Money and Credit - January 2021

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 March 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

  • Net mortgage borrowing remained robust at £5.2 billion in January. There were 99,000 mortgage approvals for house purchase in January, in line with the average of 100,000 since October 2020. Effective interest rates on new mortgage borrowing fell to 1.85%.
  • Consumer credit weakened in January, with individuals making net repayments of £2.4 billion. The effective rate on new personal loans was 5.41%.
  • Private non-financial companies borrowed £4.3 billion from capital markets in January. Net bank borrowing by small and medium sized businesses remained at £0.5 billion in January, whilst large businesses made net repayments of £1.5 billion.
  • Households deposited an additional £18.5 billion in January. 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

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

Households’ consumer credit weakened in January with net repayments of £2.4 billion. This compares to an average net repayment of £1.0 billion between September and December 2020 (Chart 1), and was the largest net repayment since May 2020. The decline reflects less new borrowing. As a result, the annual growth rate fell further to -8.9%, a new series low since it began in 1994.

Within consumer credit, the weakness on the month primarily reflected net repayments on credit cards (£2.2 billion) with some repayments of other forms of consumer credit (£0.2 billion). The annual growth rates of both components fell further, to -19.4% and -3.9%, respectively. For credit cards, this represents a new series low; for other forms of consumer credit, this is the lowest since October 2010.

The ‘effective’ rate – the actual interest rates paid – on interest-charging overdrafts bounced back by 31 basis points to 20.82% in January, close to series high in September 2020 (20.86%). Rates on new personal loans to individuals rose slightly to 5.41% but remains low compared to an interest rate of 7.03% in January 2020. The cost of credit card borrowing rose by 27 basis points to 18.03% in January.

Chart 1: Consumer credit

Seasonally adjusted net flow

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

The mortgage market remained relatively strong in January. Individuals borrowed an additional £5.2 billion secured on their homes, compared to the monthly average of £4.0 billion in the six months to February 2020.

The strength in mortgage borrowing follows a large number of approvals for house purchase. In January, the number of these approvals – an indicator for future lending – was 99,000 (Chart 2). While this was a little lower than in December (102,800) it was well above the monthly average in the six months to February 2020 (67,900). Approvals for remortgage (which only capture remortgaging with a different lender) fell slightly to 32,400.

Chart 2: Mortgage approvals

Seasonally adjusted

The effective interest rates on newly drawn mortgages fell 5 basis points to 1.85%. That is in line with the rate in January 2020, and compares with a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages fell to 2.09%, a new series low.

Households’ deposits (M&C Table J):

Households’ flows into deposit-like accounts remained strong in January. The net flow of deposits remained strong at £18.5 billion, compared to the monthly average of £4.8 billion in the six months to February 2020. Some of this strength may reflect £3.5 billion of withdrawals from National Savings and Investment (NS&I) accounts in January, which 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 January (£15.0 billion) remained well above the monthly average of £5.6 billion in the six months to February 2020, however.

The effective interest rate paid on individuals’ new time deposits with banks remains at 0.42%, the lowest since the series began in 2016. The effective rates on the outstanding stock of both sight and time deposits were broadly flat, at 0.12% and 0.49%, respectively. The rate on the stock of sight deposits remains the lowest since the series began, and 34 basis points lower than in January 2020.

Lending to and deposits from businesses

Market Finance (M&C Table F):

Private non-financial companies (PNFCs) raised £4.3 billion from financial markets in January, up from £1.3 billion in December (Chart 3). Net issues of bonds and equities were £2.1 billion and £0.9 billion, respectively. Net issuance of commercial paper was £1.3 billion, following net repayments of £2.1 in December.

Chart 3: Net finance raised by PNFCsfootnote [1]

Seasonally adjusted net flow

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

Overall, non-financial corporates repaid £1.0 billion of bank loans in January. The average cost of new borrowing from banks by all PNFCs fell by 11 basis points, to 1.70%. 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 was little changed. In January, they drew down an extra £0.5 billion in loans. The annual growth rate continued to rise, reaching 25.8%, a new series high (Chart 4). Interest rates on new loans to SMEs fell back to 2.09% in January, following the increase to 2.32% in December. This remains well below the rate of 3.37% in January 2020.

Large non-financial businesses continued making net repayments in January (£1.5 billion). The annual growth rate of borrowing by all large businesses was -1.0%.

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

Seasonally adjusted

Businesses deposits with banks:

UK businesses’ deposits fell by £9.0 billion in January (Chart 5). This net outflow was very similar to previous years: in January 2020 deposits fell by £13.1 billion. This similarity contrasts with much of 2020. Between March and December 2020, businesses’ deposits increased by an average of £17.3 billion, much stronger than in previous years. The effective rates on new time deposits and stock sight deposits for PNFCs remained broadly unchanged in January, at 0.08% and 0.06%, respectively.

Chart 5: UK businesses deposits

Not seasonally adjusted net flow

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

Sterling money (known as M4ex) increased by £30.6 billion in January, up from £12.2 billion in December. PNFCs’ holdings of money (on a seasonally adjusted basis) increased by £13.3 billion, up from £1.5 billion in December whilst households’ holdings remained strong with net flow of £18.5 billion.

Sterling net lending to private sector companies and households, or M4Lex, was -£3.6 billion in January, down from £1.7 billion net lending in December.

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


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Next release date: 29 March 2021