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, £0.1 billion of mortgage debt in October compared to £1.0 billion of net repayments in September.
- Net mortgage approvals for house purchases rose from 43,700 in September to 47,400 in October. Net approvals for remortgaging increased from 20,600 in September to 23,700 in October.
- The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a 24 basis point increase and now sits at 5.25%.
- Net borrowing of consumer credit by individuals amounted to £1.3 billion in October, down from £1.4 billion in the previous month.
- Following withdrawals of roughly £0.8 billion across August and September, households deposited £4.6 billion with banks and building societies in October, the highest since November 2022. This was driven by net flows into interest-bearing time deposits of £4.0 billion, but were partly offset by net outflows from non-interest bearing sight deposit accounts amounting to £1.7 billion in October.
- Households’ net deposit flows into National Savings and Investment (NS&I) decreased to £2.2 billion in October, following net deposits of £7.7 billion in September.
- UK non-financial businesses (PNFCs and public corporations) repaid, on net, £1.1 billion of loans in October, following net borrowing of £5.0 billion in September.
- The net flow of sterling money (known as M4ex) rose sharply to £13.9 billion in October, from -£28.8 billion in the previous month. This was largely driven by a rise in the net flows of non-intermediate other financial corporations’ (NIOFCs’) holdings of money to £10.3 billion in October, compared to -£26.3 billion in September. The flow of sterling net lending to private sector companies and households (M4Lex) amounted to -£2.3 billion in October, down from £3.4 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):
Individuals repaid, on net, £0.1 billion of mortgage debt in October compared to £1.0 billion of net repayments in September. Gross lending fell from £18.1 billion in September to £16.2 billion in October and gross repayments decreased from £19.5 billion to £17.2 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 43,700 in September to 47,400 in October (Chart 1). Net approvals for remortgaging (which only capture remortgaging with a different lender) increased from 20,600 in September to 23,700 in October.
Chart 1: Mortgage approvals
Seasonally adjusted
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose by 24 basis points to 5.25% in October. Similarly, the rate on the outstanding stock of mortgages saw a 6 basis point increase, from 3.14% in September to 3.20% in October.
Consumer credit (M&C Tables B and C):
Net consumer credit borrowing fell to £1.3 billion in October from £1.4 billion in September (Chart 2). This was driven by decreased net borrowing through credit cards, from £0.6 billion in September to £0.5 billion in October. Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) remained stable at £0.8 billion during the same period.
The annual growth rate for all consumer credit continued to increase, and is now at 8.1% in October, the highest since October 2018. This was driven by a rise in the annual growth rate for other forms of consumer credit from 6.0% in September to 6.3% in October (the highest since February 2020), while the growth rate for credit card borrowing decreased slightly from 12.5% to 12.4% over the same period.
Chart 2: Consumer credit
Seasonally adjusted
The effective interest rate on interest-charging overdrafts increased by 3 basis points to 22.52% in October. The effective rate on interest bearing credit cards increased by 16 basis points to 21.05%. By contrast, the effective rate on new personal loans to individuals saw a 2 basis point decrease, and now sits at 8.71%.
Households’ deposits (M&C Table J):
Households deposited, on net, £4.6 billion with banks and building societies in October, the highest since November 2022 (£4.8 billion). This was driven by net inflows to interest-bearing time deposits of £4.0 billion, following inflows of £5.0 billion in September. These were partly offset by net outflows from non-interest bearing sight deposit accounts amounting to £1.7 billion in October, following net outflows of £2.0 billion in September. There were zero net flows of interest-bearing sight deposits in October, which followed net outflows of £6.2 billion in September, and 12 months of consecutive net withdrawals from these accounts (Chart 3).
Chart 3: Breakdown of households’ deposits (Household M4)
Seasonally adjusted net flow
Households’ net deposit flows into National Savings and Investment (NS&I) decreased to £2.2 billion in October, following net deposits of £7.7 billion in September. 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 decrease from £7.0 billion in September to £6.8 billion in October, and remained above the average monthly net flow of £1.7 billion during the previous six months (Chart 4).
Chart 4: Household deposits
Seasonally adjusted net flow
The effective interest rate paid on individuals’ new time deposits with banks and building societies rose by 6 basis points and now sits at 5.27%. Similarly, the effective rate on the outstanding stock of time deposits saw a 15 basis point increase to 3.52% in October, while the effective rate on stock sight deposits rose from 1.96% in September to 1.99% in October.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
During October, UK non-financial businesses (PNFCs and public corporations) repaid, on net, £1.1 billion from banks and building societies (including overdrafts), following £5.0 billion of borrowing in September. Within this measure, net repayments by small and medium-sized non-financial businesses (SMEs) decreased from £1.0 billion in September to £0.3 billion in October. Large non-financial businesses repaid, on net, £0.8 billion in October, reversing £6.1 billion of net borrowing in the previous month.
The annual growth rate of borrowing by large businesses was 2.1% in October, up from 0.4% in September. The annual growth rate of borrowing by SMEs increased slightly in October to -4.6%, from -5.0% in the previous month (Chart 5).
Chart 5: Annual growth of lending to SMEs and large businesses
Seasonally adjusted
The average cost of new borrowing from banks by UK PNFCs rose from 6.63% in September to 6.88% in October. The effective interest rate on new loans to SMEs decreased by 25 basis points to 7.34% in October.
Market Finance (M&C Table F):
In October, private non-financial companies (PNFC) repaid, on net, £2.3 billion of market finance, following net borrowing of £1.9 billion in September. The decrease in net finance raised by companies was driven by £1.3 billion of net equity buybacks and £1.3 billion of bond redemptions, compared with £0.7 billion in equity buybacks and £3.1 billion of bond issuance in September. In contrast, companies issued, on net, £0.3 billion of commercial paper compared with £0.5 billion net redemptions in September (Chart 6).
Chart 6: Net finance raised by PNFCs
Seasonally adjusted net flow
Businesses’ deposits:
During October, UK non-financial businesses withdrew £3.3 billion from banks and building societies in all currencies, following withdrawals of £4.4 billion in September. The effective rate on new time deposits saw a 5 basis point decrease to 4.73% in October. Similarly, the effective rate on stock sight deposits decreased by 4 basis points, and now sits at 2.56%.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The net flow of sterling money (known as M4ex) rose sharply to £13.9 billion in October, from -£28.8 billion in the previous month. This was largely driven by a rise in the net flows of non-intermediate other financial corporations’ (NIOFCs’) holdings of money to £10.3 billion in October, compared to -£26.3 billion in September. Similarly, there was an increase in household holdings of money to £4.6 billion from -£0.7 billion in September. Net flows of PNFCs’ holding of money rose from -£1.8 billion in September to -£1.0 billion in October.
The flow of sterling net repayments from private sector companies and households (M4Lex) amounted to -£2.3 billion in October, down from £3.4 billion of net lending in September. This was driven by a decrease in the flow of net lending to NIOFCs, from £3.2 billion in September to -£2.7 billion in October, and an accompanying decrease in lending to PNFCs from £0.9 billion to -£0.6 billion. By contrast, the flow of net lending to households increased from -£0.7 billion in September to £1.0 billion in October.
Queries
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Next release date: 4 January 2024