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 borrowed, on net, £2.9 billion of mortgage debt in August, compared to £2.8 billion in July.
- Net mortgage approvals for house purchase rose from 62,500 in July to 64,900 in August, the highest level since August 2022 (72,000). Similarly, approvals for remortgaging increased from 25,200 to 27,200 over the same period.
- Net borrowing of consumer credit by individuals amounted to £1.3 billion in August, a slight increase from £1.2 billion in July.
- Private non-financial corporations (PNFCs) raised, on net, £6.2 billion of finance in August, following net repayments of £4.2 billion in July.
- The net flow of sterling money (known as M4ex) was -£0.1 billion in August, down from £10.0 billion in July. The net flow of M4ex was driven by non-intermediate other financial corporations’ (NIOFCs’) and PNFCs’ holdings of money, which decreased by £5.4 billion and £2.0 billion respectively. These were almost entirely offset by households increasing their holdings of money by £7.3 billion in August.
- The flow of sterling net lending to private sector companies and households (M4Lex) was £2.8 billion in August, compared to £8.6 billion in July. August lending was driven by increases in the flow of net lending to households and PNFCs of £2.5 billion and £1.6 billion respectively.
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 and deposits from individuals
Mortgage lending (M&C Tables D and E):
Net borrowing of mortgage debt by individuals amounted to £2.9 billion in August, compared to £2.8 billion in July. The annual growth rate for net mortgage lending rose for the sixth consecutive month, from 0.6% in July to 0.7% in August, the highest since August 2023 (1.0%). Gross lending saw an increase of £0.3 billion to £19.9 billion in August, while gross repayments increased by £1.3 billion over the same period, to £18.4 billion.
Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, increased by 2,400 to 64,900 in August, the highest level since August 2022 (72,000). Similarly, approvals for remortgaging (which only capture remortgaging with a different lender) rose from 25,200 in July to 27,200 in August, after five consecutive month-on-month decreases (Chart 1).
Chart 1: Mortgage approvals
Seasonally adjusted
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages was 4.84% in August, up from 4.81% in July. The rate on the outstanding stock of mortgages also rose by 3 basis points, to 3.72% in August.
Consumer credit (M&C Tables B and C):
Net consumer credit borrowing increased slightly to £1.3 billion in August, from £1.2 billion in July (Chart 2). This was driven by higher net borrowing through other forms of consumer credit (such as car dealership finance and personal loans), which rose from £0.7 billion in July to £0.8 billion in August, while net borrowing through credit cards was little changed at £0.5 billion in August.
The annual growth rate for all consumer credit was 7.6% in August, down from 7.8% in July. The annual growth rates for other forms of consumer credit and credit card borrowing dipped slightly to 6.5% and 10.0% respectively, from 6.7% and 10.3% in July.
Chart 2: Consumer credit
Seasonally adjusted
The effective interest rate on interest-charging overdrafts saw a 15-basis point increase, from 22.56% in July to 22.71% in August. Similarly, the effective rate on new personal loans to individuals rose by 13 basis points to 9.27%, while the effective rate on interest bearing credit cards decreased slightly from 21.61% to 21.59% over the same period.
Households’ deposits (M&C Table J):
During August, households deposited, on net, an additional £7.3 billion with banks and building societies, up from £5.9 billion in July. Within this, households deposited an additional £4.4 billion into interest-bearing sight accounts, £4.2 billion into ISAs, and £1.8 billion into non-interest bearing sight accounts. These were partly offset by net withdrawals of £0.6 billion from interest-bearing time accounts (Chart 3).
Chart 3: Breakdown of households’ deposits (Household M4)
Seasonally adjusted net flow
The effective interest rate paid on individuals’ new time deposits with banks and building societies fell by 5 basis points to 4.37% in August. The effective rates on the outstanding stock of time and sight deposits were 3.97% and 2.14% in August respectively, both unchanged from July.
Lending to and deposits from businesses
Businesses’ borrowing from banks (M&C Tables F-I):
UK non-financial businesses – private non-financial companies (PNFCs) and public corporations – borrowed, on net, £1.7 billion of bank and building society loans (including overdrafts), compared to £0.3 billion of net borrowing in July. Within this measure, net borrowing by large non-financial businesses rose to £2.3 billion in August, from £0.7 billion in July. Net repayments by small and medium-sized non-financial businesses (SMEs) amounted to £0.6 billion in August, up from £0.4 billion in July.
The annual growth rate of borrowing by large businesses rose from 1.7% in July to 2.9% in August, while the annual growth rate of borrowing by SMEs was little changed at -4.0% (Chart 3).
Chart 4: Annual growth of lending to SMEs and large businesses
Seasonally adjusted
The average cost of new borrowing from banks by UK PNFCs fell by 15 basis points to 6.75% in August. The effective interest rate on new loans to SMEs fell by 30 basis points, from 7.60% in July to 7.30% in August.
Net Finance Raised (M&C Table F):
PNFCs raised, on net, £6.2 billion of finance in August, following net repayments of £4.2 billion in July. This was driven by £3.3 billion of net borrowing through loans from banks and building societies, and £3.0 billion of net bond issuance. These were partly offset by £2.1 billion of net equity buybacks, while commercial paper issuance amounted to net zero in August (Chart 5).
Chart 5: Net finance raised by PNFCs
Seasonally adjusted net flow
Businesses’ deposits:
During August, UK non-financial businesses withdrew £0.6 billion from banks and building societies in all currencies, following net deposits of £0.1 billion in July. The effective rate on new time deposits from PNFCs fell by 34 basis points and now sits at 4.23%. Similarly, the effective rate on stock sight deposits decreased from 2.77% in July to 2.70% in August.
Aggregate money (M4ex) and lending (M4Lex) (M&C Table J)
The net flow of sterling money (knows as M4ex) was -£0.1 billion in August, down from £10.0 billion in July. The net flow of M4ex was driven by non-intermediate other financial corporations’ (NIOFCs’) and PNFCs’ holdings of money, which decreased by £5.4 billion and £2.0 billion respectively, following increases of £3.6 billion and £0.4 billion in July. These were almost entirely offset by households increasing their holdings of money by £7.3 billion in August.
The net flow of sterling net lending to private sector companies and households (M4Lex) was £2.8 billion in August, compared to £8.6 billion in July. August lending was driven by increases in the flow of net lending to households and PNFCs of £2.5 billion and £1.6 billion respectively. By contrast, the flow of net lending to NIOFCs decreased to -£1.4 billion in August, from £3.5 billion in July.
