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:
- Consumers borrowed an additional £1.4 billion in consumer credit, on net, of which £0.7 billion was new lending on credit cards.
- Small and medium sized businesses repaid £0.3 billion of loans in July. This is less than the £1.4 billion repaid in June, and the 16th consecutive month of net repayments. Large non-financial businesses repaid £1.8 billion of bank loans in July, compared to £4.1billion of borrowing in June.
- Private non-financial companies (PNFCs) redeemed £3.2 billion in net finance from capital markets. Within this there were, on net, equity buybacks of £1.9 billion, commercial paper redemptions of £0.8 billion and bond redemptions of £0.6 billion.
- The net flow of sterling money (known as M4ex) increased to £16.8 billion in July, compared with -£6.0 billion in June. Households’ holdings of money saw net flows of £4.3 billion in July, compared with £2.6 billion in June. Flows into Households’ time deposits increased to £2.8bn in July, compared to £2.0 billion in June and the highest since November 2010 (£3.1bn), whilst interest bearing sight deposits remained weak at £0.7 billion.
- The net flow of sterling lending to private sector companies and households (known as M4Lex) increased to £10.5 billion in July, compared to -£3.0 billion in June.
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.
Please note: a review has now been completed and implemented of the seasonally adjusted series, to assess and adjust for the effects of the Covid-19 pandemic since March 2020. Many of the adjusted series are included in this statistical release. Details have been published in the 2022 Covid-19 Review article. A further review will be conducted in due course to assess and adjust for the impact of the Queen’s Platinum Jubilee on May, June and potentially July 2022 data.
Lending to individuals
Mortgage lending (M&C Tables D and E):
Net borrowing of mortgage debt by individuals decreased slightly to £5.1 billion in July, from £5.3 billion in June (Chart 1). This is above the pre-pandemic average of £4.3 billion in the 12 months up to February 2020. Gross lending increased to £26.1 billion in July from £24.6 billion in June, and gross repayments increased to £20.8 billion, from £19.4 billion. Approvals for house purchases, an indicator of future borrowing, increased slightly to 63,800 in July, from 63,200 in June, which is below the 12-month pre-pandemic average up to February 2020 of 66,800. Approvals for remortgaging (which only capture remortgaging with a different lender) increased to 48,400 in July, from 43,300 in June. This also remains below the 12-month pre-pandemic average up to February 2020 of 49,500, however.
Chart 1: Mortgage lending
Seasonally adjusted flows
The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 18 basis points to 2.33% in July and is the highest since June 2016 (2.39%). The rate on the outstanding stock of mortgages ticked up 1 basis point, to 2.12%.
Consumer credit (M&C Tables B and C):
Individuals borrowed an additional £1.4 billion in consumer credit in July, on net, following £1.8 billion of borrowing in June (Chart 2). This is above the 12-month pre-pandemic average up to February 2020 of £1.0 billion. The additional consumer credit borrowing in July was split between £0.7 billion on credit cards, and £0.7 billion through other forms of consumer credit (such as car dealership finance and personal loans).
The annual growth rate for all consumer credit increased to 6.9% in July; the highest rate since March 2019 (7.2%). The annual growth rate of credit card borrowing was 13.0%, while other forms of consumer credit was 4.5%. These were the highest rates since October 2005 (13.7%) and March 2020 (5.6%) respectively.
Chart 2: Consumer credit
Seasonally adjusted
Rates on new personal loans to individuals increased by 19 basis points to 6.89% in July, similar to the February 2020 (pre-pandemic) level of 6.90%. The effective rate on interest bearing credit cards was broadly unchanged at 18.57% in July, and sits 2 basis point above the February 2020 level. The effective interest rate on interest-charging overdrafts in July decreased to 19.90% from 20.23% in June.
Households’ deposits (M&C Table J):
Households deposited an additional £4.3 billion with banks and building societies in July, compared to £2.6 billion in June. Within the household deposits measure, flows into time deposits remained strong at £2.8bn, which is the highest since November 2010 (£3.1bn). Flows into interest bearing sight deposits remained weak at £0.7bn, though up from -£0.9bn in June. Non-interest bearing sight deposits were £1.1bn, up from -£0.2bn in June. During July, households also deposited £0.3 billion into National Savings and Investment (NS&I) accounts (compared to £0.4 billion in June), which are not captured within household deposits with banks and building societies but can act as a substitute for them. The combined net flow into both deposits and NS&I accounts in July was £4.6 billion, up from £3.0 billion in June but remaining below the average monthly net flow of £5.5 billion during the 12-month pre-pandemic period up to February 2020 (Chart 3).
Chart 3: Households’ deposits
Seasonally adjusted net flow
The effective interest rate paid on individuals’ new time deposits with banks and building societies rose from 1.58% in June to 1.72% in July. The effective rate on the outstanding stock of time deposits ticked up 9 basis points to 0.63% in July. The effective rates on stock sight deposits ticked up 6 basis points to 0.27%.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
UK non-financial businesses (PNFCs and public corporations) repaid £2.1 billion of bank and building society loans in July (including overdrafts), on net, compared to £2.7 billion of borrowing in June. Within this, large non-financial businesses repaid, on net, £1.8 billion in July, compared to £4.1 billion of borrowing in June. Small and Medium sized non-financial businesses (SMEs) repaid £0.3 billion in July, on net, compared to a £1.4 billion net repayment in June. The net loan repayment by SMEs in July marked the sixteenth consecutive month of net repayments.
The annual growth rate of borrowing by large businesses decreased by 130 basis points to 5.4% in July, whilst for SMEs it rose by 17 basis points to -4.6% (Chart 4).
The average cost of new borrowing from banks by UK PNFCs increased 7 basis points to an effective interest rate of 3.18% in July, and now sits 63 basis points above the February 2020 rate of 2.56%. Effective interest rates on new loans to SMEs increased 13 basis points to 3.62% in July, remaining above February 2020 rates (3.44%).
Chart 4: Annual growth of lending to SMEs and large businesses
Seasonally adjusted
Market Finance (M&C Table F):
Private non-financial companies (PNFCs) redeemed net £3.2 billion of market finance (the sum of net equity, bond and commercial paper issuance) in July (Chart 5), in comparison to £9.2 billion redeemed in June. Within this, on net, companies bought back £1.9 billion of shares in July, redeemed £0.6 billion of bonds, and redeemed £0.8 billion of commercial paper, on net.
Businesses’ deposits:
In July, UK non-financial businesses withdrew £11.4 billion, on net, with banks and building societies in all currencies, compared to deposits of £10.5 billion in June.
The effective rate on new time deposits increased by 11 basis points to 1.23%, which is the highest since January 2009 (1.37%) and the effective rate on stock sight deposits increased by 2 basis points, to 0.32%.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The flow of sterling money (known as M4ex) increased to £16.8 billion in July, compared with -£6.0 billion in June. PNFCs’ holdings of money saw net flows of £0.1 billion, compared to -£9.4 billion in June.
The flow of sterling net lending to private sector companies and households, or M4Lex, increased to £10.5 billion in July. This was higher than the £3.0 billion of repayments in June.
Queries
If you have any comments or queries about this release please email DSD_MS@bankofengland.co.uk.
Next release date: 29 September 2022
