VALUATION AND BREAKS
Lending to individuals (excluding student loans) consists of sterling lending secured on dwellings (i.e. mortgages) and sterling consumer credit to UK-resident individuals, as well as all sterling lending to housing associations. In addition to data collected on the value of loans secured on residential property, this data set also includes information on the number and value of approvals for lending secured on dwellings, which are broken down by purpose of the approvals (i.e. for house purchase, remortgaging and other purposes). The consumer credit component is broken down into credit card and ‘other’ lending (covering overdrafts and other loans/advances, but excluding loans issued by the Student Loans Company).
In general, data are available quarterly from 1987 Q1 and monthly from April 1993. However, some series may have different start dates.
The data are available not seasonally adjusted and seasonally adjusted. Publication of data will usually occur on the 21st working day of the end of the period in the Lending to individuals statistical release and in Table A5.2 to Table A5.7 (inclusive) in Bankstats (Monetary and Financial Statistics) or subject to the published schedule of releases.
Sterling lending to individuals is provided by three main types of lender:
- UK-resident banks; a sample of UK-resident banks report monthly lending data directly to the Bank of England on the forms BE, IS, IC and IO. The forms collect additional sectoral data and further analysis of certain items of lending to UK residents respectively. Prior to October 2007, these data were collected on the form Q1D.
- UK-resident building societies; From January 2008, data from building societies are collected on the same basis as for UK-resident banks (see the article on Transition of building society statistical reporting in the January 2008 edition of Monetary and Financial Statistics). Prior to this, data for building societies were collected by the Financial Services Authority. These figures were based on a sample of societies, which were grossed up to achieve full coverage of the building society population in the published data.
- Other specialist lenders; (non-bank, non-building society UK credit grantors, specialist mortgage lenders, retailers, central and local government, public corporations, insurance companies and pension funds). Statistics relating to lending secured on dwellings are reported directly to the Bank of England on form MM, which collects data from specialist mortgage institutions on secured lending to individuals and individual trusts. Data on secured lending by other lenders are collected by the Office for National Statistics. Data on consumer credit provided by other specialist lenders, retailers, and other lenders are collected by the Office for National Statistics.
The Student Loans Company and the Department for Business, Innovation and Skills supply information from which the separately-published series including student loans are compiled.
All data are subject to revision if and when new information becomes available. For more information on revisions practices see the Explanatory Note on revisions, available here.
Lending to individuals (excluding student loans) comprises all sterling lending to the UK household sector, other than student loans, and all sterling lending to housing associations but excludes unincorporated businesses and non-profit institutions serving households. The lending to individuals data differ from the M4 lending to individuals statistics, because the former include lending by institutions other than banks and building societies and lending to housing associations.
In order to bring their treatment into line with that in the National Accounts, housing associations were reclassified from non-profit institutions serving households in the household sector to private non-financial corporations in August 2005. But secured lending to housing associations remains included within lending to individuals.
Levels series are not adjusted for breaks; however, some break-adjusted levels series are available on request.
A securitisation occurs when a portfolio of loans is transferred to a UK-resident or a non-resident special purpose vehicle (SPV), which funds the purchase of the portfolio through the issue of bonds or other securities. When a portfolio of loans is disposed of (or acquired) by an institution in the UK, without the issue (or redemption) of bonds or other securities to fund the purchase, it is known as a loan transfer for statistical purposes.
LENDING SECURED ON DWELLINGS
Lending secured on dwellings
includes secured lending to individuals and all lending to housing associations. The data are collected on a monthly basis and include gross lending, net lending and approvals by value and number. Gross lending
figures refer to the total value of loans advanced by institutions in a given period. Repayments and other adjustments are excluded. MFIs
gross lending excludes bridging loans, but since figures for gross lending to housing associations are not available, only net advances to housing associations are included.Other specialist lenders'
lending includes loans fully secured on residential property to housing associations from March 1999. Net lending
refers to the flow of gross lending less the flow of repayments. The figure for monthly net lending will not necessarily equal the difference between the amounts outstanding this month and the previous month, because various adjustments are applied, such as adjustments for bad debt write-off (see also changes
page) to arrive at net lending. Net lending reflects the impact of acquisitions/disposals of mortgage portfolios (see Table A5.7) and includes sterling bridging loans. Repayments
include repayments of principal broken down into full redemptions, partial redemptions and all other repayments of principal. Interest payments are excluded from these data.
Approvals are the firm offers of lenders to advance credit secured on specific dwellings to their customers. This is the total agreed advance, irrespective of whether the mortgage offer has been accepted by the customer. The number and value of approvals are reported net of cancellations (where an approval has been made previously, but not taken up and the outstanding approval has been cancelled). All series for numbers of approvals are shown in actual numbers terms. Approvals secured on dwellings are broken down into three types:
- 'House purchase'
covers approvals that are fully secured on residential property by a first mortgage. It includes existing borrowers transferring their existing mortgage to another property, lending to first-time purchasers and lending for buy-to-let purposes.
occurs when existing borrowers redeem their current mortgage in favour of a new one secured on the same property, but with a different mortgage lender.
- 'Other lending'
occurs when existing borrowers increase the size of their current mortgage, with the same lender. It includes any loan secured on residential property which is used for home improvement, car purchase etc.
From January 2008 additional monthly gross approvals and cancellations data are available on the Bank's Statistical Interactive Database. The database can be accessed at www.bankofengland.co.uk/mfsd/iadb/NewInterMed.asp
. The additional series can be downloaded by clicking on "Tables", "Money and Lending", "Monthly lending secured on dwellings: gross approvals and cancellations, not seasonally adjusted.
CONSUMER CREDIT (EXCLUDING STUDENT LOANS)
Consumer credit (excluding student loans) is defined as borrowing by UK individuals to finance current expenditure on goods and/or services excluding loans issued by the Student Loans Company. Consumer credit (excluding student loans) is split into two components; credit card lending and ‘other’ lending (mainly overdrafts and other loans/advances). Charge card lending can sometimes be indistinguishable from credit card lending; in these cases it is included in data for credit card lending.
MFIs lending includes sterling credit card lending, sterling overdrafts and other unsecured sterling loans and advances to individuals. Banks’ net lending includes an estimate of sterling items in transit and suspense that relate to this lending.
‘Other consumer credit lenders' comprise non-bank credit grantors and specialist mortgage lenders extending consumer credit. Retailers’ consumer lending occurs where funding is provided direct to the individual (not via an intermediary). Figures relate to hire/purchase agreements and other forms of credit (such as sales on budget accounts, credit sale agreements and personal loans repayable by instalments), but exclude monthly accounts and sales on bank or building society credit cards. Insurance companies’ figures include outstanding premiums.
In January 1998, Other Specialist Lenders were re-defined to exclude lending by institutions in the Channel Islands and Isle of Man, as these were now classified as non-residents. Flows have been adjusted for the change in sector; levels data however are not break-adjusted.
Building societies' statistical reporting transitioned from the Financial Services Authority to the Bank of England on 1st January 2008, and some minor changes to the calculation of lending to individuals have been implemented. The effects of these have been removed from the flows data, and are small in terms of the amounts outstanding.
In order to protect the confidentiality of reporting institutions data the publication of separate series for banks and building societies has been discontinued from January 2010. Instead, series for Monetary Financial Institutions have been added, as well as "of which mutuals" series, in most cases.
Prior to 2010, securitisations and loan transfers to UK residents were recorded in Table A5.7, but any securitisations or transfers to non-residents were only footnoted in the relevant tables (A5.3 for Lending Secured on Dwellings and A5.6 for Consumer Credit). From 2010 data onwards, all securitised loans are reported on balance sheet, so Table A5.7 reflects only true loan sales to UK residents, while loan transfers to non-residents will be footnoted in tables A5.2, A5.3 and A5.6.
Similarly, prior to 2010, loans securitised with UK resident SPVs were included as lending by Other Specialist Lenders. From 2010 onwards, these securitised loans are reported on the balance sheets of the originating MFIs. This caused a level shift in various series in January 2010, as well as changing the coverage of various series from January 2010 data onwards. For more details, please see the February 2010 Monetary and Financial Statistics article “Statistical Reporting of Securitisations” by Jennifer Owladi.
Hence, Table A5.7 should be used in conjunction with Tables A5.3 and A5.6 (for net lending) when analysing the data by type of lending institution.
Further detail about the reporting of securitisations prior to 2010 is provided in an article in the November 2004 edition of Monetary and Financial Statistics (Bankstats) “Impact of securitisations and loan transfers activity on M4 Lending” by Lorna Hall.
LENDING SECURED ON DWELLINGS
Gross lending: Prior to 2008, building societies’ gross lending comprised loans fully secured on residential property and other loans fully secured on land to individuals and housing associations. Prior to October 1998, this was defined as Class 1 and Class 2 sterling lending to individuals and housing associations excluding mortgage portfolios acquired by UK building societies.
- Class 1 lending referred to sterling advances made by UK building societies to UK individuals where the advances are secured on dwellings for the purchase of property; in addition, a Class 1 advance had to be the first charge on the property.
- Class 2 lending referred to sterling advances made by building societies to individuals or housing associations, secured on dwellings other than by a first charge. This may have included lending which was not for the purchase of property, but excluded bridging loans.
From January 2008, second charge mortgages are excluded from other specialist lenders’ secured lending data.
Net lending figures reflect the impact of acquisitions/disposals of mortgages or consumer credit portfolios (see Acquisitions of mortgages and consumer credit portfolios
) and include sterling bridging loans made by banks and other specialist lenders from April 1993, and by building societies from January 2008. Monthly data on banks’ net lending to housing associations prior to July 1996 have been derived by interpolating quarterly observations and using the quarterly pattern of building societies’ lending. Quarterly data after July 1996 are the sum of monthly observations.
In April 2004 a population review of other specialist mortgage lenders was undertaken (for more information see Bank of England: Monetary and Financial Statistics article 'Population Review for Other Specialist Mortgage Lenders
From April 1993, the definition of bank ‘lending for house purchase’ changed to cover all lending which is fully secured by a first charge on a residential property; thus it corresponded more closely to ‘Class 1’ lending by building societies (more details are available on pages 316-317 of the August 1992 Quarterly Bulletin). The net effect was to boost lending for ‘house purchase’; net lending figures were, however, adjusted to exclude the estimated effect of this redefinition. The amount of outstanding bank lending to individuals which is secured on dwellings but not included in the above definitions totalled at least £1,269mn at end-1993, £1,051mn at end-1994 and £853mn at end-1995 (the figures may not be comprehensive). This series, for example, includes some lending arising from schemes such as specialised ‘mortgage equity extraction’ products.
Repayments: The breakdown of repayments of mortgage principal for banks is available from October 1997, for building societies from September 1992 and for other lenders from January 1999. Repayments of mortgage lending by central and local government, public corporations, insurance companies and pension funds are not available broken down by type, but are included in the series for other lenders' repayments on redemption.
Approvals: Quarterly data on the total value of all approvals, and on the number of approvals for house purchase, are published back to 1987. However, data on approvals by OSLs are available from Q1 1991 onwards only, and so aggregate approvals data from Q1 1991 onwards are not directly comparable with those for prior periods.
Prior to October 1997, banks’ value and number of approvals are gross of cancellations and exclude approvals for other purposes. Following the Banking Statistics Review, from October 1997, all approvals are reported net of cancellations and breakdowns of approvals for house purchase, remortgaging and other purposes are available. For further details on these changes, see Bank of England: Monetary and Financial Statistics article ‘Mortgage market statistics
’. Due to this revision of definition, there is a break in the published (bank and aggregate) approvals series from October 1997. The data are therefore not directly comparable with those for earlier periods.
A breakdown of the value and number of approvals by purpose is available for banks from October 1997, for other specialist lenders from January 1999 and for building societies from January 2001. For further details of these changes see the Supplementary Notes in the May 2001 edition of Monetary and Financial Statistics
. Prior to these dates, the Bank only collected data on the total value of approvals across all purposes, and on the number of approvals for house purchase from each type of lender. This means that the series for the total value
of approvals by all lenders has breaks in both January 1999 and January 2001. This also means that the total value of approvals by all lenders and across all purposes do not equal the sum of its components (value of approvals split by purpose) prior to 2001.
Prior to January 2008, the value of building society approvals referred to sterling loans to individuals fully secured on residential property and other loans fully secured on land (previously Class 1 and 2 sterling lending (i.e. including some approvals to private non-financial corporations)). The number of building society approvals measured only approvals for sterling loans secured on residential property.
CONSUMER CREDIT (EXCLUDING STUDENT LOANS)
Following an ONS review in August 1997, data for ‘other specialist lenders’ were improved and revised back to January 1995. Total outstanding consumer credit was revised upwards by £2.6bn. Flows were break adjusted. Monthly data are available for lending by retailers from January 1997 but are not available for lending by insurance companies. The missing monthly data have been interpolated from quarterly data.
Within total consumer credit (excluding student loans) outstanding, credit card lending had been underestimated and ‘other’ consumer credit overestimated prior to January 1999 as a result of a longstanding inconsistency. The credit card element had previously covered sterling credit card lending to the UK household sector by only UK banks and building societies. Credit card lending by other specialist lenders and retailers (where they finance lending themselves) could not be separately identified and so was included within the ‘other’ consumer credit component.
From January 1999 onwards this inconsistency has been corrected, as credit card lending by other specialist lenders can be separately identified. As a result, data from January 1999 onwards for credit card lending and for ‘other’ consumer credit are not directly comparable with those for earlier periods. The change affects all three measures of credit card lending (gross, net and amounts outstanding), with an equal offsetting change to ‘other’ consumer credit. In non-seasonally adjusted terms, gross credit card lending was on average around £800 million per month higher since January 1999, whilst the amount outstanding of credit card debt was boosted by £4.8 billion in January 1999. The changes to net credit card lending are much smaller in absolute terms, with no discernible change to trend.
From November 2006, the Bank of England ceased to update the separate data on consumer credit provided by other specialist lenders, retailers, and insurance companies, previously contained in Table A5.6 of Monetary and Financial Statistics. The final month for which separate data are available on the Bank's Statistical Interactive Database
is November 2006. The three categories have been merged into “other consumer credit lenders”.
Prior to January 2008, building societies’ lending was unsecured lending to individuals including sterling bridging loans (prior to October 1998 this was class 3 lending to individuals). Building societies gross lending through overdrafts is no longer included from January 2008.
The Student Loans Company (SLC) pays tuition fees to Higher Education Institutions on behalf of students who have taken out tuition fee loans. From the academic year 2006/07 onwards, tuition fee loans were made available to new students who were subject to variable fees (fees charged at a higher rate than the previous fixed level fees), and also to those continuing students who were not entitled to 100% tuition fee grants, and hence, were paying all or part of their lower fixed level tuition fees. Such loans are made in instalments, paid mainly in February and May. As students paying the lower fixed level fees left university, while new entrants were subject to higher variable fees, the level of tuition fee loans rose each year after 2006/07. Outstanding balances of student loans are likely to exclude repayments collected via PAYE and Self Assessment during the previous year, since the SLC is notified of these repayments by HMRC usually within one year of the end of the tax year to which they relate. Because of delays in the availability of reliable statistics, information on student loans is published some time after the period(s) to which it relates. Further information on statistics covering Government student support schemes can be found at www.slc.co.uk/statistics/national_statistics.html.
Srinivasan S (2012), 'A new measure of consumer credit', Monetary and Financial Statistics, July.
O'Connor P (2010), ' Changes to the Publication of Bank and Building Societies Statistics', January.
Owladi, J (2010), ‘Statistical Reporting of Securitisations’, Monetary and Financial Statistics, February.
O’Connor, P (2008), 'Transition of building society statistical reporting’, Monetary and Financial Statistics, January.
Hall, L (2004) ‘Impact of securitisations and loan transfers activity on M4 lending’, Monetary and Financial Statistics, November, pages 7-8
Hall, L (2004) ‘Population review of Other Specialist mortgage Lenders’, Monetary and Financial Statistics, April, pages 14-19
Senior, S (1998) ‘Mortgage market statistics’, Monetary and Financial Statistics, September, pages 3 5