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, £1.1 billion of mortgage debt in January compared to £0.9 billion in December.
- Net mortgage approvals for house purchases rose from 51,500 in December to 55,200 in January. Net approvals for remortgaging remained stable at 30,900 in January.
- The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 9 basis points, to 5.19% in January.
- Net borrowing of consumer credit by individuals rose to £1.9 billion in January, from £1.3 billion in December.
- Households deposited, on net, £6.8 billion with banks and building societies in January.
- UK non-financial businesses (PNFCs and public corporations) borrowed, on net, £0.3 billion, up from £0.1 billion in December.
- The net flow of sterling money (known as M4ex) continued to be volatile month-on-month. M4ex fell by £0.6 billion in January, compared to an increase of £19.4 billion in December. As seen in recent months, flows have largely been driven by movements in non-intermediate other financial corporations’ (NIOFCs’) holdings of money. These holdings decreased by £6.9 billion in January, compared to an increase of £15.0 billion in December.
- The flow of sterling net lending to private sector companies and households (M4Lex) amounted to -£3.5 billion in January, down from £6.4 billion in December. 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, £1.1 billion of mortgage debt in January, compared to £0.9 billion in December. The annual growth rate for net mortgage lending was negative for the first time since the series began in March 1994, at -0.2%, a new series low. Gross lending decreased, from £17.2 billion in December to £16.9 billion in January. Gross repayments over the same period also decreased, from £19.0 billion to £18.5 billion.
Net approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, rose from 51,500 in December to 55,200 in January (Chart 1). Net approvals for remortgaging (which only capture remortgaging with a different lender) remained stable at 30,900 in January.
Chart 1: Mortgage approvals
Seasonally adjusted
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 9 basis points, to 5.19% in January. The rate on the outstanding stock of mortgages increased by 5 basis points, from 3.36% in December to 3.41% in January.
Consumer credit (M&C Tables B and C):
Net consumer credit borrowing rose to £1.9 billion in January, from £1.3 billion in December (Chart 2). This was mainly driven by higher borrowing through credit cards, which rose from £0.3 billion in December to £0.9 billion in January. Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) also increased slightly, from £0.9 billion in December to £1.0 billion in January.
The annual growth rate for all consumer credit increased, and is now at 8.9% in January. This reflects a rise in the annual growth rate for other forms of consumer credit, from 6.8% in December to 7.4% in January. This increase was partially offset by credit card borrowing falling slightly, from 12.8% to 12.6%.
Chart 2: Consumer credit
Seasonally adjusted
The effective interest rate on interest-charging overdrafts increased by 101 basis points, to 22.92% in January. The effective rate on interest-bearing credit cards also increased, by 43 basis points, to 21.29%. By contrast, the effective rate on new personal loans to individuals saw a 15 basis point drop, and now sits at 9.02%.
Households’ deposits (M&C Table J):
Households deposited, on net, £6.8 billion with banks and building societies in January. Flows into sight deposits of £7.2 billion were higher than time deposits of £0.1 billion. The flows into interest-bearing sight deposits were partly offset by net outflows from non-interest bearing accounts of £4.1 billion (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 -£0.8 billion in January, from £0.6 billion in December. Deposits into NS&I accounts are not captured within households’ deposits with banks and building societies, but can act as a substitute for them. Overall households’ deposits with banks and building societies, as well as NS&I accounts, grew by £6.0 billion in January. This is more than the average monthly rate of £5.3 billion over the past 6 months, but less than the £7.5 billion observed in October 2023 (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 fell by 27 basis points, to 4.53%. The effective rate on the outstanding stock of time deposits increased by 5 basis points to 3.76% in January, and the effective rate on stock sight deposits increased by 4 basis points to 2.07%.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
During January, UK non-financial businesses (PNFCs and public corporations) borrowed, on net, £0.3 billion from banks and building societies (including overdrafts), up from £0.1 billion in December. Within this measure, large non-financial businesses borrowed £0.4 billion in January, down from a net borrowing of £1.1 billion in December.
Net borrowing by small and medium-sized non-financial businesses (SMEs) increased from net repayments of £1.0 billion in December, to net repayments of £0.1 billion in January.
The annual growth rate of borrowing by large businesses was 1.3% in January, up from 0.7% in December. The growth rate of lending to SMEs increased slightly from -5.0% in December to -4.8% in January.
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 6.78% in December to 7.01% in January. Similarly, the effective interest rate on new loans to SMEs increased by 4 basis points, to 7.50% in January.
Net Finance Raised (M&C Table F):
In January, private non-financial corporations (PNFCs) repaid, on net, £3.8 billion from MFIs and market finance, an increase from net repayments of £1.5 billion in December. Within this, PNFCs repaid, on net, £2.9 billion of loans, bought back £1.9 billion of equity and issued £0.6, and £0.2 billion of bonds and commercial paper, respectively. (Chart 6).
Businesses’ deposits:
During January, UK non-financial businesses withdrew £19.9 billion from banks and building societies in all currencies, following withdrawals of £5.5 billion in December. The effective rate on new time deposits from PNFCs saw a 7 basis point decrease, to 4.65% in January. In contrast, the effective rate on stock sight deposits increased by 7 basis points, and now sits at 2.69%.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The net flow of sterling money (known as M4ex) continued to be volatile month-on-month. M4ex fell by £0.6 billion in January, compared to an increase of £19.4 billion in December. As seen in recent months, flows have largely been driven by movements in non-intermediate other financial corporations’ (NIOFCs’) holdings of money. These holdings decreased by £6.9 billion in January, compared to an increase of £15.0 billion in December. This decrease was partially offset by the net flow of PNFCs’ holdings of money, which sat at -£0.4 billion in January, up from -£1.3 billion in December. Households also increased holdings of money by £6.8 billion in January, compared to £5.7 billion in December.
The flow of sterling net lending to private sector companies and households (M4Lex) was -£3.5 billion in January, down from £6.4 billion in December. This was mainly driven by a decrease in the flow of lending to NIOFCs, from £7.2 billion in December, to -£4.0 billion in January. The flows of lending to households also contributed to this, falling from £0.2 billion net repayments in December, to £0.5 billion net repayments in January. The flow of lending to PNFCs partly offset this, which increased from £0.6 billion of net repayments, to £1.0 billion in net borrowing.
Queries
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Next release date: 2 April 2024
