The ISA sum comes after savers put in around £4.2bn in the tax-free accounts in May, and after a record net inflow of £12.3bn in April.
Households also put £2.1bn into easy access interest-bearing sight accounts, £1.5bn in fixed rate interest-bearing time accounts, while £600m was placed into non-interest-bearing sight accounts.
According to the Bank of England’s Money and Credit June 2024 statistics, the effective interest rate paid on new fixed account time deposits with banks and building societies was “broadly flat” at 4.44% in June.
However, the effective rate on the outstanding stock of time deposits rose by 4 basis points to 3.96%, while the effective easy access rate fell by three basis points to 2.11% in June.
Derek Sprawling, Paragon Bank savings managing director, said: “June was another strong month for cash ISA deposits, continuing a trend we have seen throughout this year as savers look to shield their interest from tax. Our analysis shows that the overwhelming majority of savings stock growth in 2024 is down to savers moving money into ISA accounts and we expect this to continue over the coming months.”
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Consumer credit borrowing
Net consumer credit borrowing dipped slightly in June to £1.2bn from £1.5bn in May.
Within this, net borrowing through credit cards fell slightly to £500m in June from £600m in May, while net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) also decreased, to £700m from £900m over the same period.
The Bank revealed that the growth rate for all consumer credit was 8% in June, down from 8.4% in May. The annual growth rate for credit card borrowing fell to 10.5% in June from 10.8% in May, while the annual growth rate for other forms of consumer credit also dipped to 7% in June, from 7.3% in May.
Further, the effective interest rates on interest-charging overdrafts fell by 23 basis points, to 22.35% in June. The effective rate on interest-bearing credit cards also fell, to 21.28% from 21.65% over the same period, a 37 basis point drop. However, the effective rate on new personal loans to individuals remained unchanged, at 8.93% over the same period.
Nick Winter, financial planner at Quilter, said: “Given the hardships many have faced in recent years, it is encouraging to see the tides appear to be turning and more people are now able to put more money into savings and are becoming less reliant on borrowing.”
Mortgage lending and debt
The statistics revealed that individuals borrowed (on net), £2.7bn of mortgage debt in June, nearly double the £1.3bn recorded in May.
Meanwhile, net mortgage approvals for house purchases – an indicator of future borrowing – “remained stable” at 60,000 in the month, while approvals for remortgaging decreased from 29,300 to 27,500.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a slight increase of three basis points, to 4.82% in June. Similarly, the rate on the outstanding stock of mortgages rose by four basis points to 3.65% in June, from 3.61% in May.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “The toxic combination of high inflation, high borrowing costs and falling real wages made it significantly harder for movers to secure the properties they wanted, causing some to shelve plans until lending conditions improved and others to downsize their aspirations.
“Those with existing mortgages also found themselves in trouble when their cheap fixed-rate loans ended, and they had to take on a new mortgage with significantly higher repayments. While inflation has now retreated and workers are now enjoying bumper wage increases, with most households managing to adjust their finances for the new borrowing reality, others have struggled as the weight of heavy repayments dealt a hefty blow to their household budgets.”
