Money and Credit - December 2023

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:

• Individuals repaid, on net, £0.8 billion of mortgage debt in December compared to net zero in November.
• Net mortgage approvals for house purchases rose from 49,300 in November to 50,500 in December. Net approvals for remortgaging increased from 25,700 in November to 30,800 in December.
• The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 6 basis points to 5.28% in December. The first drop since November 2021.
• Net borrowing of consumer credit by individuals fell to £1.2 billion in December, from £2.1 billion in November.
• Households deposited, on net, £5.4 billion with banks and building societies in December. Households, on aggregate, did not follow the recent trend of withdrawing from sight deposit accounts, and for the first time since May 2022, flows into sight deposits were higher than time deposits.
• UK non-financial businesses (PNFCs and public corporations) borrowed, on net, £0.7 billion, following £1.4 billion of repayments in November.
• The net flow of sterling money (known as M4ex) continued to be volatile month-on-month. M4ex increased by £19.9 billion in December, compared to a decrease of £2.9 billion in November. As seen in recent months, flows have largely been driven by movements in non-intermediate other financial corporations’ (NIOFCs’) holdings of money. These holdings increased by £15.6 billion in December, compared to a decrease of £6.9 billion in November. Households also contributed to the growth in M4ex, albeit to a lesser extent.
• The flow of sterling net lending to private sector companies and households (M4Lex) amounted to £6.4 billion in December, down from £12.7 billion in November. This was mainly driven by a decrease in the flow of lending to NIOFCs.

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):

Individuals repaid, on net, £0.8 billion of mortgage debt in December compared to net zero in November. The annual growth rate for net mortgage lending was flat for the first time since the series began in March 1994, a new series low. Gross lending continued to increase, from £16.4 billion in November to £17.2 billion in December. Gross repayments also increased, from £15.6 billion to £19.1 billion over the same period.

Net approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, rose from 49,300 in November to 50,500 in December (Chart 1). Net approvals for remortgaging (which only capture remortgaging with a different lender) increased from 25,700 in November to 30,800 in December.

Chart 1: Mortgage approvals

Seasonally adjusted

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 6 basis points, to 5.28% in December. The first drop since November 2021. The rate on the outstanding stock of mortgages increased by 9 basis points, from 3.27% in November to 3.36% in December.

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

Net consumer credit borrowing fell to £1.2 billion in December, from £2.1 billion in November (Chart 2). This was mainly driven by lower borrowing through credit cards, which fell from £1.0 billion in November to £0.3 billion in December. Similarly, net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) also decreased, from £1.1 billion in November to £0.9 billion in December.

The annual growth rate for all consumer credit decreased slightly, and is now at 8.5% in December. This reflects a fall in the annual growth rate for other forms of consumer credit, from 6.9% in November to 6.7% in December. This fall was partially offset by credit card borrowing growing slightly, from 12.4% to 12.7%, the highest rate since February 2023.