Money and Credit - May 2019

These monthly statistics on borrowing and deposits by households and businesses are used by the Bank’s policy committees to understand economic trends and developments in the banking system.
Published on 01 July 2019

Key points

  • Annual growth in consumer credit continued to slow, falling to 5.6% in May. The monthly flow of consumer credit in May was broadly in line with the average since July 2018, at £0.8 billion.
  • UK businesses raised £1.7 billion of net finance in May, driven by continued strength in net bond issuance.
  • Household deposits increased by £6.5 billion in May, the largest amount since September 2016. This reflects greater flows into non-interest-bearing deposit accounts.
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 extra amount borrowed by consumers to buy goods and services was £0.8 billion in May, broadly in line with the £0.9 billion average since July 2018. Within this, additional borrowing for other loans and advances fell on the month to £0.5 billion, and credit card lending increased to £0.3 billion.

The annual growth rate of consumer credit slowed further in May, to 5.6%, reflecting the weaker lending flows seen over most of the past year (Chart 1). This was the lowest since April 2014, and well below the peak of 10.9% in November 2016.

Chart 1: Consumer credit

Seasonally adjusted

Mortgage lending (Tables D and E):

Net mortgage borrowing by households fell to £3.1 billion in May, the smallest increase since April 2017. However the annual growth rate for mortgage lending remained stable at 3.2%, and has now been around 3% since late 2016. Mortgage approvals for house purchase (an indicator of future lending) fell back slightly on the month to 65,400, though remained broadly in line with the narrow range seen in previous years. The number of approvals for remortgaging also fell in May, to 46,700.

Lending to businesses (Tables F-I)

Businesses can raise money by borrowing from UK banks (in the form of loans) or from financial markets (in the form of bonds, equity and commercial paper). The amount businesses borrowed from these sources was £1.7 billion in May, compared to £5.5 billion in the previous month (Chart 2). Within this, net bond issuance (a form of longer-term borrowing from financial markets) was £2.6 billion, continuing the relative strength seen over recent months. There were net repayments in the commercial paper market (a form of short-term borrowing from financial markets) for the third consecutive month, which contrasts with relatively strong net issuance at the turn of the year. After strength in April, businesses reduced equity held in the market by £0.8 billion in May.

Chart 2: Net financed raised by PNFCs1

Seasonally adjusted

Banks lent an additional £1.3 billion to large businesses in May, somewhat below the recent monthly average of £1.8 billion. Additional lending to small and medium sized businesses (SMEs) remained positive in May, at £0.2 billion. Since January, the net flow of loans to non-financial businesses has averaged £1.6 billion, significantly greater than an average flow of £0.7 billion in the same period in 2018. These stronger flows have resulted in the growth rates for business lending increasing for both large businesses and SMEs, to 6.2% and 0.4% respectively.

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 £2.9 billion in May (Chart 3). Within this, households’ money holdings increased by £6.5 billion, the largest increase since September 2016. The strength on the month was due to increased flows into non-interest-bearing deposit accounts. Money held by PNFCs increased by £2.0 billion, above the £0.8 billion average seen over the previous six months.

Chart 3: Broad money by sector

Seasonally adjusted
1. There is a discrepancy between the total of net finance raised and its components due to the seasonal adjustment methodology.
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