Money and Credit - February 2019

Published on 29 March 2019

Key points

The annual growth of consumer’s borrowing on credit cards and as other loans continued to slow, though at a more gradual pace than the second half of 2018.
Annual growth of bank lending to businesses fell in February for large business and SMEs, reversing increases in January.
Households significantly increased deposits in savings accounts that pay interest in February.

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

Lending to individuals (Tables A-E)

Consumer credit (Tables B and C):

The annual growth rate of consumer credit has continued to slow, though more gradually than during the second half of 2018. At 6.3% in February (Chart 1), it was well below its peak of 10.9% in November 2016. Within this, the growth rate of both credit card lending and other loans and advances fell slightly.

Chart 1: Annual growth rate of consumer credit

Seasonally adjusted

The amount of consumer credit increased by £1.1 billion in February, slightly above the £0.9 billion monthly average since July 2018. The annual growth rate fell, however, due to stronger flows in 2018 falling out the annual calculation. The average monthly flow between January 2016 and June 2018 was £1.5 billion. In February, flows of lending through both credit cards and other loans were broadly unchanged at £0.4 billion and £0.7 billion respectively.

Mortgage lending (Tables D and E):

Individuals’ net borrowing through mortgages was slightly weaker in February, at £3.5 billion, and was slightly below the £3.8 billion average of the past six months. Mortgage approvals for house purchase (an indicator of future lending) fell back slightly, to 64,300, also slightly below the average of the previous six months of 65,500. Approvals for remortgaging, meanwhile, were 47,700, below the 49,500 average of the previous six months.

Lending to businesses (Tables F-I)

UK businesses repaid £3.8 billion of finance from UK banks (in the form of loans) and financial markets (in the form of bonds, equity and commercial paper) in February. Bond markets (a longer-term form of borrowing from financial markets) was the main driver where there were net redemptions of £3.1 billion though, within this, there was a small increase in gross issuance, following little activity in recent months.

Bank lending to large businesses increased by £1.1 billion in February, but was below the recent average of £2.0 billion. In contrast, lending to small and medium sized businesses (SMEs) fell slightly by £0.1 billion. These weaker flows have resulted in the growth rates for business lending falling for both large businesses and SMEs, to 5.6% and 0.2% respectively (Chart 2).

Chart 2: Bank lending to businesses growth

Seasonally adjusted

Broad money (Table J)

The total amount of money held by UK households, private non-financial corporations (PNFCs) and non-intermediary other financial corporations (NIOFCs) (broad money or M4ex) increased by £3.6 billion in February (Chart 3). The increase was more than accounted for by households’ money holdings which increased by £5.3 billion, above the £3.3 billion average of the previous six months. This strength was mainly due to continued strength in instant access interest bearing savings accounts. Money holdings by PNFCs and NIOFCs fell back slightly in February.