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 for the fourth consecutive month to £1.2 billion in August, up from £0.2 billion in July.
- Net mortgage approvals for house purchases fell from 49,500 in July to 45,400 in August, the lowest level in six months. Net approvals for remortgaging dropped from 39,300 to 25,000 during the same period, the lowest since July 2012.
- The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a 16 basis point increase and now sits at 4.82%.
- Net borrowing of consumer credit by individuals amounted to £1.6 billion in August, up from £1.3 billion in the previous month.
- Households withdrew £0.3 billion from banks and building societies in August, following two consecutive months of net deposits. This was driven by net outflows from interest-bearing and non-interest bearing sight deposit accounts of £6.4 billion and £6.0 billion respectively. These outflows were partly offset by net flows of £8.3 billion into time deposit accounts, which were down from £10.3 billion in July.
- August marked the seventh consecutive month of net repayments in market finance by private non-financial companies (PNFC), which repaid £4.9 billion against £1.6 billion of net repayments in July.
- UK non-financial businesses (PNFCs and public corporations) repaid £0.9 billion of banks and building society loans (including overdrafts), following net borrowing of £0.6 billion in July.
- The net flow of sterling money (known as M4ex) fell from -£1.9 billion in July to -£8.1 billion in August, driven by net flows of -£6.6 billion by non-intermediate other financial corporations’ (NIOFCs’). The flow of sterling net lending to private sector companies and households (M4Lex) amounted to -£1.1 billion in August, down from £7.3 billion in the previous month.
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 saw an increase from £0.2 billion in July to £1.2 billion in August. This was the fourth consecutive monthly increase in mortgage borrowing and the highest since January 2023. Gross lending rose from £19.1 billion in July to £19.7 billion in August, while gross repayments were little changed at £18.9 billion in August.
Net approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, fell from 49,500 in July to 45,400 in August, the lowest level in six months (Chart 1). Net approvals for remortgaging (which only capture remortgaging with a different lender) saw a significant decline from 39,300 in July to 25,000 in August, the lowest since July 2012 (24,400).
Chart 1: Mortgage approvals
Seasonally adjusted
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose by 16 basis points to 4.82% in August. Similarly, the rate on the outstanding stock of mortgages saw a 9 basis point increase, from 2.97% in July to 3.06% in August.
Consumer credit (M&C Tables B and C):
Individuals borrowed, on net, an additional £1.6 billion in consumer credit in August, up from £1.3 billion in July (Chart 2). This was largely driven by increased borrowing through other forms of consumer credit (such as car dealership finance and personal loans), from £0.6 billion in July to £1.0 billion in August, while borrowing on credit cards saw a small increase to £0.7 billion during the same period.
The annual growth rate for all consumer credit rose to 7.6% in August, following a slight dip to 7.3% in July. This was driven by the increase in the annual growth rate for other forms of consumer credit to 5.8% in August, compared to 5.4% in July, while the annual growth rate for credit card borrowing remained unchanged at 11.8% between July and August.
Chart 2: Consumer credit
Seasonally adjusted
The effective interest rate on interest-charging overdrafts increased by 44 basis points to 22.14% in August, following a 7 basis point decrease in July. Similarly, the effective rate on new personal loans to individuals saw a 46 basis point increase and now sits at 9.07%, while the effective rate on interest bearing credit cards was little changed at 20.77% in August.
Households’ deposits (M&C Table J):
Households withdrew, on net, £0.3 billion from banks and building societies in August, following two consecutive months of net deposit inflows. This was driven by net outflows from interest-bearing and non-interest bearing sight deposit accounts of £6.4 billion and £6.0 billion respectively, compared to outflows of £10.2 billion and £1.2 billion in July. These outflows were partly offset by net inflows into interest-bearing time deposit accounts, which saw a decrease from £10.3 billion in July to £8.3 billion in August (Chart 3).
Chart 3: Breakdown of households’ deposits (Household M4)
Seasonally adjusted net flow
Households’ deposits into National Savings and Investment (NS&I) accounts amounted to £0.4 billion in August, following net withdrawals of £0.1 billion in July. Deposits into NS&I accounts are not captured within households’ deposits with banks and building societies but can act as a substitute for them. The combined seasonally adjusted net flow of both household deposits with banks and building societies and NS&I accounts saw a slight decrease from £0.3 billion in July to net zero in August, and remained well below the average monthly net flow of £1.5 billion during the previous six months (Chart 4).
Chart 4: Household deposits
Seasonally adjusted net flow
The effective interest rate paid on households’ new time deposits with banks and building societies rose by 18 basis points and now sits at 5.12%. Similarly, the effective rate on the outstanding stock of time deposits saw a 24 basis point increase to 3.18% in August, while the effective rate on stock sight deposits rose from 1.66% in July to 1.83% in August.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
During August, UK non-financial businesses (PNFCs and public corporations) repaid a net £0.9 billion of banks and building society loans (including overdrafts), following net borrowing of £0.6 billion in July. Within this measure, there were net repayments by small and medium sized non-financial businesses (SMEs), which rose from £0.2 billion in July to £0.7 in August. Similarly, there were net repayments by large non-financial businesses amounting to £0.2 billion in August, compared to net borrowing of £0.8 in the previous month.
The annual growth rate of borrowing by large businesses was -1.0% in August, down from 1.2% in July. Similarly, the annual growth rate of borrowing by SMEs fell from -4.3% to -4.6% during the same period (Chart 5).
The average cost of new borrowing from banks by UK PNFCs rose from 6.72% in July to 6.97% in August, and now sits 494 basis points above the December 2021 rate of 2.03% (when Bank rate increases began). The effective interest rate on new loans to SMEs increased by 46 basis points to 7.65% in August, compared to 2.51% in December 2021.
Chart 5: Annual growth of lending to SMEs and large businesses
Seasonally adjusted
Market Finance (M&C Table F):
August marked the seventh consecutive month of net repayments in market finance by private non-financial companies (PNFC). Net repayments by private non-financial companies (PNFC) saw a £3.3 billion increase, from £1.6 billion in July to £4.9 billion in August. Within this measure, equity buybacks by companies amounted to £0.9 billion in August, down from £2.3 billion in the previous month. Companies also redeemed, on net, £3.7 billion of bonds and £0.3 billion of commercial paper (Chart 6).
Businesses’ deposits:
During August, UK non-financial businesses deposited £3.1 billion with banks and building societies in all currencies, following net withdrawals of £6.9 billion in July. The effective rate on new time deposits saw a 17 basis point increase to 4.75% in August. Similarly, the effective rate on stock sight deposits rose by 15 basis points and now sits at 2.49%.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The net flow of sterling money (known as M4ex) fell to -£8.1 billion in August, from -£1.9 billion in the previous month. This was largely driven by a decline in the net flows of non-intermediate other financial corporations’ (NIOFCs’) holdings of money to -£6.6 billion in August, compared to -£3.3 billion in July. Similarly, net flows of PNFCs’ holding of money fell from £1.0 billion in July to -£1.1 billion in August, while net flows of households’ holdings of money decreased from £0.4 billion to -£0.3 billion during the same period.
The flow of sterling net lending to private sector companies and households (M4Lex) amounted to -£1.1 billion in August, down from £7.3 billion in July. This was driven by a fall in the flow of net lending to NIOFCs, from £5.1 billion in July to -£2.9 billion in August, and a decrease in the flow of net lending to PNFCs from £1.3 billion to £0.5 billion. In contrast, the flow of net lending to households saw a modest increase to £1.3 billion, compared to £0.9 billion in July.
Queries
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Next release date: 30 October
