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:
- Net borrowing of mortgage debt by individuals decreased from £5.9 billion to £4.0 billion in October.
- Mortgage approvals for house purchases decreased to 59,000 in October from 66,000 in September.
- The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 25 basis points, to 3.09% in October.
- Consumers borrowed an additional £0.8 billion in consumer credit, on net, above the £0.6 billion borrowed in September.
- Households deposited an additional £6.2 billion with banks and building societies in October. Within this, flows into time deposits significantly increased to £11.3 billion from £2.9 billion. These were however partly offset by -£4.8 billion of flows out of interest bearing sight deposits.
- Non-financial businesses (PNFCs and public corporations) repaid £7.3 billion of bank loans in October, the highest net repayment since June 2020, while non-financial companies (PNFCs) raised net zero in market finance.
- The net flow of sterling money (known as M4ex) decreased sharply to -£16.3 billion in October, from £73.8 billion in September. Similarly, the net lending to private sector (known as M4Lex) fell to -£29.1 billion from £25.4 billion over the same period. Both were driven by non-intermediate other financial corporations (NIOFCs), with net flows of -£21.8 billion and -£32.7 billion in M4ex and M4Lex respectively.
- The effective interest rate paid on individuals’ new time deposits with banks and building societies rose to 3.26% in October, from 2.49% in September.
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 individuals
Mortgage lending (M&C Tables D and E):
Net borrowing of mortgage debt by individuals decreased from £5.9 billion to £4.0 billion in October (Chart 1), the lowest level since November 2021 (£3.8 billion). Gross lending increased to £28.2 billion in October from £27.2 billion in September, while gross repayments went up from £21.5 billion to £24.8 billion.
Approvals for house purchases, an indicator of future borrowing, decreased to 59,000 in October, from 66,000 in September, and were below the previous 6-month average (also 66,000). Approvals for remortgaging (which only capture remortgaging with a different lender) increased slightly in October, to 51,300 from 49,500 in September, and were higher than the previous 6-month average of 47,300.
Chart 1: Mortgage lending
Seasonally adjusted flows
The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 25 basis points to 3.09% in October. The rate on the outstanding stock of mortgages increased by 5 basis points, to 2.29%.
Consumer credit (M&C Tables B and C):
Individuals borrowed an additional £0.8 billion in consumer credit in October, on net, following £0.6 billion of borrowing in September (Chart 2). This was below previous 6-month average of £1.3 billion. The additional consumer credit borrowing in October was split between £0.4 billion on credit cards, which increased from £0.1 billion in September, and £0.4 billion through other forms of consumer credit (such as car dealership finance and personal loans).
The annual growth rate for all consumer credit decreased slightly to 7.0% in October, from 7.1% in September. The annual growth rate of credit card borrowing decreased from 12.1% in September to 11.5% in October, while the annual growth rate of other forms of consumer credit remained at 5.1% from September to October.
Chart 2: Consumer credit
Seasonally adjusted
The effective rate on new personal loans to individuals increased by 48 basis points to 7.23% in October, the highest level since December 2018 (7.45%). The effective rate on interest bearing credit cards increased to 19.31% in October from 18.96% in September. Conversely, the effective interest rate on interest-charging overdrafts in October slightly decreased, by 10 basis points, to 20.73%.
Households’ deposits (M&C Table J):
Households deposited an additional £6.2 billion with banks and building societies in October, compared to £8.1 billion in September. Within the household deposits measure, flows into time deposits in October, at £11.3 billion, were the highest on record (series starting in December 1997). Flows into interest bearing and non-interest bearing sight deposits both decreased, to -£4.8 billion (from £3.0 billion) and £2.3 billion (from £4.1 billion), respectively, in October. During October, households also deposited £0.2 billion into National Savings and Investment (NS&I) accounts (compared to £0.8 billion in September), the weakest level since January 2022 (£0.1 billion); these are not captured within household deposits with banks and building societies, but can act as a substitute for them. The combined net flow into both deposits and NS&I accounts in October was at £6.4 billion, a decrease from £8.9 billion in September but still above the average monthly net flow of £5.3 billion during the previous six months (Chart 3).
Chart 3: Households’ deposits
Seasonally adjusted net flow
The effective interest rate paid on individuals’ new time deposits with banks and building societies rose from 2.49% in September to 3.26% in October, the largest monthly increase since December 2021 when Bank Rate increases began. The effective rate on the outstanding stock of time deposits increased by 20 basis points to 1.07% in October. The effective rates on stock sight deposits rose 9 basis points to 0.52%.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
UK non-financial businesses (PNFCs and public corporations) repaid £7.3 billion of bank and building society loans in October (including overdrafts), on net, compared to £3.0 billion of net borrowing in September. This is the highest level of net repayments from non-financial businesses since June 2020 (£8.0 billion). Within this, net repayments by large non-financial businesses were £5.6 billion in October, compared to £3.1 billion of net borrowing in September, while net repayments by small and medium sized non-financial businesses (SMEs) increased from £0.1 billion in September to £1.8 billion in October.
The annual growth rate of borrowing by large businesses decreased by 2.4 percentage points to 6.9% in October, while for SMEs it fell by 0.2 percentage points, to -3.9% (Chart 4).
The average cost of new borrowing from banks by UK PNFCs increased 22 basis points to an effective interest rate of 3.81% in October, and now sits 178 basis points above the December 2021 rate of 2.03%. Effective interest rates on new loans to SMEs increased by 46 basis points to 4.74% in October (above the December 2021 rate of 2.51%).
Chart 4: Annual growth of lending to SMEs and large businesses
Seasonally adjusted
Market Finance (M&C Table F):
In October, private non-financial companies (PNFC) raised net zero market finance in comparison to a net redemption of £4.1 billion in September. Within this, on net, companies bought back £2.6 billion of equity, but issued £1.3 billion each of bonds and commercial paper.
Businesses’ deposits:
In October, UK non-financial businesses withdrew, on net, £14.6 billion of deposits from banks and building societies in all currencies, compared to a net withdrawal of £0.1 billion in September.
The effective rate on new time deposits increased by 31 basis points to 2.36%, while the effective rate on stock sight deposits increased by 13 basis points, to 0.70%.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The flow of sterling money (known as M4ex) sharply decreased, to -£16.3 billion, in October, from £73.8 billion in September. This was mainly driven by flows of non-intermediate other financial corporations’ (NIOFCs’) holdings of money decreasing to £21.8 billion in October, from £67.8 billion in September. Flows of PNFCs’ holdings of money increased to -£0.8 billion from -£2.1 billion in September.
The flow of sterling net lending to private sector companies and households, or M4Lex, was -£29.1 billion in October, and entirely driven by a decrease in the flow of net lending to NIOFCs, to -£32.7 billion.
Queries
If you have any comments or queries about this release please email DSD_MS@bankofengland.co.uk.
Next release date: 29 December 2022
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There is a discrepancy between the total of net finance raised and its components due to the seasonal adjustment methodology
