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, £1.2 billion of mortgage debt in May, down from £2.2 billion in April.
- Net mortgage approvals for house purchases fell from 60,800 in April to 60,000 in May, while approvals for remortgaging decreased slightly from 29,900 to 29,600 over the same period.
- Net consumer credit borrowing bounced back in May to £1.5 billion, after a fall in April of £0.6 billion to £0.8 billion.
- Private non-financial corporations (PNFCs) raised, on net, £3.9 billion of finance in May. This was driven by PNFCs issuing a net £4.9 billion of equity. This was the first positive net equity issuance since September 2021 (£0.9 billion) and the highest since June 2009 (£9.6 billion).
- The net flow of sterling money (known as M4ex) amounted to £2.6 billion in May. This was largely driven by households’ holdings of money, which saw an increase of £5.3 billion during this period. Within households’ holdings of money, households deposited an additional £4.2 billion into ISAs, following a record net inflow of £12.3 billion in April (the series began in 1999).
- The flow of sterling net lending to private sector companies and households (M4Lex) was -£0.1 billion in May, down from £1.3 billion in April. This was largely driven by decreases in the flow of net lending to non-intermediate other financial corporations (NIOFCs) and the flow of net lending to households of -£1.8 billion and £1.3 billion respectively, compared to -£1.0 billion and £1.8 billion in April.
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 decreased from £2.2 billion in April to £1.2 billion in May. The annual growth rate for net mortgage lending rose to 0.3% in May, after a rise to 0.2% in April (the first such rise in the growth rate since October 2022). Gross lending increased for the fourth consecutive month to £22.2 billion in May, up from £21.1 billion in April, while gross repayments saw an increase of £1.2 billion over the same period to £20.5 billion.
Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, amounted to 60,000 in May, down from 60,800 in April. Approvals for remortgaging (which only capture remortgaging with a different lender) also saw a slight decrease, from 29,900 in April to 29,600 in May (Chart 1).
Chart 1: Mortgage approvals
Seasonally adjusted
Footnotes
- The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a slight increase of 5 basis points to 4.79% in May. Similarly, the rate on the outstanding stock of mortgages rose by 4 basis points, from 3.57% in April to 3.61% in May.
Consumer credit (M&C Tables B and C):
Net consumer credit borrowing bounced back in May to £1.5 billion, from £0.8 billion in April (Chart 2). Within this, net borrowing through credit cards rose from £0.2 billion in April to £0.6 billion in May, while net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) increased from £0.6 billion to £0.9 billion over the same period.
The annual growth rate for all consumer credit was 8.3% in May, up from 8.1% in April. The annual growth rate for credit card borrowing was unchanged at 10.8%, while the annual growth rate for other forms of consumer credit rose from 6.9% in April to 7.3% in May.
Chart 2: Consumer credit
Seasonally adjusted
The effective interest rates on interest-charging overdrafts fell by 18 basis points, to 22.58% in May. Similarly, the effective rate on new personal loans to individuals decreased by 8 basis points and now sits at 8.93%, while the effective rate on interest bearing credit cards rose by 19 basis points, from 21.46% in April to 21.65% in May.
Households’ deposits (M&C Table J):
Household deposits with banks and building societies rose by £5.3 billion in May. This was driven by households depositing an additional £4.2 billion into ISAs, following a record net inflow of £12.3 billion in April (the series began in 1999). These were partly offset by net withdrawals of interest-bearing sight, interest-bearing time and non-interest bearing sight deposits of £1.7 billion, £0.5 billion and £0.3 billion respectively (Chart 3).
Chart 3: Breakdown of households’ deposits (Household M4)
Seasonally adjusted net flow
Footnotes
- The effective interest rate paid on individuals’ new time deposits with banks and building societies was 4.43% in May, up from 4.40% in April. The effective rate on the outstanding stock of time deposits and the effective rate on stock sight deposits rose by 4 and 2 basis points respectively, to 3.92% and 2.14% in May.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
During May, UK non-financial businesses (PNFCs and public corporations) repaid, on net, £0.5 billion of bank and building society loans (including overdrafts), compared to £1.1 billion of net repayments in April. Within this measure, net borrowing by large non-financial businesses increased to £0.3 billion in May, compared to £0.3 billion of net repayments in April. Net repayments by small and medium-sized non-financial businesses (SMEs) were unchanged between April and May, at £0.8 billion.
The annual growth rate of borrowing by large businesses fell for the third consecutive month, from -0.3% in April to -0.4% in May. By contrast, the annual growth rate of borrowing by SMEs increased slightly to -4.6% in May, from -4.7% in the previous month (Chart 4).
Chart 4: Annual growth of lending to SMEs and large businesses
Seasonally adjusted
Footnotes
- The average cost of new borrowing from banks by UK PNFCs was 7.18% in May, a 21 basis point increase from 6.97% in April. Over the same period, the effective interest rate on new loans to SMEs rose by 23 basis points to 7.82%.
Net Finance Raised (M&C Table F):
Private non-financial corporations (PNFCs) raised, on net, £3.9 billion of finance in May, following net repayments of £3.1 billion in April. This was driven by £4.9 billion of net equity issuance in May, the first positive net equity issuance since September 2021 (£0.9 billion) and the highest since June 2009 (£9.6 billion). PNFCs also issued, on net, £0.2 billion of commercial paper in May, little changed from £0.3 billion in April. Net bond redemptions amounted to £1.3 billion in May, compared to £0.3 billion of net issuance in April (Chart 5).
Chart 5: Net finance raised by PNFCs
Seasonally adjusted net flow
Businesses’ deposits:
During May, UK non-financial businesses deposited £9.0 billion with banks and building societies in all currencies, following net withdrawals of £2.8 billion in April. This was the highest net inflow since May 2023 (£10.1 billion). The effective rate on new time deposits from PNFCs was unchanged at 4.60% between April and May, while the effective rate on stock sight deposits increased by 2 basis points, to 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 £2.6 billion in May, down from £9.3 billion in April. The net flow of M4ex was largely driven by households’ holdings of money, which saw an increase of £5.3 billion in May, compared to an £8.4 billion increase in April. PNFCs also increased their holdings of money by £0.5 billion in May, while non-intermediate other financial corporations (NIOFCs) decreased their holdings of money by £3.2 billion over the same period.
The flow of sterling net lending to private sector companies and households (M4Lex) saw a decrease from £1.3 billion in April to -£0.1 billion in May. This was largely driven by a decrease in the flow of net lending to NIOFCs, from -£1.0 billion in April to -£1.8 billion in May, and a decrease in the flow of net lending to households from £1.8 billion in April to £1.3 billion in May. The flow of net lending to PNFCs also decreased slightly, from £0.5 billion in April to £0.4 billion in May.
Queries
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Next release date: 29 July 2024
