Money and Credit - December 2020

Our monthly Money and Credit statistical release is made up of three parts: broad money and credit, lending to individual and lending to businesses.
Published on 01 February 2021


These monthly statistics on the amount of, and interest rates 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:

  • Mortgage approvals for house purchase in 2020 (818,500) were higher than in 2019 (789,100), notwithstanding house purchase approvals hitting a record low of 9,400 in May 2020.
  • Net mortgage borrowing remained strong at £5.6 billion in December. Effective interest rates on new mortgage borrowing rose to 1.90%, the highest since October 2019.
  • Consumer credit was weak in 2020, with individuals making net repayments of £16.6 billion. Effective rates on new personal loans was 5.38% in December.
  • Private non-financial companies borrowed £1.6 billion from capital markets in December, resulting in a total of £52.6 billion borrowing in 2020, well above £7.4 billion in 2019.
  • Net bank borrowing by small and medium sized businesses was a record £43.3 billion in 2020 compared to £1.4 billion in 2019. Large businesses made net repayments of £5.8 billion in 2020 compared to net borrowing of £13.8 billion in 2019.
  • Household deposits increased by £20.9 billion in December, the strongest since May. Business deposit flows strengthened at £15.8 billion. Deposit interest rates remained at historically low levels.

References in the text point to the summary tables below. For further statistics, please see our visual summariesEffective Rates (ER) statistical releaseCapital Issuance statistical release, and Bankstats tables.

Lending to individuals

Mortgage lending (M&C Tables D and E):

The mortgage market remained strong in December. Individuals borrowed an additional £5.6 billion secured on their homes, broadly unchanged from November. Net borrowing continued to be significantly higher than the average of £3.9 billion seen in the six months to February 2020. Strength since September in net mortgage borrowing has, however, only partially offset weakness earlier in the year: total borrowing in 2020 (£43.3 billion) was below 2019 (£48.1 billion).

The strength in mortgage borrowing follows a large number of approvals for house purchase over the second half of 2020. In December, the number of these approvals – an indicator for future lending – was 103,400 (Chart 1). This was slightly lower than in November (105,300) but well above the February level (73,400). Recent strength in approvals has more than offset the significant weakness earlier in the year. House purchase approvals – having troughed at a record low of 9,400 in May – totaled 818,500 in 2020, the largest number in one year since 2007. Approvals for remortgage (which only capture remortgaging with a different lender) fell slightly in December to 33,800, around 35% lower than in February (52,400). Remortgage approvals in 2020 (451,400) were lower than in 2019 (587,600).

Chart 1: Mortgage approvals

Seasonally adjusted

The ‘effective’ interest rates – the actual interest rates paid – on newly drawn mortgages rose 7 basis points to 1.90% in December. That is slightly above the rate at the start of the year (1.85% in January) and the highest since October 2019. The rate on the outstanding stock of mortgages was little changed at 2.12% in December.

Consumer credit (M&C Tables B and C):

Households’ consumer credit remained weak in December with net repayments of £1.0 billion. This follows a net repayment of £1.5 billion in November (Chart 2). Total net repayments were £16.6 billion in 2020, the weakest in one year on record. As a result, the annual growth rate fell further to -7.5% in December, a new series low since it began in 1994.

Within consumer credit, the weakness in December reflected net repayments on both credit cards (£0.8 billion) and other forms of consumer credit (£0.1 billion). As a result, the annual growth rates of both components fell further, to -16.2% and -3.4%, respectively. For credit cards, this represents a new series low.

The effective rate on interest-charging overdrafts was little changed at 20.51% in December. Rates on new personal loans to individuals fell slightly to 5.38% in December, and continue to remain low compared to an interest rate of 7.03% in January. The cost of credit card borrowing bounced back to 17.76% in December, following the series low at 17.49% in November.

Chart 2: Consumer credit

Seasonally adjusted net flow

Households’ deposits (M&C Table J):

Households’ flows in to deposit-like accounts rose in December. The net flow of deposits was £20.9 billion in December, up from £18.4 billion in November (Chart 3). And there were smaller withdrawals – £2.7 billion in December compared to £6.3 billion in November– from National Savings and Investment (NS&I) accounts. These are not captured within household deposits but can act as a substitute for them. The combined flow into both deposits and NS&I accounts in December (£18.2 billion) was higher than recent months (around £12 billion between September and November), but similar to an average of £19.9 billion seen between March and August 2020.

Chart 3: Household liquid assets

Seasonally adjusted net flow

The effective interest rate paid on individuals’ new time deposits with banks fell by 8 basis points in December, to 0.42%, a new series low since it began in 2016. The effective rates on the outstanding stock of both sight and time deposits were broadly flat, at 0.12% and 0.51%, respectively. The rate on the stock of sight deposits remains the lowest since the series began, and 34 basis points lower than in January.

Lending to and deposits from businesses

Market Finance (M&C Table F):

Private non-financial companies (PNFCs) raised £1.6 billion from financial markets in December, down from £2.4 billion in November (Chart 4). The total net capital issuance for 2020 was £52.6 billion, the largest in one year on record. Overall, December net issuance was led by net issues of bonds (£2.0 billion) and equities (£1.6 billion). This was partially offset by net repayments of commercial paper at £2.1 billion.

Chart 4: Net finance raised by PNFCs1

Seasonally adjusted net flow

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

Businesses borrowing from banks (M&C Tables F-I):

Overall, non-financial corporates repaid £0.5 billion of bank loans in December, following net borrowing of £2.4 billion in November. The average cost of new borrowing from banks by all PNFCs rose by 20 basis points, to 1.86%. The rate compares with 2.68% in January 2020.

Within overall corporate borrowing, small and medium sized non-financial businesses (PNFCs and public corporations) net borrowing from banks weakened. In December, they drew down an extra £0.7 billion in loans, down from £1.9 billion in November. Despite the fall in net borrowings, the annual growth rate continued to rise following record net borrowing in 2020 (£43.3 billion), reaching 25.6% in December (Chart 5). Interest rates on new loans to SMEs increased by a further 28 basis points to 2.32% in December, but remain well below the rate of 3.37% in January. Rates have risen gradually over recent months from a trough of 0.98% in May.

Large non-financial businesses made net repayments of £1.1 billion in December. Large businesses have been making large net repayments since May, leading to total net repayment of £5.8 billion in 2020 compared to net borrowing of £13.8 billion in 2019. The annual growth rate of borrowing by all large businesses was -1.7% in December.

Chart 5: Annual growth of lending to SMEs and large businesses

Seasonally adjusted

Businesses deposits with banks:

UK businesses’ deposits rose by £15.8 billion in December, up from £5.7 billion in November. This remained significantly higher than the monthly average of £0.4 billion of withdrawals in the six months to February 2020, but well below the average £28.8 billion between March and June. The effective rates on new time deposits and stock sight deposits for PNFCs remained broadly unchanged in December, both at 0.06%.

Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)

Sterling money (known as M4ex) increased by £13.2 billion in December; down from £33.0 billion in November. PNFCs and households’ holdings of money were little changed (£2.2 billion and £20.9 billion, respectively) whilst Non-Intermediate OFCs decreased their holdings by £9.9 billion.

Sterling net lending to private sector companies and households, or M4Lex, was £1.3 billion in December, down from £18.8 billion net lending in November.


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Next release date: 1 March 2021