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Brits saved another £18.5bn in January

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Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 min read
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Bonn, Germany - February 03: Five-year old girl puts money in a money box on February 03, 2018 in Bonn, Germany. (Photo Illustration by Ute Grabowsky/Photothek via Getty Images)
A little girl puts money in a money box. Photo: Ute Grabowsky/Photothek via Getty Images

Britain's savings glut continues, according to new data.

Brits paid down debt and contributed more to savings in January, the Bank of England said on Monday, extending the savings spree that began last year after the COVID-19 crisis hit.

£18.5bn ($26bn) was put into consumer deposits at the start of 2021, the Bank of England said. January's savings figure is almost four times the average monthly deposit figure prior to the pandemic.

"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 Bank of England said.

NS&I, the state-owned investment company, cut payout rates and savings awards last year which led to a surge of withdrawals.

READ MORE: COVID-19 shutdowns created 6 million 'accidental savers' in UK

Alongside saving, Brits paid off £2.4bn in debt in January. It was the largest monthly net repayment since May last year.

Both data points extend trends that began in 2020. Lockdown and state support programmes like furlough left people with spare cash that they put into savings. At the same time, people used the financial headroom to pay off debts. Britain returned to lockdown at the start of January.

The Bank of England said credit conditions elsewhere in the market broadly remained unchanged. Mortgage approvals fell slightly to 99,000 but remained well above average. Banks lent £5.2bn secured against properties in January.

Property market activity has surged thanks to a temporary stamp duty holiday announced last year and set to run until March. Chancellor Rishi Sunak will reportedly announce an extension of the holiday until June in this Wednesday's budget.

"Activity is far higher than normal levels and this has no doubt been driven by the current stamp duty holiday," Islay Robinson, chief executive of Enness Global Mortgages said. "Homebuyers are shrugging off any fears of a pandemic property decline in their rush to secure a stamp duty free purchase."

WATCH: Should I pay off debt or save money?