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 mortgage approvals for house purchases rose from 60,500 in February to 61,300 in March, the highest number of net approvals since September 2022. Conversely, net approvals for remortgaging decreased from 37,700 to 34,200 over the same period.
- The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased by 17 basis points, to 4.73% in March.
- In March, private non-financial corporations (PNFCs) raised, on net, £10.2 billion of finance from banks and capital markets. This was the largest amount since May 2020 and was mainly driven by £8.0 billion of net bond issuance.
- The net flow of sterling money (known as M4ex) increased to £12.1 billion. This was mainly driven by households’ holdings of money, which increased by £8.5 billion in March, the highest flow since October 2022.
- The flow of sterling net lending to private sector companies and households (M4Lex) increased significantly, to £10.5 billion in March. This was mainly driven by an increase in net lending to non-intermediate other financial corporations (NIOFCs) to a flow amount of £9.9 billion.
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):
Individuals borrowed, on net, £0.3 billion of mortgage debt in March, compared to £1.6 billion in February. The annual growth rate for net mortgage lending remained slightly negative at -0.1% in March. Gross lending rose from £18.6 billion in February to £20.1 billion in March, its highest amount since February 2023. Likewise, gross repayments increased from £16.6 billion to £19.5 billion over the same period.
Net approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, continued their upward trend, increasing from 60,500 in February to 61,300 in March – the highest number of net approvals since September 2022 (65,400). Conversely, net approvals for remortgaging (which only capture remortgaging with a different lender) decreased from 37,700 to 34,200 over the same period (Chart 1).
Chart 1: Mortgage approvals
Seasonally adjusted
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased by 17 basis points, to 4.73% in March. The rate on the outstanding stock of mortgages increased by 2 basis points, to 3.50% in March.
Consumer credit (M&C Tables B and C):
Net consumer credit borrowing increased to £1.6 billion in March, from £1.4 billion in February (Chart 2). This was driven by net borrowing through credit cards, which rose from £0.5 billion to £0.7 billion in March, while net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) remained unchanged at £0.9 billion over the same period.
The annual growth rate for all consumer credit remained unchanged when compared to February, at 8.8%. The annual growth rates for credit cards and for other forms of consumer credit were both little changed at 12.0% and 7.4%, respectively.
Chart 2: Consumer credit
Seasonally adjusted
In March, the effective interest rate on interest-charging overdrafts and interest-bearing credit cards decreased by 58, and 29 basis points, to 22.21% and 21.26%, respectively. The effective rate on new personal loans to individuals dropped by 37 basis points, to 8.39%.
Households’ deposits (M&C Table J):
In March, household deposited an additional £8.5 billion with banks and building societies, the highest net inflow since October 2022. Within this, households deposited an additional £1.6 billion into interest-bearing sight deposits, £2.0 billion into time deposits and £3.2 billion into ISAs. Conversely, households withdrew £0.6 billion from non-interest-bearing deposits. (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 fell by 9 basis points, to 4.37%. The effective rate on the outstanding stock of time deposits increased by 3 basis points to 3.84%, and the effective rate on stock sight deposits was little changed at 2.12%.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
In March, UK non-financial businesses (PNFCs and public corporations) repaid, on net, £1.1 billion of loans from banks and building societies (including overdrafts), compared with £2.8 billion of net repayments in February. Within this measure, large non-financial businesses repaid £0.7 billion in March, compared to £2.2 billion of repayments in February. Similarly, small and medium-sized non-financial businesses (SMEs) made net repayments of £0.4 billion in March, compared to net repayments of £0.6 billion in February.
The annual growth rate of borrowing by large businesses was 0.5% in March, down from 1.4% in February. The growth rate of lending to SMEs remained broadly unchanged, at -4.7% in March (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 fell by 2 basis points to 6.95%, and the effective interest rate on new loans to SMEs fell by 6 basis points to 7.49% in March.
Net Finance Raised (M&C Table F):
In March, private non-financial corporations (PNFCs) raised, on net, £10.2 billion of finance. This is the largest amount of net finance raised since May 2020, and an increase from net repayments of £4.9 billion in February. This was mainly driven by £8.0 billion of net bond issuance. PNFCs also borrowed £1.1 billion from banks and building societies and issued a net £0.2 billion in commercial paper. This was partially offset by PNFCs buying back £1.3 billion of equity, continuing the trend of net equity buybacks since October 2021 (Chart 5).
Businesses’ deposits:
During March, UK non-financial businesses deposited £3.0 billion with banks and building societies in all currencies, compared to £1.9 billion in February. The effective rate on new time deposits from PNFCs decreased by 2 basis points to 4.64% in March, and the effective rate on stock sight deposits decreased by 3 basis points to 2.69% over the same period.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The net flow of sterling money (known as M4ex) continued to increase in March. M4ex rose by £12.1 billion, compared to an increase of £8.9 billion in February. This was mainly driven by households’ holdings of money, which increased by £8.5 billion in March, up from a £7.0 billion increase in February, this marked the highest flow since October 2022. Non-intermediate other financial corporations (NIOFCs) increased their holdings of money by £4.0 billion, while PNFCs decreased their holdings of money by £0.3 billion.
The flow of sterling net lending to private sector companies and households (M4Lex) increased significantly from -£15.2 billion in February to £10.5 billion in March. This was almost wholly driven by an increase in the flow of net lending to NIOFCs, from -£15.7 billion in February to £9.9 billion in March. The flows of net lending to PNFCs also increased, from -£1.3 billion in February, to £0.7 billion in March. This was slightly offset by the flow of lending to households, which decreased from £1.8 billion in February, to net zero in March.
Queries
If you have any comments or queries about this release, please email DSD_MS@bankofengland.co.uk.
Next release date: 31 May 2024
