Money and Credit - March 2022

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 04 May 2022

Overview

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 UK banking system.

Key points:

  • Net borrowing of mortgage debt by individuals amounted to £7.0 billion in March, up from £4.6 billion in February. Mortgage approvals for house purchases were little changed at 70,700 in March, and remains above the 12-month pre-pandemic average up to February 2020 of 66,700.
  • Consumers borrowed an additional £1.3 billion in consumer credit, on net, of which £0.8 billion was new lending on credit cards.
  • Sterling money (known as M4ex) increased by £22.6 billion in March. Households’ holdings of money saw net flows of £4.6 billion, compared with £4.1 billion in February.
  • The effective interest rate paid on individuals’ new time deposits with banks and building societies rose by 16 basis points to 0.92%.
  • Large businesses’ borrowing from banks fell to £1.9 billion in March from £4.3 billion in February, while small and medium sized businesses repaid £0.7 billion of bank loans. Private non-financial companies (PNFCs) redeemed £6.5 billion in net finance from capital markets.

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 borrowing of mortgage debt by individuals increased to £7.0 billion in March, up from £4.6 billion in February (Chart 1), and remains above the pre-pandemic average of £4.3 billion in the 12 months up to February 2020. Gross lending rose slightly to £26.5 billion in March from £26.0 billion in February, while gross repayments fell to £19.7 billion in March from £21.0 billion in February.

Approvals for house purchases, an indicator of future borrowing, were little changed at 70,700 in March, from 71,000 in February, and remains above the 12-month pre-pandemic average up to February 2020 of 66,700. Approvals for remortgaging (which only capture remortgaging with a different lender) rose slightly to 48,800 in March. This remains below the 12-month pre-pandemic average up to February 2020 of 49,500, but is the highest since February 2020 (52,100).

Chart 1: Mortgage lending

Seasonally adjusted flows

The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 14 basis points to 1.73% in March. The rate on the outstanding stock of mortgages ticked up 2 basis points to 2.04% in March.

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

Individuals borrowed an additional £1.3 billion in consumer credit in March, on net, following £1.6 billion of borrowing in February (Chart 2). This is still higher than the 12-month pre-pandemic average up to February 2020 of £1.0 billion. The additional borrowing in March of consumer credit was split between £0.8 billion on credit cards, and £0.5 billion through other forms of consumer credit (such as car dealership finance and personal loans).

The annual growth rate for all consumer credit increased to 5.2% in March from 4.5% in February; the highest rate since February 2020. The annual growth rates of credit card borrowing and other forms of consumer credit were 10.6% and 3.0% respectively.

Chart 2: Consumer credit

Seasonally adjusted

The effective interest rate on interest-charging overdrafts in March fell by 40 basis points to 20.30%. Rates on new personal loans to individuals fell by 22 basis points to 5.92% in March - this was 97 basis points below the February 2020 (pre-pandemic) level. The cost of credit card borrowing was 18.01% in March, 54 basis points below the February 2020 level.

Households’ deposits (M&C Table J):

Households deposited an additional £4.6 billion with banks and building societies in March. In addition, during this period households deposited £1.4 billion into National Savings and Investment (NS&I) accounts, which are not captured within household deposits with banks and building societies but can act as a substitute for them. The combined net flow into both deposits and NS&I accounts in March (£6.0 billion) compares to an average monthly net flow of £5.5 billion during the 12-month pre-pandemic period up to February 2020 (Chart 3).

Chart 3: Households’ deposits

Seasonally adjusted net flow

The effective interest rate paid on individuals’ new time deposits with banks and building societies rose from 0.77% in February to 0.92% in March, an increase of 15 basis points. The effective rate on the outstanding stock of time deposits was little changed at 0.41%. The effective rates on stock sight deposits remained low at 0.12%.

Lending to and deposits from businesses

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

UK non-financial businesses (PNFCs and public corporations) borrowed £1.2 billion from banks in March (including overdrafts), on net, compared to £3.8 billion in February. Within this, net borrowing by large non-financial businesses was £1.9 billion in March, compared to £4.3 billion in February. Small and Medium sized non-financial businesses (SMEs) repaid £0.7 billion, on net, increasing from a £0.5 billion net repayment in February. The net loan repayment by SMEs in March marked the thirteenth consecutive month in a row of net repayments.

The annual growth rate of borrowing by large businesses increased to 5.0% in March from 3.9% in February, the highest annual growth rate since June 2020 (5.3%) (Chart 4). The annual growth rate of borrowing by SMEs fell to -5.1%, a new series low (the series began in April 2012).

The average cost of new borrowing from banks by UK PNFCs rose 64 basis points to an effective interest rate of 2.94% in March, above the monthly average since February 2020 (1.98%). Effective interest rates on new loans to SMEs rose 38 basis points to 3.49% in March, though this remains below February 2020 rates (3.44%).

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

Seasonally adjusted

Market Finance (M&C Table F):

Private non-financial companies redeemed a net £6.5 billion of market finance (the sum of net equity, bond and commercial paper issuance) in March (Chart 5), in comparison to £4.1 billion redeemed in February. There were net equity buybacks of £2.6 billion, a £2.3 billion net redemption in bonds, and a £1.7 billion net redemption in commercial paper.

Chart 5: Net finance raised by PNFCs (a)

Seasonally adjusted net flow

Footnotes

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

Businesses’ deposits:

In March, UK non-financial businesses deposited £12.4 billion, on net, into banks and building societies in all currencies, compared to a deposit of £2.6 billion in February.

The effective rate on new time deposits increased by 12 basis points to 0.58% and the effective rate on stock sight deposits increased by 4 basis points, to 0.15%.

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

The flow of sterling money (known as M4ex) increased to £22.6 billion in March, compared with £6.1 billion in February. Households’ holdings of money saw net flows of £4.6 billion compared with £4.1 billion in February, falling below the average of £4.7 billion over the twelve months to February 2020. PNFCs’ holdings of money also saw net flows of £4.5 billion, compared to an increase of £3.3 billion in March.

Sterling net lending to private sector companies and households, or M4Lex, increased to £21.5 billion in March, from £4.6 billion of lending in February.

Queries

If you have any comments or queries about this release please email dsd_ms@bankofengland.co.uk.

Next release date: 31 May 2022

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