Money and Credit - September 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 remained at £6.1 billion in September.
• Mortgage approvals for house purchases decreased significantly to 66,800 in September from 74,400 in August.
• The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 29 basis points to 2.84% in September.
• Consumers borrowed an additional £0.7 billion in consumer credit, on net, below the additional £1.2 billion borrowed in August – entirely driven by lower credit card borrowing of £0.1 billion against £0.7 billion in August.
• Non-financial businesses borrowed £2.6 billion of bank loans in September, while private non-financial companies (PNFCs) redeemed £4.0 billion in net finance from capital markets.
• The net flow of sterling money (known as M4ex) increase sharply to £74.4 billion in September, from £4.4 billion in August while the net lending to private sector (known as M4Lex) rose to £25.9 billion from £4.2 billion in August. Both were driven by increases of £67.8 billion and £19.3 billion in holdings by, and lending to, non-intermediate other financial corporations (NIOFCs), respectively.
• The effective interest rate paid on individuals’ new time deposits with banks and building societies rose to 2.49% in September from 1.94% in August.

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 remained at £6.1 billion in September (Chart 1). This is above the past 6-month average of £5.7 billion. Gross lending increased to £27.0 billion in September from £25.9 billion in August, while gross repayments were little changed at £20.6 billion in September.

Approvals for house purchases, an indicator of future borrowing, decreased significantly to 66,800 in September, from 74,400 in August, and were below the past 6-month average of 67,200. Approvals for remortgaging (which only capture remortgaging with a different lender) also decreased in September, to 49,100 from 49,500 in August but were higher than the past 6-month average of 47,100.

Chart 1: Mortgage lending

Seasonally adjusted flows

The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 29 basis points to 2.84% in September, the largest monthly increase since December 2021 when Bank Rate began rising. The rate on the outstanding stock of mortgages increased by 7 basis points, to 2.24%.

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

Individuals borrowed an additional £0.7 billion in consumer credit in September, on net, following £1.2 billion of borrowing in August (Chart 2). This was the lowest level since December 2021 (£0.3 billion). The additional consumer credit borrowing in September was split between £0.1 billion on credit cards, which fell from £0.7 billion in August, and £0.7 billion through other forms of consumer credit (such as car dealership finance and personal loans).

The annual growth rate for all consumer credit increased slightly to 7.2% in September, from 7.1% in August; the highest rate since March 2019 (also 7.2%). The annual growth rate of credit card borrowing decreased from 13.2% in August to 12.1% in September, while the annual growth rate of other forms of consumer credit increased from 4.6% in August to 5.2% in September.

Chart 2: Consumer credit

Seasonally adjusted

The effective rate on new personal loans to individuals decreased by 13 basis points to 6.75% in September, but remained higher than the December 2021 rate of 6.27%. Conversely, the effective rate on interest bearing credit cards increased to 18.96% in September, and sits above the December 2021 rate of 17.86%. The effective interest rate on interest-charging overdrafts in September increased to 20.83%, from 20.46% in August.

Households’ deposits (M&C Table J):

Households deposited an additional £8.1 billion with banks and building societies in September, compared to £3.2 billion in August. This was the biggest increase of household deposits since June 2021 (£9.9 billion). Within the household deposits measure, flows into time deposits increased to £3.4 billion in September from £1.1 billion in August. Flows into interest bearing and non-interest bearing sight deposits increased to £3.0 billion (from £0.7 billion) and £4.1 billion (from £1.6 billion) in September, respectively. During September, households also deposited £0.8 billion into National Savings and Investment (NS&I) accounts (compared to £1.1 billion in August); these 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 September was strong at £8.9 billion, well above the average monthly net flow of £5.3 billion during the past six months (Chart 3).