Lending and deposits from individuals Net borrowing from individuals on mortgage debt rose to £2.7bn in June, up from £1.3bn in May. As a result, the annual growth rate of net mortgage lending rose to 0.5% in June, up from 0.3% in May, continuing the upward trend seen in previous months.
Lending and related actions: Gross lending: fell to £20.8bn in June, from £22.6bn in May.
Gross repayments: fell by £1.6bn over the same period, to £18.7bn.
Mortgage approvals: Net mortgage approvals: remained stable at 60,000 in June.
Remortgage approvals: fell to 27,500 in June, from 29,300 in May. These figures show a mixed picture of mortgage lending activity, with net borrowing continuing to rise while some aspects of mortgage approvals declined.
Net sterling money flows up in June: Net sterling money flows (known as M4ex) rose to £4.1bn in June, up from £3.4bn in May. This was largely driven by an increase in household money holdings, which rose by £8.4bn in June compared to £6.5bn in May. Of this increase, households deposited an additional £3.4bn into individual savings accounts.
Factors affecting M4ex Household holdings: up by £8.4bn. PNFCs and NIOFCs: down by £1.8bn and £2.4bn respectively.
Effective interest rates on interest-bearing overdrafts fell by 23bps to 22.35% in June. The effective interest rate on interest-bearing credit cards also fell, to 21.28% from 21.65% over the same period, a decrease of 37 basis points. However, the effective interest rate on new personal loans to individuals remained unchanged, at 8.93% over the same period.
Net lending flows and interest rates
June saw notable changes in interest rates and consumer credit, with interest rates on new mortgages and the stock of mortgages outstanding rising. At the same time, net consumer borrowing fell slightly, reflecting a decline in borrowing via credit cards and other forms of consumer credit. These changes led to lower annual growth rates for all consumer loans, suggesting a slight slowdown in consumer borrowing activity in June.
Lending to non-intermediated financial firms: fell to £0.2 billion from £0.5 billion over the same period. These figures reflect an improvement in the flow of funds and lending in the UK market, suggesting a potential recovery in economic activity and increased confidence among households and businesses.
Analysis of changes in interest rates and consumer credit for June:
Mortgage interest rates: New mortgages: The “effective” interest rate – the actual interest paid – on new mortgages rose slightly by 3 basis points to 4.82% in June.
Outstanding stock of mortgages: The interest rate rose by around 4 basis points to 3.65% in June compared to 3.61% in May.
Consumer credit Net consumer borrowing: Diminished slightly in June to £1.2bn, from £1.5bn in May.
Credit cards: Net borrowing fell to £0.5bn in June from £0.6bn in May.
Other forms of consumer credit: Net borrowing fell to £0.7bn from £0.9bn over the same period.
Consumer loan annual growth rates: All consumer loans: Annual growth rate fell to 8.0% in June, from 8.4% in May.
Credit card borrowing: Annual growth rate slowed to 10.5% in June from 10.8% in May.
Other forms of consumer lending: Annual growth rate slowed to 7.0% in June from 7.3% in May.
Analysis of the cost of borrowing and combined financing for June
Household deposits: Household deposits with banks and building companies rose by £8.4 billion in June. This was driven by an additional £3.4 billion in individual savings accounts. Households also deposited £2.1 billion, £1.5 billion and £0.6 billion in demand accounts, term accounts and non-interest-bearing demand accounts respectively.
The effective interest rate paid on new deposits by individuals with banks and building companies was largely flat at 4.44% in June. The effective rate on the outstanding stock of term deposits rose by 4 basis points to 3.96%, while the effective rate on demand deposits fell by 3 basis points to 2.11% in June.
Aggregate borrowing and funding cost analysis for June: Cost of borrowing and non-bank personal finance institutions: The average cost of new borrowing from banks was 6.85% in June, down 33 basis points from 7.18% in May. SMEs: The effective interest rate on new loans was 7.53%, down 29bps from 7.82% in May.
Net syndicated financing: PNFCs raised net financing of £6.7bn in June, up from £4.2bn in May.
Bond issuance: Contributed net bond issuance of £4.0bn.
Loans: Raised £3.6bn from banks and building societies.
Share buybacks: Part of the funding was offset by share buybacks of £1.2bn.
Commercial paper issuance: PNFCs issued a net £0.5bn of commercial paper in June, up from £0.2bn in May.
June saw a fall in the cost of borrowing for both NBFIs and SMEs in the UK, reflecting an improvement in borrowing conditions. Meanwhile, private non-financial companies (PNFCs) raised more net financing than the previous month, thanks to bond and loan issues.
