Money and Credit - September 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 29 October 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 was £4.8 billion in September, up from £3.0 billion in August. Mortgage approvals for house purchase increased further to 91,500, the highest since September 2007. Effective mortgage interest rates were broadly unchanged.
  • Net consumer credit borrowing weakened in September, with households making net repayments of £0.6 billion. The interest rate on interest-charging overdrafts increased by an additional 3.5 percentage points, to a new series high of 22.52% in September, while the rates on new consumer credit and credit card borrowing were little changed.
  • Private corporates borrowed £0.7 billion from capital markets in September. Small and medium sized non-financial businesses (SMEs) borrowed £1.6 billion, on net, from banks, while large businesses repaid £5.8 billion.
  • Overall, household and business deposits were strong in September, at £6.8 billion and £2.5 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 strengthened a little further in September. On net, households borrowed an additional £4.8 billion secured on their homes, following borrowing of £3.0 billion in August. This pickup 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 reaching levels slightly higher than the average of £4.0 billion in the six months to February 2020. The increase on the month reflected higher gross borrowing of £20.5 billion, although this remains below the February level of £23.4 billion.

The number of mortgage approvals for house purchase continued increasing sharply in September, to 91,500 from 85,500 in August (Chart 1). This was the highest number of approvals since September 2007, and is 24% higher than approvals in February 2020. Approvals in September were around 10 times higher than the trough of 9,300 approvals in May. Approvals for remortgage (which only capture remortgaging with a different lender) are slightly lower than in August, at 32,700, and remain 38% lower than in February 2020.

Chart 1: Mortgage approvals

Seasonally adjusted

The ‘effective’ interest rates – the actual interest rates paid – on newly drawn, and the outstanding stock of, mortgages were little changed in September. New mortgage rates were 1.74%, an increase of 2 basis points on the month, while the interest rate on the stock of mortgage loans fell 1 basis point to 2.13% in September.

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

Household’s consumer credit weakened in September with net repayments of £0.6 billion, following some additional net borrowing in July (£1.1 billion) and August (£0.3 billion) (Chart 2). Although the repayment in September was small in comparison to the £3.9 billion monthly average seen between March and June, this contrasts with an average of £1.1 billion of additional borrowing per month in the 18 months to February 2020. The weakness in consumer credit net flows pushed the annual growth rate down further in September to -4.6%, a new series low since it began in 1994.

The weakening in consumer credit reflected an increase in gross repayments, but little change in gross borrowing. But both remained lower than their February levels. Gross borrowing was £21.4 billion, compared with £25.8 billion in February. Repayments increased to £22.3 billion from £20.6 billion in August, also remaining lower than the February level of £24.6 billion.

The net repayment of consumer credit was driven by a net repayment on credit cards of £0.6 billion. That compares with £0.2 billion of net borrowing in August. There was also a small net repayment, of £0.1 billion, on other forms of consumer credit in September. The annual growth rates of both components remained negative, at -11.6% and -1.3%, respectively.

The effective rates – the actual interest rate paid - on interest-charging overdrafts continued to rise in September, by 3.52 percentage points to 22.52%. This is the highest since the series began in 2016, and compares to a rate of 10.32% in March 2020 before new rules on overdraft pricing came into effect. Rates on new personal loans to individuals were little changed in September, at 4.78%, compared to an interest rate of around 7% in early 2020. The cost of credit card borrowing was also broadly unchanged at 17.92% in September.

Chart 2: Consumer credit

Seasonally adjusted

Households’ deposits (M&C Table J):

Households’ deposits increased by £6.8 billion in September, but remained below the average of £17.3 billion between March and June. This compares to additional deposits of £5.5 billion in August, and was slightly higher than the average in the six months to February 2020 (£5.0 billion). The strong flow of deposits in September can be accounted for by deposits into instant access accounts.

The interest rates paid on individuals’ deposits fell further in September. The effective interest rate on new time deposits fell 4 basis points to a new series low of 0.46%, 58 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 0.13% and 0.56%, respectively. The rate on the stock of sight deposits is the lowest since the series began in 2016, and 33 basis points lower than in February.

Lending to and deposits from businesses

Market Finance (M&C Table F):

Businesses raised £0.7 billion from financial markets in September, lower than the £2.7 billion raised in August. This was somewhat weaker than the average increase between March and June of £7.7 billion, and a touch below the average of £1.6 billion raised in the six months to February 2020 (Chart 3). Strong net issuance of equity, at £3.9 billion in September, was largely offset by a net redemption of both bonds and commercial paper, of £2.1 billion and £1.1 billion, respectively.

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 £0.5 billion of loans in September. Small and medium sized companies (SMEs) continued borrowing in September, whilst large companies made net repayments. The average cost of new borrowing from banks by all PNFCs ticked up to 1.65%, 2 basis points higher than in August. The rate compares with 2.56% in February 2020.

Small and medium sized non-financial businesses continued borrowing from banks. In September, they drew down an extra £1.6 billion in loans, on net. On average, net lending was £11.3 billion between May and July, and these strong flows meant that the annual growth rate has risen sharply, to 22.8% in September, the strongest on record (Chart 4). Interest rates on new loans to SMEs remained low at 1.72% in September. While rates remain well below the rate of 3.44% in February, they have risen gradually over recent months from a trough of 0.98% in May.

Large non-financial businesses made net repayments of £5.8 billion to banks in September, down from £0.6 billion of net borrowing in August. This compares to average net repayments of £11.9 billion a month between May and July. Notwithstanding large net repayments in recent months, the annual growth rate of borrowing by all large businesses remained slightly positive, at 0.7%, following strong net borrowing between March and April.

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 £2.5 billion in September, down from £12.8 billion in August, and well below the average £28.8 billion between March and June. Deposits remained significantly higher than the monthly average of £0.4 billion of withdrawals in the six months to February 2020, however. The effective rates on new time deposits for PNFCs and stock sight deposits both fell to 0.08% in September, a fall of 2 basis points and 1 basis point, respectively.

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

Overall, private sector companies and households increased their holdings of money in September. Sterling money (known as M4ex) increased by £10.8 billion in September; a significant rise from August which saw withdrawals of £1.0 billion (Chart 5). This is a continuation of the trend of strong deposit flows seen between March and July, albeit at a much weaker pace in comparison to the £40.5 billion monthly average seen during that period.

Sterling net lending to private sector companies and households, or M4Lex, was £2.8 billion in September, following a net repayment of £3.5 billion in August. This was driven by strength in household borrowing.

Chart 5: Broad money by sector

Seasonally adjusted


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Next release date: 30 November 2020