Money and Credit – November 2023

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:

• Mortgage lending to individuals was at net zero in November compared to £0.1 billion of net repayments in October.
• Net mortgage approvals for house purchases rose from 47,900 in October to 50,100 in November. Net approvals for remortgaging increased from 24,000 in October to 27,000 in November.
• The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a 9 basis point increase and now sits at 5.34% in November.
• Net borrowing of consumer credit by individuals amounted to £2.0 billion in November, up from £1.4 billion in the previous month.
• As seen over 2023, households continue to move deposits into higher interest time deposit accounts, in turn withdrawing from sight accounts. Households deposited £3.4 billion with banks and building societies in November. This was driven by net inflows of £3.7 billion into both time deposits and ISAs. These were partly offset by net outflows from sight deposit accounts of around £2.6 billion.
• UK non-financial businesses (PNFCs and public corporations) repaid, on net, £1.6 billion of loans in November, following net repayments of £1.8 billion in October.
• The net flow of sterling money (known as M4ex) continued to be volatile month-on-month. M4ex decreased by £3.2 billion in November, compared to an increase of £13.4 billion in October. As seen in previous months, flows have largely been driven by movements within non-intermediate other financial corporations’ (NIOFCs’) holdings of money. These holdings fell by £6.6 billion in November, compared to an increase of £10.0 billion in October. The flow of sterling net lending to private sector companies and households (M4Lex) amounted to £12.5 billion in November, up from £2.2 billion of net repayments in October. This was mainly driven by an increase 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):

Mortgage lending to individuals was at net zero in November compared to £0.1 billion of net repayments in October. The annual growth rate for net mortgage lending reached 0.3% in November, the lowest since the monthly series began in March 1994. Gross lending increased from £15.9 billion in October to £16.6 billion in November, while gross repayments decreased from £17.2 billion to £15.6 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 47,900 in October to 50,100 in November (Chart 1). Net approvals for remortgaging (which only capture remortgaging with a different lender) increased from 24,000 in October to 27,000 in November.

Chart 1: Mortgage approvals

Seasonally adjusted

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose by 9 basis points to 5.34% in November. Similarly, the rate on the outstanding stock of mortgages saw a 7 basis point increase, from 3.20% in October to 3.27% in November.

Consumer credit (M&C Tables B and C):

Net consumer credit borrowing rose to £2.0 billion in November from £1.4 billion in October (Chart 2). This was mainly driven by increased net borrowing through credit cards, from £0.5 billion in October to £1.0 billion in November. Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) increased slightly, from £0.9bn in October to £1.0 billion in November.

The annual growth rate for all consumer credit continued to increase, and is now at 8.6% in November, the highest since September 2018. This was driven by a rise in the annual growth rate for other forms of consumer credit from 6.3% in October to 6.9% in November (the highest since December 2019), while the growth rate for credit card borrowing remained stable at 12.5% for the third consecutive month.

The effective interest rate on interest-charging overdrafts decreased by 7 basis points to 22.45% in November. The effective rate on interest bearing credit cards decreased by 11 basis points to 20.94%. By contrast, the effective rate on new personal loans to individuals saw a 34 basis point increase, and now sits at 9.05%.

Households’ deposits (M&C Table J):

As seen over the past year, households continue to move deposits into higher interest time deposit accounts, in turn withdrawing from sight accounts. Households deposited, on net, £3.4 billion with banks and building societies in November. This was driven by net inflows of £3.7 billion into both time deposits and ISAs. These were partly offset by net outflows from sight deposit accounts of around £2.6 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 £0.4 billion in November, following net deposits of £2.3 billion in October. 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 £3.8 billion in November. This is more than the average monthly rate of £3.5 billion over the past 6 months, but significantly less than the £6.8 billion observed in October (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 20 basis points and now sits at 5.07%. The effective rate on the outstanding stock of time deposits saw an 11 basis point increase to 3.62% in November, while the effective rate on stock sight deposits also rose, from 1.99% in October to 2.03% in November.

Lending to and deposits from businesses

Businesses’ borrowing from banks (M&C Tables F-I):

During November, UK non-financial businesses (PNFCs and public corporations) repaid, on net, £1.6 billion from banks and building societies (including overdrafts), following £1.8 billion of repayments in October. Within this measure, net repayments by small and medium-sized non-financial businesses (SMEs) reduced from £1.0 billion in October to £0.6 billion in November. Large non-financial businesses repayments remained at around £1.0 billion.

The annual growth rate of borrowing by large businesses was 1.0% in November, down from 2.1% in October. Lending to SMEs continued to contract at around the same rate as has been observed since around January 2022, the annual growth rate decreased from -4.6% in October to -4.9% in November.

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 6.88% in October to 7.00% in November. The effective interest rate on new loans to SMEs increased by 31 basis points to 7.65% in November.

Market Finance (M&C Table F):

In November, private non-financial companies (PNFC) repaid, on net, £2.2 billion of market finance, similar to October. The net repayments were driven by £0.9 billion of net equity buybacks, £1.2 billion of net bond redemptions, and £0.1 billion of net commercial paper redemptions (Chart 6).

Chart 6: Net finance raised by PNFCs

Seasonally adjusted net flow

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Next release date: 30 January 2024