Cash ISA Allowance Cut May Hit Mortgages, Savings

Chancellor Rachel Reeves is expected to announce a substantial reduction in the annual tax-free Cash ISA allowance, potentially lowering it from £20,000 to as little as £4,000 or £5,000, during her Mansion House speech on July 15. The proposed change, driven by efforts to stimulate stock market investment, has prompted warnings from major building societies that it could increase mortgage costs and limit access to home loans, as these institutions depend on Cash ISA deposits for funding. Industry experts caution that the reform may undermine savings incentives and destabilize the mortgage market, potentially jeopardizing the government's goal of building 1.5 million homes by 2029. Reeves has pledged not to cut the overall ISA limit, but the specific cap for Cash ISAs remains at risk. The move affects 12.4 million adults currently holding Cash ISAs, sparking widespread concern. Financial advisers recommend that savers use their full £20,000 allowance before any changes are implemented.