Huge Increase In Deposits By Households

1st March 2021

Bank of England report published today (1 March 2021) shows big rise in household savings.

Households' deposits.

Households' flows into deposit-like accounts remained strong in January. The net flow of deposits remained strong at £18.5 billion, compared to the monthly average of £4.8 billion in the six months to February 2020. Some of this strength may reflect £3.5 billion of withdrawals from National Savings and Investment (NS&I) accounts in January, which are not captured within household deposits but can act as a substitute for them. The combined flow into both deposits and NS&I accounts in January (£15.0 billion) remained well above the monthly average of £5.6 billion in the six months to February 2020, however.

The effective interest rate paid on individuals’ new time deposits with banks remains at 0.42%, the lowest since the series began in 2016. The effective rates on the outstanding stock of both sight and time deposits were broadly flat, at 0.12% and 0.49%, respectively. The rate on the stock of sight deposits remains the lowest since the series began, and 34 basis points lower than in January 2020.