Money and Credit - June 2018

Key points

• The annual growth rates of consumer credit and mortgage lending were unchanged in June, at 8.8% and 3.2% respectively.
• Net finance raised by UK businesses was £2.6 billion in June, above its average over the past year; this followed strength in May. Net bank lending was the largest component of businesses’ borrowing.
• The amount of money held by UK households increased by £3.7 billion in June, slightly above its recent average.

References in the text point to the summary tables below. For further statistics, please see our Bankstats tables.

Lending to individuals (Tables A-E)

Consumer credit (Tables B and C)

Annual growth of consumer borrowing, excluding mortgages, remained stable in June, at 8.8% (Chart 1).¹ Credit cards have been accounting for an increasing share of consumer credit growth over the past couple of years and the growth rate of credit card lending has exceeded that of other loans and advances (which includes personal loans, overdrafts and car finance) since January 2018. Annual credit card growth was 9.5% in June, whilst the growth rate of other loans and advances was 8.5%.

The net amount of credit extended to borrowers each month can give us a better picture of recent developments, as the annual growth rate can be a lagging indicator. Net consumer credit lending was unchanged at £1.6 billion in June, a little above the average of the past year. The contributions from credit card lending and other loans and advances were also unchanged, at £1.0 billion and £0.6 billion respectively.

Chart 1: Consumer credit

Seasonally adjusted

Mortgage lending (Tables D and E)

In June, the annual growth rate for mortgage lending remained unchanged at 3.2%, and has now been around 3% since late 2016. Although this is above the growth rate between 2009 and 2013, it remains modest compared to the pre-crisis period. In value terms, households borrowed an extra £3.9 billion secured against their homes in June, which slightly exceeds the average of the past year.

The number of mortgages approved for house purchase increased a little in June, to 66,000, and were close to their average since late 2013. This data gives us an indication of how much new mortgage lending we might expect to see in coming months. The number of approvals for remortgaging fell 7.3% in June to 48,000. Despite this fall, remortgaging approvals remain broadly in line with the average over 2018 so far.

Lending to businesses (Tables F-I)

Businesses can raise money by borrowing from banks or from financial markets (in the form of bonds, equity and commercial paper). The total amount borrowed by businesses from these sources in June increased by £2.6 billion (Chart 2), close to its average over the past year.

Within this, businesses’ net issuance of bonds was muted in June at £0.3 billion, following the M&A related strength of £11.0 billion in May. Net bank lending of £1.4 billion was the largest component of overall borrowing by businesses in June.

Chart 2: Net finance raised by private non-financial corporations (PNFCs)

Seasonally adjusted

The increase in bank lending was due to £0.8 billion of net lending to large businesses, and a further £0.5 billion of net lending to small and medium enterprises (SMEs). Lending to companies of all sizes was a little stronger than during the past few months but the annual growth rates remained subdued. The twelve-month growth rate of lending to SMEs was 0.0% and to large businesses was 1.6% (Chart 3).

Chart 3: Loans to non-financial businesses

Seasonally adjusted

Broad money (Table J)

After strength in May, the total amount of money held by UK households, businesses and non-intermediary other financial corporations (NIOFCs) (Broad money or M4ex) fell by £2.3 billion in June (Chart 4). This weakness was mostly due to a reduction in NIOFC money holdings of £7.0 billion. Money held by households increased by £3.7 billion in June: this was slightly above the average of recent months, which have seen volatility in flows of household money.

Chart 4: Sectoral components of broad money

Seasonally adjusted

1. This month we published our annual update of consumer credit including student loans, which incorporates the latest student loans data from the Student Loans Company. For more information or to access these series, see Consumer credit including student loans.

Summary tables

Highs and lows

Next release date : 30 August 2018

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