- Households paid £4.7 billion into savings accounts in August – up from £3.8 billion in July (source: Money and Credit – August 2026 | Bank of England)
- Cash ISAs saw £4.4 billion in deposits, £0.3 billion went into fixed rate accounts, and £0.3 billion into easy-access accounts paying no interest
- Meanwhile, £1.6 billion was withdrawn from easy-access accounts paying interest
- Mortgage approvals for house purchases fell from 56,100 in July to 54,900 in August – well below an average of around 60,100 over the previous six months
- The average rate on new mortgages increased from 4.45% in July to 4.6% in August
Sarah Coles, head of personal finance at AJ Bell, comments:
“The mortgage market dried up in the summer heatwave, as mortgage rates heated up and buyers worried about getting their fingers burned. Meanwhile, higher savings rates tempted us to squirrel a little more money away than in July, especially in ISAs.
“Cash ISAs had their best month since April, with £4.4 billion more paid into these accounts. But we can expect this trend to gather even more speed as we get closer to the end of the tax year and the prospect of the shrinking allowance for those under the age of 65 galvanises people into action.
“Fixed rates were popular, partly because rates got more attractive, and they’ve continued to climb since. At the moment, if you’re able to tie your money up for a year, you can make 5.1% in the most competitive accounts and if you don’t need it for three years you can get an account paying 5.18% (according to Moneyfacts). Meanwhile the average rate for easy-access accounts was stuck at 1.65%, while the best on the market (excluding limited access accounts and those with a bonus that lasts less than a year) offers 4.55%.
“If you’re considering fixing some of your savings, or you have emergency savings sitting in an easy-access account paying a miserable rate of interest and want to shift to somewhere more rewarding, shopping around is key. Savers should aim to look beyond the high street, checking online banks and cash savings hubs for the best deals.
Mortgage approvals dry up
“The mortgage misery we’re feeling right now kicked off in early August, with the first rate rises since April. The U-turn was sparked by escalating concerns over continued conflict in the Middle East, and the impact of higher oil prices for longer. More inflation started to be priced into the markets, so bond prices fell and yields rose. Bond yields power the swaps market, where mortgage rates are set, so this started to push fixed rates higher. The pain hasn’t eased since.
“Fewer mortgage approvals are likely to feed through into sluggish sales. For keen first-time buyers, this puts you in a strong position to negotiate, especially given that house price growth is so minimal right now. It’s easy to rush in when you fall for a property, but it’s worth taking your time, making sure you have made as much use of your Lifetime ISA bonus as you can, and pushing for the best possible deal. The future of house prices is uncertain, so the harder you work now, the better protected you will be if the market stutters.”
