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 decreased from £1.1 billion in August to -£0.9 billion in September – the lowest since April 2023.
- Net mortgage approvals for house purchases fell to 43,300 in September, the lowest level since January 2023. Net approvals for remortgaging fell to 20,600 in September, the lowest level since January 1999.
- The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a 19 basis point increase and now sits at 5.01%.
- Net borrowing of consumer credit by individuals amounted to £1.4 billion in September, down from £1.7 billion in the previous month.
- Households withdrew £0.7 billion from banks and building societies in September. This was driven by net outflows from interest-bearing and non-interest bearing sight deposit accounts of £6.2 billion and £2.8 billion respectively. These were partly offset by net flows of £5.3 billion into time deposit accounts, which were down from inflows of £8.0 billion in August.
- UK non-financial businesses (PNFCs and public corporations) borrowed a net £5.2 billion from banks and building societies (including overdrafts), following net zero in August.
- Households’ net deposit flows into National Savings and Investment (NS&I) rose sharply to £7.7bn in September, the highest since August 2020, following net deposits of £0.3 billion in August.
- During September, UK non-financial businesses withdrew £4.4 billion from banks and building societies in all currencies, following net deposits of £3.2 billion in August.
- The net flow of sterling money (known as M4ex) fell sharply to -£31.5 billion in September, from -£7.5 billion in August. This was driven by net flows of -£29.1 billion by non-intermediate other financial corporations’ (NIOFCs’). The flow of sterling net lending to private sector companies and households (M4Lex) amounted to £3.4 billion in September, up from -£0.8 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 decreased from £1.1 billion in August to -£0.9 billion in September. This was the lowest since April 2023 (-£1.3 billion). Gross lending fell from £19.4 billion in August to £18.6 billion in September, while gross repayments rose from £19.0 billion to £19.5 billion over the same period.
Net approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, continued to fall from 45,400 in August to 43,300 in September, the lowest level since January 2023 (39,900) (Chart 1). Net approvals for remortgaging (which only capture remortgaging with a different lender) continued to decline from 25,100 in August to 20,600 in September, the lowest level since January 1999 (18,300).
Chart 1: Mortgage approvals
Seasonally adjusted
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose by 19 basis points to 5.01% in September. Similarly, the rate on the outstanding stock of mortgages saw an 8 basis point increase, from 3.06% in August to 3.14% in September.
Consumer credit (M&C Tables B and C):
Net consumer credit borrowing fell to £1.4 billion in September from £1.7 billion in August (Chart 2). This was largely driven by decreased borrowing through other forms of consumer credit (such as car dealership finance and personal loans), from £1.0 billion in August to £0.8 billion in September. Net borrowing on credit cards also saw a decrease, though smaller, from £0.7 billion to £0.6 billion, during the same period.
The annual growth rate for all consumer credit rose to 8.0% in September, the highest since November 2018. This was driven by a rise in the annual growth rate for credit card borrowing from 11.8% in August to 12.5% in September, and other forms of consumer credit from 5.9% to 6.0% (the highest since February 2020) over the same period.
Chart 2: Consumer credit
Seasonally adjusted
The effective interest rate on interest-charging overdrafts increased by 35 basis points to 22.49% in September. The effective rate on interest bearing credit cards increased by 12 basis points to 20.89%. By contrast, the effective rate on new personal loans to individuals saw a 34 basis point decrease, and now sits at 8.73%.
Households’ deposits (M&C Table J):
Households withdrew, on net, £0.7 billion from banks and building societies in September, continuing the trend from August. This was driven by net outflows from interest-bearing and non-interest bearing sight deposit accounts of £6.2 billion and £2.8 billion respectively, following outflows of £6.1 billion and £6.0 billion in August. These were partly offset by net inflows into interest-bearing time deposit accounts, which fell from £8.0 billion in August to £5.3 billion in September (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) rose sharply to £7.7 billion in September, the highest since August 2020 (£9.8bn), following net deposits of £0.3 billion in August. 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 witnessed the sharp increase from £0.2 billion in August to £7.0 billion in September, and rose above the average monthly net flow of £0.7 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 9 basis points and now sits at 5.21%. Similarly, the effective rate on the outstanding stock of time deposits saw a 19 basis point increase to 3.37% in September, while the effective rate on stock sight deposits rose from 1.83% in August to 1.96% in September.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
During September, UK non-financial businesses (PNFCs and public corporations) borrowed a net £5.2 billion from banks and building societies (including overdrafts), following net zero in August. Within this measure, net repayments by small and medium-sized non-financial businesses (SMEs) rose from £0.7 billion in August to £0.8 billion in September. By contrast, net borrowing by large non-financial businesses increased to £6.0 billion in September, from £0.7 billion in the previous month.
The annual growth rate of borrowing by large businesses was 0.4% in September, up from -0.9% in August. The annual growth rate of borrowing by SMEs fell slightly further in September to -5.0%, from -4.6% 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 fell from 6.97% in August to 6.63% in September, and now sits 460 basis points above the December 2021 rate of 2.03% (when Bank rate increases began). The effective interest rate on new loans to SMEs decreased by 6 basis points to 7.59% in September, compared to 2.51% in December 2021.
Market Finance (M&C Table F):
September ended the 7-month streak of month of net repayments in market finance by private non-financial companies (PNFC). Net finance raised by private non-financial companies (PNFC) was at £1.8 billion of net borrowing in September, following the net repayments of £4.9 billion of in August. The increase in net finance raised was mainly driven by £3.1 billion of net bond issuance compared with £3.7 billion of net redemptions in August. In contrast, net equity buybacks remained at £0.8 billion from August to September, while companies redeemed, on net, £0.5 billion of commercial paper (Chart 6).
Businesses’ deposits:
During September, UK non-financial businesses withdrew £4.4 billion from banks and building societies in all currencies, following net deposits of £3.2 billion in August. The effective rate on new time deposits saw a three basis point increase to 4.78% in September. Similarly, the effective rate on stock sight deposits rose by 11 basis points, and now sits at 2.60%.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The net flow of sterling money (known as M4ex) fell sharply to -£31.5 billion in September, from -£7.5 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 -£29.1 billion in September, compared to -£6.3 billion in August. Similarly, net flows of PNFCs’ holding of money fell from -£1.1 billion in August to -£1.7 billion in September, while net flows of households’ holdings of money also decreased from -£0.1 billion to -£0.7 billion during the same period. The 12-month growth rate for monthly household M4 is at its lowest since records began in September 1998 sitting at 0.8 %.
The flow of sterling net lending to private sector companies and households (M4Lex) amounted to £3.4 billion in September, up from -£0.8 billion in August. This was driven by an increase in the flow of net lending to NIOFCs, from -£2.9 billion in August to £3.2 billion in September, and an increase in the flow of net lending to PNFCs from £0.6 billion to £0.8 billion. By contrast, the flow of net lending to households decreased to -£0.6 billion, from £1.5 billion in August.
Queries
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Next release date: 29 November 2023
