ISA contributions totalled £4.2bn in October, after £2.4bn was invested into ISAs by households in September, the Bank of England (BoE) has revealed.

The central bank’s latest Money and Credit report stated that overall, households increased their holdings of money into banks and building societies by £6.8bn in October, falling from £8.2bn in deposits in September.

The increase in ISA contributions has been attributed to speculation around ISA reforms ahead of the Autumn Budget, which was announced last week.

Although the yearly ISA contribution amount has remained at £20,000, the cash ISA limit has been cut to £12,000 from April 2027, while the additional £8,000 set to be exclusively used for stocks and shares ISA investments.

Personal finance analyst at Bestinvest, Alice Haine, said that while some changes were anticipated, some details were surprising.

She added: "The changes will make ISAs even more complex, but the Government claims its intent is to push more Britons towards investing – a move that may encourage a shift in savings behaviour for some but is unlikely to work across the board, particularly among the risk averse.

"Remember, these rules don’t take effect for almost 18 months, so savers have time to take full advantage of the current £20,000 cash ISA allowance. Expect subscriptions to tick up in the months ahead as people look to maximise the benefit while they can in the face of a rising tax burden, which is now on course to hit 38% of GDP by 2030.

"For the many people still parking cash savings in regular bank and building accounts alongside cash ISAs, it’s wise to act fast to secure the best deals."

The BoE’s report also revealed that net mortgage approvals for house purchases fell by 600 month-on-month to 65,000, while remortgage approvals dropped to 33,100, the lowest figure recorded since February.

Meanwhile, net borrowing of mortgage debt by individuals decreased to £4.3bn, after totalling £5.2bn in September.

Haine stated that easing in the mortgage market reflected early signs of strains in the buyer market.

She concluded: "Property tax fears ahead of the Budget had dented sentiment with some sellers accelerating deals to complete before the Chancellor delivered her fiscal statement, while others paused or abandoned plans altogether. The latest tax changes are expected to dampen demand further – particularly at the top of the end of the market – with estate agents bracing for collapsed deals and weaker buyer appetite.

"One silver lining for buyers is all these changes could subdue price growth, particularly at the higher end, improving affordability levels in pricier parts of the country, such as London and the South-East. Will we see more homes valued just under the £2m mark, for example, to escape that dreaded mansion tax?"

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