February rise in mortgage approvals is ‘snapshot of what could have been’

Charlene Young, senior pensions and savings expert at AJ Bell, said: “Tax year end often means a rush to use allowances, but savers still ploughed an extra £4.6 billion into Cash ISAs in February.

“Flows for the month were nearly 30 per cent higher compared to February 2025, despite expectations at the time that we would see a cut to the Bank of England base rate in March.

“We now know under 65s will be restricted to £12,000 per tax year for their Cash ISA savings from April next year, as part of the government’s campaign to drive a culture of retail investing in the UK.

“But there is a danger this continued flight to cash will lead to savers losing out when it comes to real returns.

“The average annual Cash ISA interest rate in February was 1.9 per cent (including unconditional bonuses), and non-ISA accounts were only offering an average of 2.12 per cent, providing little compensation for the lack of protection from tax.

“Last week’s inflation figures showed prices rose by three per cent in the year to February, before the impact of the shock to oil and energy prices following the eruption of conflict in the Middle East has even begun to filter through to households.

“On the lending side, net mortgage approvals for house purchases increased to 62,600 and approvals for remortgaging to 41,200, up from 60,200 and 38,500 in January respectively.

“But the Iran war has flipped interest rate expectations on their head, and swap rates – which underpin fixed rate mortgage deals – have surged.

“So far in March lenders have either hiked rates or pulled deals, with first-time buyers amongst the hardest hit.”