Money and Credit - October 2019

Published on 29 November 2019

Overview

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.

Key points

The net flow of consumer credit was £1.3 billion in October, above the £1.1 billion average since July 2018.
Lending in the mortgage market continues to be steady, around the trend of the past three years. Net mortgage borrowing picked up on the month to £4.3 billion, whilst mortgage approvals for house purchase fell slightly to 65,000.
UK businesses made net repayments of £0.9 billion of finance in October, driven by a weakening in borrowing from both banks and financial markets.

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 in order to buy goods and services rose to £1.3 billion in October, above the £1.1 billion average since July 2018. Within this, net borrowing for both credit cards and other loans and advances rose, to £0.4 billion and £1.0 billion respectively.

The annual growth rate of consumer credit was 6.1% in October, up from 5.9% in September. This is the first increase in the annual growth rate since June 2018, but it remains considerably lower than its post-crisis peak of 10.9% in November 2016.

Chart 1: Consumer credit

Seasonally adjusted

Mortgage lending (Tables D and E):

Mortgage market indicators point to continued stability. Net mortgage borrowing by households was £4.3 billion in October, £0.4 billion higher than in September. The recent stability in the monthly flows has left the annual growth rate unchanged at 3.2%, close to levels seen over the past three years. Mortgage approvals for house purchase (an indicator for future lending) fell slightly in October, to 65,000, but remained within the narrow range seen over the past two years. Mortgage approvals for remortgage strengthened on the month to 51,000.

Lending to businesses (Tables F-I)

Businesses can raise funds by borrowing from banks (via loans) or from financial markets (via instruments such as bonds and commercial paper, or with equity). In October, UK businesses repaid £0.9 billion of finance from these sources. Both borrowing from banks, and money raised in financial markets, were weaker than in September.

Firms made net repayments of £0.4 billion to financial markets in October. Within this, UK businesses made £1.4 billion of net repayments of commercial paper in October, reflecting both weaker gross issuance and stronger gross repayments. This represented the largest net repayment of commercial paper since September 2018. For the sixth consecutive month, businesses made net repayments of equity, October’s totalling £0.7 billion. In contrast, net bond issuance by businesses was positive, at £1.7 billion in October, but below the £2.3 billion average issuance over the past 6 months.

Borrowing from banks increased by £0.7 billion in October, weaker than the previous six-month average of £1.9 billion. These weaker flows resulted in a fall in the annual growth rate of bank lending to 3.8%. Within this, the growth rate of borrowing from large businesses and SMEs fell to 5.3% and 1.0% respectively.

Chart 2: Net financed raised by PNFCs

Seasonally adjusted

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

Broad money (Table J)

Broad money (M4ex) is a measure of the amount of money held by households, non-financial businesses (PNFCs) and financial companies that do not act as intermediaries, such as pension funds or insurance companies (NIOFCs). Total money holdings in October rose by £1.6 billion, this was weak compared to both September and the average of the previous six-months.

The amount of money held by households rose by £3.7 billion in October, primarily driven by increased holdings of interest bearing sight deposits. NIOFC’s money holdings fell by £2.4 billion, while the amount held by PNFCs rose by £0.4 billion.

Some statistics on the outstanding amount of lending and deposits within the banking sector have been revised for September. In the first vintage of September’s statistics, some of this data was reported using an approach that was inconsistent to previous data, and reduced the total amounts outstanding. The current vintage of data corrects for this.