Money and Credit - May 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 01 July 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 increased to £7.4 billion in May, up from £4.2 billion in April to sit above its 12-month pre-pandemic average up to February 2020 of £4.3 billion.
  • Consumers borrowed an additional £0.8 billion in consumer credit, on net, of which £0.4 billion was new lending on credit cards.
  • Large non-financial businesses’ repaid £1.9 billion of bank loans in May compared to £2.6 billion borrowing in April. Small and medium sized businesses repaid £0.2 billion of bank loans in May, less than the £0.5 billion repaid in April and the 15th consecutive month of net repayments. Private non-financial companies (PNFCs) redeemed £5.1 billion in net finance from capital markets.
  • The net flow of sterling money (known as M4ex) increased to £20.3 billion in May compared with £1.8 billion in April. Households’ holdings of money saw net flows of £5.4 billion in May, compared with £5.7 billion in April.
  • The net flow of sterling lending to private sector companies and households (known as M4Lex) increased to £13.0 billion in May, compared to -£3.3 billion in April.

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.

Please note: over the coming months, a review of the seasonally adjusted series will be conducted to assess and adjust for the effects of the Covid-19 pandemic on the seasonally adjusted series since the onset of the pandemic in March 2020. A separate review will assess and adjust for the impact of the Queen’s Platinum Jubilee on May, June and potentially July 2022 data. Both reviews may lead to revisions in the published seasonally adjusted series.

Lending to individuals

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

Net borrowing of mortgage debt by individuals increased to £7.4 billion in May from £4.2 billion in April (Chart 1). This is above the pre-pandemic average of £4.3 billion in the 12 months up to February 2020. Gross lending increased to £28.4 billion in May from £26.7 billion in April, while gross repayments rose slightly to £21.8 billion in May from £21.6 billion in April.

Approvals for house purchases, an indicator of future borrowing, ticked up to 66,200 in May, from 66,100 in April. This is slightly below the 12-month pre-pandemic average up to February 2020 of 66,700. Approvals for remortgaging (which only capture remortgaging with a different lender) were unchanged at 47,800 in May. This remains below the 12-month pre-pandemic average up to February 2020 of 49,500.

Chart 1: Mortgage lending

Seasonally adjusted flows

The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 13 basis points to 1.95% in May. The rate on the outstanding stock of mortgages ticked up 2 basis point to 2.07% in May.

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

Individuals borrowed an additional £0.8 billion in consumer credit in May, on net, following £1.4 billion of borrowing in April (Chart 2). This is slightly below the 12-month pre-pandemic average up to February 2020 of £1.0 billion. The additional consumer credit borrowing in May was split between £0.4 billion on credit cards, and £0.4 billion through other forms of consumer credit (such as car dealership finance and personal loans).

The annual growth rate for all consumer credit was unchanged at 5.7% in May; the highest rate since February 2020 (5.8%). The annual growth rate of credit card borrowing was 11.2%, and the annual growth rate of other forms of consumer credit was 3.5%, the highest rate since March 2020 (5.6%).

Chart 2: Consumer credit

Seasonally adjusted

The effective interest rate on interest-charging overdrafts in May increased by 15 basis points to 20.22%. Rates on new personal loans to individuals ticked-down by 3 basis points to 6.49% in May, this was 40 basis points below the February 2020 (pre-pandemic) level. The effective rate on interest bearing credit cards increased by 30 basis points to 18.38% in May from 18.08% in April, and sits 18 basis points below the February 2020 level.

Households’ deposits (M&C Table J):

Households deposited an additional £5.4 billion with banks and building societies in May, compared to £5.7 billion in April. During this period, households deposited £0.3 billion into National Savings and Investment (NS&I) accounts (compared to £0.6 billion in April), 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 May was £5.7 billion, down from £6.3 billion in April but in line with the average monthly net flow of £5.6 billion during the 12-month pre-pandemic period up to February 2020 (Chart 3).

Chart 3: Households’ deposits

Seasonally adjusted

The effective interest rate paid on individuals’ new time deposits with banks and building societies rose from 1.09% in April to 1.25% in May, an increase of 16 basis points. The effective rate on the outstanding stock of time deposits increased by 5 basis points to 0.50% in May. The effective rates on stock sight deposits ticked up 3 basis points to 0.18%.

Lending to and deposits from businesses

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

UK non-financial businesses (PNFCs and public corporations) repaid £2.1 billion of bank and building society loans in May (including overdrafts), on net, compared to £2.1 billion borrowing in April. Within this, large non-financial businesses repaid, on net, £1.9 billion in May, compared to £2.6 billion borrowing in April. Small and Medium sized non-financial businesses (SMEs) repaid £0.2 billion in May, on net, compared to a £0.5 billion net repayment in April. The net loan repayment by SMEs in May marked the thirteenth consecutive month of net repayments.

The annual growth rate of borrowing by large businesses decreased to 6.5% in May from 7.0% in April (Chart 4). The annual growth rate of borrowing by SMEs rose to -4.9% in May from -5.3% in April.

The average cost of new borrowing from banks by UK PNFCs increased 45 basis points to an effective interest rate of 2.86% in May, rising 30 basis points above the February 2020 rate of 2.56%. Effective interest rates on new loans to SMEs increased by 59 basis points to 3.44% in May, falling in line with 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 (PNFCs) redeemed a net £5.1 billion of market finance (the sum of net equity, bond and commercial paper issuance) in May (Chart 5), in comparison to £2.1 billion redeemed in April. Within this, companies bought back a record £4.3 billion of shares in May, redeemed £0.9 billion in bonds, but issued £0.1 billion in commercial paper, on net.

Chart 5: Net finance raised by PNFCs1footnote [1]

Seasonally adjusted

Businesses’ deposits:

In May, UK non-financial businesses deposited £14.7 billion, on net, with banks and building societies in all currencies, compared to a net withdrawal of £14.6 billion in April.

The effective rate on new time deposits increased by 16 basis points to 0.86%, and the effective rate on stock sight deposits increased by 6 basis points, to 0.25%.

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

The flow of sterling money (known as M4ex) increased to £20.3 billion in May, compared with £1.8 billion in April. Households’ holdings of money saw net flows of £5.4 billion compared to £5.7 billion in April, remaining above the pre-pandemic average of £4.7 billion over the twelve months to February 2020. PNFCs’ holdings of money saw net flows of £6.7 billion, compared to -£1.2 billion in April.

The flow of sterling net lending to private sector companies and households, or M4Lex, increased to £13.0 billion in May. This was significantly higher than the £3.3 billion decrease in lending in April.

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

Queries

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

Next release date: 29 July 2022

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