Brits paid £3.8bn into cash ISAs in July, taking the total for the tax year to £23.7bn, which is a 22% increase on the same period last year.

The latest Bank of England (BoE) money and credit report for July found that these ISA savings, and an additional £3.3bn in interest-paying easy access savings accounts, meant that overall deposits in banks and building societies increased by £5.7bn in July.

This is despite £500m being withdrawn from fixed rate savings and £1.4bn from easy access accounts paying not interest.

In this time, the average rate on a fixed account fell slightly to 4.42% and the average easy access rate rose slightly to 2.14%.

Head of active savings at Hargreaves Lansdown, Mark Hicks, said: "Tax is on everyone’s mind as the Budget lurks around the corner, and savers are snapping up cash ISAs to escape an unnecessary tax bill on their savings. We’re highly likely to see more of the same as the 30 October approaches, and with cash ISA rates so competitive, savers don’t have to pay a price for this protection.

"The tax threat to our savings is key. Cash ISAs remain incredibly popular, and given all the warnings of the tax pain to come in the Budget, clients are prioritising tax wrappers. Our newer data shows this trend is likely to continue over the next few months as we get closer to the Budget announcement."

The latest BoE data also revealed that in July, mortgage approvals for house purchases increased to 62,000, the highest figure since September 2022. By contrast, approvals for remortgaging fell to 25,100.

Furthermore, individuals borrowed, on net, £2.8bn in mortgage debt, which is the highest level seen since November 2022.

Head of personal finance at Hargreaves Lansdown, Sarah Coles, added: "The return of mortgage approvals bodes well for autumn in the property market. These figures came ahead of the BoE rate cut, and at a time when average mortgage rates were largely unchanged.

"Since then, we have had the psychological boost of a BoE rate cut, and seen mortgage deals inch down, which may well have strengthened the resolve of buyers."

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