By The latest data on household and business borrowing and deposits shows dynamic shifts in the UK banking landscape. These statistics are essential to the Bank of England’s analysis of the nation’s economic trends, providing key insights into mortgage lending, consumer credit, business borrowing, and deposit patterns.
Key Highlights:
- Mortgage Lending: Net borrowing of mortgage debt dropped by £0.3 billion to £2.5 billion, while net approvals for house purchases rose to 65,600, the highest since August 2022. Remortgaging approvals also increased, up 3,100 to 30,800 in September.
- Consumer Credit: Net consumer credit borrowing by individuals decreased to £1.2 billion from £1.4 billion in August. Credit card borrowing declined slightly, with a fall from £0.5 billion to £0.4 billion, while other forms of consumer credit saw a modest reduction as well.
- Business Borrowing and Finance: Private non-financial corporations raised £3.2 billion in net finance, a decrease from August’s £6.9 billion. Within this, bond issuance and bank loans were the primary sources of new funding, while equity buybacks and commercial paper repayments offset some of the growth.
- Household Deposits: Households increased their bank and building society deposits by £8.2 billion in September. This growth included notable increases in deposits into ISAs, interest-bearing accounts, and non-interest-bearing sight accounts.
- Aggregate Lending and Money Flow: Total sterling money flow (M4ex) rose significantly to £8.9 billion, while net lending (M4Lex) increased to £15.4 billion in September, driven by growth in lending to households, non-intermediate other financial corporations, and private non-financial companies.
The September report presents a complex economic environment, with steady demand in housing and stable consumer credit growth, contrasted by businesses adjusting their financing strategies amid varying interest rates. For comprehensive tables, visual summaries, and detailed breakdowns, consult the Bank’s Effective Rates (ER), Capital Issuance, and Bankstats releases.
Industry comments
Gareth Lewis, managing director of specialist lender MT Finance, says: “There is some positivity with net mortgage approvals at their highest since August 2022, showing there is consumer confidence from a purchase perspective. But we need this to continue for a period of time.
“Tomorrow’s Budget is hanging over everyone. When you talk to mortgage brokers, there is a sense of uncertainty among clients and people holding fire until we have some clarity. If we end up with a softer Budget than was expected just a month ago, combined with the expected reduction in interest rates going forward, that will encourage people to go out and transact.
“Interestingly, we are seeing a lot of down valuations at the moment, which may suggest there are not enough transactions to support values. We are still living in a higher cost environment; sellers may try to charge a premium because there is nothing else similar for sale on the market but buyers aren’t prepared to pay it.”
Jeremy Leaf, north London estate agent and a former RICs residential chairman, says: “Mortgage approvals always set the direction of travel for market activity over the next quarter at least.
“These latest numbers show that momentum over the past few months has been sustained and we are looking forward to an upward trajectory into early 2025.
“We have noticed in our offices too buyers are shrugging off concerns about what may be a ‘painful’ Budget and consequences for affordability while taking advantage of rising incomes and anticipating lower mortgage rates.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Mortgage approvals for new purchases rose again, which bodes well for a strong final quarter to the year for the housing market. Remortgaging has also picked up, suggesting a growing number of borrowers are drawn to ‘best buy’ rates offered by other lenders, rather than sticking with their existing provider as lenders compete for business.
“The effective interest rate paid on new mortgages decreased to 4.76 per cent as lower pricing is reflected in the official figures and we expect this trend to continue in coming months.”
Comments