Money and Credit - September 2019

Published on 29 October 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 £0.8 billion in September, remaining below the £1.1 billion average since July 2018.
Net mortgage borrowing by households was little changed at £3.8 billion in September, close to the average of the past three years.
Net finance raised by UK businesses was relatively strong in September, rising to £9.7 billion. This primarily reflected £6.5 billion net issuance of bonds and £2.9 billion of borrowing from banks.

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 fell slightly to £0.8 billion in September, and for the second month in a row was below £1.1 billion, the average since July 2018.

Within consumer credit, net credit card borrowing weakened on the month to £0.1 billion, the lowest since December 2018. Net borrowing for other loans and advances was £0.7 billion, down from £0.8 billion in August and the weakest outturn since March 2019.

The annual growth rate of consumer credit was 6.0% in September. This growth rate has now been falling steadily for nearly three years. Revisions to the data this month, however, mean that the annual growth rate has been revised up slightly over the past two and a half years.

Chart 1: Consumer credit

Seasonally adjusted

Mortgage lending (Tables D and E):

Mortgage market indicators point to continued stability in the market. Net mortgage borrowing by households was little changed at £3.8 billion in September. The stability in the monthly flows has left the annual growth rate unchanged at 3.2%. Growth rates have now remained close to this figure for the past three years. Mortgage approvals for house purchase (an indicator for future lending) were also broadly unchanged in September, at 66,000, and remained within the narrow range seen over the past three years. Mortgage approvals for remortgage strengthened slightly to 49,000.

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). The extra amount non-financial businesses borrowed from these sources rose to £9.7 billion in September, the highest since May 2018, and up from £3.5 billion of net borrowing in August.

The strength was primarily driven by £6.5 billion net issuance of bonds in September. Net issuance was the strongest since October 2018 and was the largest gross issuance since May 2018. Net borrowing from other financial market sources also picked up. There was positive net issuance of commercial paper for the first time since February, at £1.5 billion. Firms continued to make net repayments of equity, but at £0.2 billion, this was less weak than the £0.9 billion of net repayments in August.

Borrowing from banks also increased in September, rising to £2.9 billion, and the annual growth rate rose to 3.9%. Within this, the growth rate of borrowing from large businesses rose to 5.5%, while the growth rate of borrowing by SMEs rose slightly to 1.0%.

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 September rose by £10.9 billion, broadly flat on the month, and remaining above the average of the past 6 months.

The amount of money held by households rose by £5.5 billion in September, primarily driven by increased holdings of interest bearing sight deposits. NIOFC’s money holdings rose by £4.3 billion, while the amount held by PNFCs rose by £1.0 billion.