risk of paying tax on their savings interest, due to the freeze in the personal savings allowance. This has remained the same for eight years and is therefore more easily exceeded by the significantly higher bank and building society savings rates of late. It means savers are liable for tax charges at much lower levels of deposits, which is why ISAs are a more tax-efficient option for savings as adults can save or invest up to £20,000 with all income and gains protected from the ravages of tax.”

Elsewhere, mortgage approvals in the UK were steady in April, at 61,100, figures from the Bank of England show, in a sign the market is stabilising but at a level well below the pre-pandemic housing market.

The figure was almost exactly flat when compared to March, but lower than in most of the 2010s.

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages increased was also close to flat at 4.74% in April. The rate on the total stock of mortgages, including existing ones, increased by 7 basis points, to 3.57%.

Craig Fish, director at Beckton-based mortgage broker Lodestone, told industry news portal Newspage: “Mortgage enquiries have been ambling along at a fairly consistent level, mainly coming from first-time buyers and home movers. But the enquiries are often not evolving beyond that stage due to the uncertainty around interest rates, specifically when the base rate will be cut. That’s likely causing the no-change scenario in approvals for house purchase.”