Money and Credit - October 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 30 November 2020


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:

  • Net mortgage borrowing remained robust at £4.3 billion in October. Mortgage approvals for house purchase increased further to 97,500, the highest since September 2007. Effective interest rates on new mortgage borrowing ticked up to 1.78%.
  • Consumer credit remained weak in October, with households making net repayments of £0.6 billion. Effective rates on new personal loans increased by 37 basis points to 5.15%.
  • Private corporates borrowed £7.8 billion from capital markets in October but this was broadly offset by a net repayment of bank loans.
  • Overall, household and business deposits were strong in October, at £12.3 billion and £13.0 billion respectively. Deposit interest rates remain at historically low levels.

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

Lending to individuals

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

The mortgage market remained strong in October. On net, households borrowed an additional £4.3 billion secured on their homes, following borrowing of £4.9 billion in September. The continued strength in borrowing follows high levels of mortgage approvals for house purchase seen over recent months. Mortgage borrowing troughed at £0.2 billion in April, but has since recovered and is slightly higher than the average of £3.9 billion in the six months to February 2020.

The number of mortgage approvals for house purchase continued increasing in October, to 97,500 from 92,100 in September (Chart 1). This was the highest number of approvals since September 2007, 33% higher than approvals in February 2020 and around 10 times higher than the trough of 9,400 approvals in May. Approvals for remortgage (which only capture remortgaging with a different lender) were broadly unchanged in October, at 32,900, and remain around 40% lower than in February 2020.

Chart 1: Mortgage approvals

Seasonally adjusted

The ‘effective’ interest rates – the actual interest rates paid – on newly drawn mortgages ticked up by 4 basis points to 1.78% in October. New mortgage rates have risen back to their level in June, but remain below the rate at the start of the year (1.85% in January). The rate on the outstanding stock of mortgages was little changed at 2.12% in October.

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

Household’s consumer credit remained weak in October with net repayments of £0.6 billion, unchanged from September (Chart 2). Since the beginning of March, households have repaid £15.6 billion of consumer credit. As a result, the annual growth rate fell further in October to -5.6%, a new series low since it began in 1994.

Within consumer credit, the weakness was driven by a net repayment on credit cards of £0.4 billion, broadly unchanged from the £0.6 billion repaid in September. Other forms of consumer credit were broadly flat on the month with a small net repayment of £0.1 billion. The annual growth rates of both components fell further, to -13.0% and -2.0%, respectively.

The effective rate on interest-charging overdrafts was 19.70% in October, above the rate of 10.32% in March 2020 before new rules on overdraft pricing came into effect. Rates on new personal loans to individuals increased in October by 37 basis points, to 5.15%, but remain low compared to an interest rate of around 7% in early 2020. The cost of credit card borrowing was broadly unchanged at 17.96% in October.

Chart 2: Consumer credit

Seasonally adjusted

Households’ deposits (M&C Table J):

Households’ deposits increased by the largest amount since May in October (£12.3 billion). This follows a £6.6 billion increase in deposits in September, and an average flow between March and June of £17.4 billion a month. The strong flow of deposits in October can be accounted for by deposits into instant access accounts. This strength could in part reflect less investment in National Savings and Investment (NS&I) accounts, which are not captured within household deposits, but can be substitutes for one another as they have similar characteristics. There was a small withdrawal (£0.5 billion) from these accounts in October compared with strong investments seen since March, including £5.0 billion in September. The flow in to both deposits and NS&I accounts combined was a little over £11½ billion in September and October.

The effective interest rate paid on individuals’ new time deposits increased by 7 basis points in October, to 0.53%, though remains 50 basis points lower than in February. The effective rates on the outstanding stock of both sight and time deposits were broadly flat, both falling 1 basis point to 0.12% and 0.55%, respectively. The rate on the stock of sight deposits is the lowest since the series began in 2016, and 34 basis points lower than in February.

Lending to and deposits from businesses

Market Finance (M&C Table F):

Businesses raised £7.8 billion from financial markets in October, up from £0.5 billion in September. Private corporates have raised a significant £44.8 billion from financial markets since March, and this month’s increase was slightly higher than the average seen since then (Chart 3). There was continued strength in net issuance of equity, at £3.0 billion in October, and a pickup in both net issuance of bonds and commercial paper, at £4.3 billion and £0.4 billion, respectively, following net redemptions in September.

Chart 3: Net financed raised by PNFCs1

Seasonally adjusted


  • 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, private corporates repaid £6.6 billion of bank loans in October, broadly offsetting the strong issuance in financial markets (Chart 3). The average cost of new borrowing from banks by all PNFCs ticked up to 1.69%, 4 basis points higher than in September. The rate compares with 2.56% in February 2020.

Within overall corporate borrowing, small and medium sized non-financial businesses continued borrowing from banks. In October, they drew down an extra £1.7 billion in loans, on net. SMEs have borrowed a significant amount since May, and as a result the annual growth rate has risen sharply, reaching 23.9% in October, the strongest on record (Chart 4). Interest rates on new loans to SMEs increased by 11 basis points to 1.83% in October, but remain well below the rate of 3.44% in February. Rates have risen gradually over recent months from a trough of 0.98% in May.

Large non-financial businesses made net repayments of £6.7 billion to banks in October. This continues the significant net repayments seen since May, including £6.8 billion in September. This trend has pushed the annual growth rate of borrowing by all large businesses negative, to -2.1% in October; the lowest since January 2015.

Chart 4: Annual growth of lending to SMEs and large businesses

Seasonally adjusted

Businesses deposits with banks (M&C Tables F-I):

UK businesses’ deposits rose by £13.0 billion in October, up from £2.5 billion in September. This was significantly higher than the monthly average of £0.4 billion of withdrawals in the six months to February 2020, but remained well below the average £28.8 billion between March and June. The effective rates on new time deposits for PNFCs were unchanged at 0.08% in October, whilst the effective rates on stock sight deposits fell by 1 basis point, to 0.07%.

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

Overall, private sector companies and households significantly increased their holdings of money in October. Sterling money (known as M4ex) increased by £29.9 billion in October; a significant rise from September which saw holdings increase by £11.5 billion (Chart 5). This is similar to strong deposit flows seen between March and July, which saw money holdings increase by £40.8 billion on average each month.

Sterling net lending to private sector companies and households, or M4Lex, was £7.3 billion in October, up from £2.9 billion net lending in September.

Chart 5: Broad money by sector

Seasonally adjusted


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Next release date: 4 January 2021