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.
- Net mortgage borrowing reached a record high of £17.9 billion in June, just before the lower stamp duty rates began to taper off from July. Mortgage approvals for house purchase were 81,300 in June, down from 86,900 in April.
- Consumers borrowed £0.3 billion as consumer credit, on net. The effective rate on new personal loans remained low at 5.67%, compared to 7.03% in January 2020.
- Households’ net flow in to deposit accounts increased in June, to £9.8 billion. Deposit interest rates continued to fall slightly to new historically low levels.
- Large businesses borrowed £0.8 billion from banks in June, whilst small and medium sized businesses repaid £0.3 billion. Private non-financial companies redeemed £0.8 billion of finance from capital markets in June, compared to a monthly average net issuance of £3.3 billion since March 2020.
References in the text point to the summary tables below. For further statistics, please see our visual summaries, Effective Rates (ER) statistical release, Capital Issuance statistical release, and Bankstats tables.
Lending to individuals
Mortgage lending (M&C Tables D and E):
Net mortgage borrowing hit a record of £17.9 billion in June. The previous record, in March 2021, was £11.5 billion, and borrowing has averaged £5.4 billion in the 12 months to May 2021 (Chart 1). This increase was driven by borrowing ahead of the tapering off of the lower stamp duty rates from July. Evidence suggests there has been a shortening of time between a mortgage being approved and the lending itself; there was no large rise in the number of mortgage approvals in recent months, unlike ahead of the strong net borrowing in March. Gross lending increased to £43.8 billion, with gross repayments also increasing to £27.7 billion.
Approvals for house purchases, an indicator of future borrowing, decreased in June to 81,300, from 86,900 in May. This is the lowest since July 2020, but remains above pre-February 2020 levels. Approvals for remortgage (which only capture remortgaging with a different lender) rose slightly to 35,400 in June, from 34,800 in May. This remains low compared to the months running up to February 2020.
Chart 1: Mortgage lending
Seasonally adjusted flows
The ‘effective’ rate – the actual interest rate paid – on newly drawn mortgages rose 5 basis points to 1.95% in June. That is above the rate in January 2020 (1.85%), and compares to a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages remained unchanged at a series low of 2.07%.
Consumer credit (M&C Tables B and C):
Individuals borrowed £0.3 billion in consumer credit in June, on net (Chart 2). This follows significant net repayments between March 2020 and February 2021, averaging £1.9 billion. £0.3 billion remains below the £1.2 billion average monthly borrowing in the 24 months to February 2020. The annual growth rate remained weak, but rose slightly to -2.2% in June from -2.9% in May.
The increase in net consumer credit reflected an additional £0.2 billion of ‘other’ forms of consumer credit, such as car dealership finance and personal loans. Credit card lending showed net borrowing of £0.1 billion. The annual growth rates of both components have risen from series lows in February 2021, but remained weak at -0.1% and -7.4%, respectively.
Chart 2: Consumer credit
The effective interest rate on interest-charging overdrafts reversed May’s decrease, increasing by 90 basis points to 20.68% in June. This series has varied between 19.8% and 20.9% since September 2020. Rates on new personal loans to individuals increased by 6 basis points, to 5.67% in June, compared to an interest rate of 7.03% in January 2020. The cost of credit card borrowing has varied between 17.5% and 18.5% since March 2020.
Households’ deposits (M&C Table J):
Households deposited an additional £9.8 billion with banks and building societies in June. This compares to an average net flow into banks and building societies of £14.7 billion in the six months to May 2021 (Chart 3), and a series peak of £27.4 billion in May 2020. The June flow is nevertheless relatively strong - in the year to February 2020, the average inflow was £4.7 billion.
Chart 3: Households’ deposits
Seasonally adjusted net flow
The effective interest rate paid on individuals’ new time deposits with banks ticked down by 1 basis point to 0.32%, a new series low. The effective rates on the outstanding stock of time deposits also fell marginally to another new series low, at 0.40%, whilst sight deposit rates stood still at 0.10%.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
UK non-financial businesses (PNFCs and public corporations) borrowed £0.5 billion from banks in June, having repaid £1.8 billion in May. The average cost of new borrowing from banks by all PNFCs rose 12 basis points to 2.38%. This is above the average seen since March 2020 and compares with a series low of 1.05% in May 2020. The rise in June 2021 was driven by a 15 basis points increase in the cost of fixed-rate loans to 2.29%, and an increase of 11 basis points in the cost of floating-rate loans – which usually account for the majority of corporate borrowing – to 2.38%.
The pickup in borrowing in June reflected large non-financial businesses borrowing £0.8 billion, the highest amount borrowed since November 2020. This strength was partially offset by small and medium sized non-financial businesses (SMEs) who repaid £0.3 billion of loans in June, on net.
Large non-financial businesses have been making net repayments for much of the past year. The annual growth rate of borrowing by all large businesses remained weak, at -6.2% in June, as a result. This was up from the near historical low seen in May (-11.8%), as larger net repayments a year earlier stopped reducing the annual growth rate (Chart 4).
The net repayment by SMEs follows average net borrowing of £2.9 billion per month since March 2020. The annual growth rate has fallen sharply from 25.9% in March to 6.3% in June. Particularly strong net borrowing in May and June 2020 is no longer boosting the annual growth rate. Interest rates on new loans to SMEs decreased by 41 basis points to 2.58% in June, partially reversing the increase in May.
Chart 4: Annual growth of lending to SMEs and large businesses
Market Finance (M&C Table F):
Private non-financial companies (PNFCs) redeemed £0.8 billion in financial markets in June, on net (Chart 5), reversing the finance raised in May. In the twelve months to May 2021, PNFCs have issued an average of £2.4 billion.
The redemption in June was driven by net redemption of bonds and commercial paper at £0.3 billion and £1.2 billion, respectively. This was partially offset by net issuance of equity at £0.7 billion. Net redemption was driven by a slight decrease in gross issuance and a slight increase in gross redemptions.
Chart 5: Net finance raised by PNFCsfootnote 
Seasonally adjusted net flow
Businesses’ deposits with banks:
In June, UK businesses deposited £18.9 billion with banks in all currencies, on net. This is similar to June 2020 (£19.0 billion), with June a relatively strong month historically. The effective rates on new time deposits and stock sight deposits for PNFCs remained broadly unchanged at very low levels in June, at 0.07% and 0.04%, respectively.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
Sterling money (known as M4ex) increased by £18.4 billion in June, up from £8.3 billion in May. This is the strongest since January 2021. Households’ holdings of money continued rising with net flows of £9.8 billion. PNFCs’ holdings (on a seasonally adjusted basis) increased by £5.3 billion, up from £1.6 billion in May.
Sterling net lending to private sector companies and households, or M4Lex, rose in June, by £23.6 billion. This was significantly up from £7.1 billion in May, and the highest since March 2020 (£52.8 billion). The increase was concentrated among households.
There is a discrepancy between the total of net finance raised and its components due to the seasonal adjustment methodology.