Overview
These monthly statistics on the amount of, and interest rates on, borrowing and deposits by households and businesses are used by the Bank’s policy committees to understand economic trends and developments in the UK banking system.
Key points:
- Individuals borrowed, on net, £2.7 billion of mortgage debt in June, up from £1.3 billion in May.
- Net mortgage approvals for house purchases remained broadly stable at 60,000 in June, while approvals for remortgaging decreased from 29,300 to 27,500 over the same period.
- Net consumer credit borrowing dipped slightly in June to £1.2 billion, from £1.5 billion in May.
- Private non-financial corporations (PNFCs) raised, on net, £6.7 billion of finance in June, an increase from £4.2 billion in May. This was driven by £4.0 billion of net bond issuance and £3.6 billion of loans by banks and building societies.
- The net flow of sterling money (known as M4ex) amounted to £4.1 billion in June, up from £3.4 billion in May. This was largely driven by households’ holdings of money, which saw an increase of £8.4 billion in June, compared to a £6.5 billion increase in May. Within this, households deposited an additional £3.4 billion into ISAs. The M4ex growth was partially offset by decreased holdings of money by PNFCs and NIOFCs, of £1.8 billion and £2.4 billion respectively.
- The flow of sterling net lending to private sector companies and households (M4Lex) increased to £3.7 billion in June, from £0.3 billion in May. This was driven by an increase in the flow of net lending to households to £2.3 billion in June, from £1.7 billion in May, as well as an increase in the flow of net lending to non-intermediate other financial corporations (NIOFCs), to £1.2 billion in June from -£1.8 billion in May. The flow of lending to PNFCs decreased to £0.2 billion from £0.5 billion over the same period.
References in the text point to the summary tables below. For further statistics, please see our visual summaries, Effective Rates (ER) statistical release, Capital Issuance statistical release, and Bankstats tables.
Lending to and deposits from individuals
Mortgage lending (M&C Tables D and E):
Net borrowing of mortgage debt by individuals increased to £2.7 billion in June from £1.3 billion in May. The annual growth rate for net mortgage lending rose to 0.5% in June, after a rise to 0.3% in May, continuing the trend seen in previous months. Gross lending decreased to £20.8 billion in June, from £22.6 billion in May, while gross repayments decreased by £1.6 billion over the same period, to £18.7 billion.
Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, remained broadly stable at 60,000 in June. Approvals for remortgaging (which only capture remortgaging with a different lender) decreased to 27,500 in June, from 29,300 in May (Chart 1).
Chart 1: Mortgage approvals
Seasonally adjusted
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a slight increase of 3 basis points, to 4.82% in June. Similarly, the rate on the outstanding stock of mortgages rose by 4 basis points to 3.65% in June, from 3.61% in May.
Consumer credit (M&C Tables B and C):
Net consumer credit borrowing dipped slightly in June to £1.2 billion, from £1.5 billion in May (Chart 2). Within this, net borrowing through credit cards fell slightly to £0.5 billion in June from £0.6 billion in May, while net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) also decreased, to £0.7 billion from £0.9 billion over the same period.
The annual growth rate for all consumer credit was 8.0% in June, down from 8.4% in May. The annual growth rate for credit card borrowing fell to 10.5% in June from 10.8% in May, while the annual growth rate for other forms of consumer credit also dipped, to 7.0% in June from 7.3% in May.
Chart 2: Consumer credit
Seasonally adjusted
The effective interest rates on interest-charging overdrafts fell by 23 basis points, to 22.35% in June. The effective rate on interest bearing credit cards also fell, to 21.28% from 21.65% over the same period, a 37 basis point drop. However, the effective rate on new personal loans to individuals remained unchanged, at 8.93% over the same period.
Households’ deposits (M&C Table J):
Household deposits with banks and building societies rose by £8.4 billion in June. This was driven by households depositing an additional £3.4 billion into ISAs. Households also deposited into interest-bearing sight, interest-bearing time and non-interest bearing sight accounts, £2.1 billion, £1.5 billion and £0.6 billion respectively. (Chart 3).
Chart 3: Breakdown of households’ deposits (Household M4)
Seasonally adjusted net flow
The effective interest rate paid on individuals’ new time deposits with banks and building societies was broadly flat at 4.44% in June. The effective rate on the outstanding stock of time deposits rose by 4 basis points to 3.96%, while the effective rate on stock sight deposits fell by 3 basis points, to 2.11% in June.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
During June, UK non-financial businesses (private non-financial companies (PNFCs) and public corporations) borrowed, on net, £1.9 billion of bank and building society loans (including overdrafts), compared to £0.1 billion in May. Within this measure, net borrowing by large non-financial businesses increased to £2.7 billion in June, from £1.0 billion in May. Net repayments by small and medium-sized non-financial businesses (SMEs) were unchanged between May and June, at £0.8 billion.
The annual growth rate of borrowing by large businesses bounced back, to 2.5% in June from -0.3% in May. The annual growth rate of borrowing by SMEs also increased, to -4.3% in June from -4.6% in the previous month (Chart 4).
Chart 4: Annual growth of lending to SMEs and large businesses
Seasonally adjusted
The average cost of new borrowing from banks by UK PNFCs was 6.85% in June, a 33 basis point decrease from 7.18% in May. Over the same period, the effective interest rate on new loans to SMEs was 7.53%, a 29 basis point decrease from 7.82%.
Net Finance Raised (M&C Table F):
PNFCs raised, on net, £6.7 billion of finance in June, an increase from £4.2 billion in May. This was driven by £4.0 billion of net bond issuance and £3.6 billion of loans by banks and building societies. This was partially offset by £1.2 billion of equity buybacks. PNFCs also issued, on net, £0.5 billion of commercial paper in June, an increase from £0.2 billion in May. (Chart 5).
Chart 5: Net finance raised by PNFCs
Seasonally adjusted net flow
Businesses’ deposits:
During June, UK non-financial businesses deposited £8.3 billion with banks and building societies in all currencies, a decrease from £9.2 billion in May. The effective rate on new time deposits from PNFCs was unchanged at 4.60% between May and June. The effective rate on stock sight deposits also remained unchanged, at 2.72% over the same period.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The net flow of sterling money (known as M4ex) amounted to £4.1 billion in June, up from £3.4 billion in May. The net flow of M4ex was largely driven by households’ holdings of money, which increased to £8.4 billion in June, compared to a £6.5 billion increase in May. NIOFCs decreased their holdings of money by £2.4 billion in June, while PNFCs also decreased their holdings of money, by £1.8 billion over the same period.
The flow of sterling net lending to private sector companies and households (M4Lex) increased to £3.7 billion in June, from £0.3 billion in May. This was driven by an increase in the flow of net lending to households to £2.3 billion in June, from £1.7 billion in May, as well as an increase in the flow of net lending to NIOFCs, to £1.2 billion in June from -£1.8 billion in May. In contrast, the flow of lending to PNFCs decreased to £0.2 billion from £0.5 billion over the same period.
Queries
If you have any comments or queries about this release, please email DSD_MS@bankofengland.co.uk.
Next release date: 30 August 2024
