- Deposits in banks and building societies were up by £5.4 billion in May (source: Money and Credit – May 2026 | Bank of England)
- Cash ISAs played a significant role, up £3.1 billion in the month as the dash for Cash ISAs continues
- There was an extra £1.3 billion paid into fixed-rate accounts, while £2 billion was withdrawn from easy-access accounts paying interest and £0.3 billion from accounts paying no interest
- The average rate on new fixed accounts was 4.26%, up from 4.07% in April – but the average easy-access rate was unchanged at 1.65%
- Mortgage approvals for house purchases fell to 56,200, below the six-month average of 63,300
- The average rate on new mortgages rose from 4.08% in April to 4.22% in May
Sarah Coles, head of personal finance at AJ Bell, comments:
“The dash for Cash ISAs in May, on the back of a £12 billion boost in April, lays bare the unintended consequences of cutting the Cash ISA allowance. This tax year is the last chance for under 65s to pay in up to £20,000 before their allowance is cut to £12,000 from 6 April 2027. It means they’re filling their boots while they can. For a policy that was intended to encourage people to move away from cash and towards investing, this is hardly the result the government would have been hoping for.
“Cash plays a vital role in everyone’s lives, and anyone of working age typically needs enough to cover three to six months’ worth of essential spending in an easy access account – plus money for any planned one-off expenses in the next five years. However, beyond that, it’s worth considering if a Stocks and Shares ISA could be a better home for a portion of your portfolio. In the short term you may see the ups and downs of the stock market, but in the long run, it has a far better chance of beating inflation, so you can build a valuable nest egg.
“There was some account juggling during the month, with money coming out of easy access accounts. However, interestingly, savers were also moving into fixed rate accounts. Inflation expectations at the time, plus competition in this market, has nudged rates higher, while easy access rates stagnated. Savers are realising the benefits of fixing savings that they won’t need for a period in return for more interest.
“Savers tend to keep too much of their savings in easy access accounts, because it makes them feel comfortable to have it close at hand. However, this is a valuable reminder of the benefits of considering how much of your savings you’ll actually need to spend during the next year, and what you can tie up for longer, in order to make the most of your savings.
“Mortgage approvals dropped in May, as some of the enthusiasm from buyers in the early spring slowly seeped out of the market. At this stage, there was no end in sight for the Iran war, and inflation expectations had pushed mortgage rates higher through March and April. We will have to wait and see whether the peace agreement and more optimism emerging in June persuades buyers back to the market, or whether the recent turmoil has persuaded them that now isn’t the time to take a leap of faith in the property market.”
