24th June 2016

May 2016 figures for the high street banks

Dr Rebecca Harding, Chief Economic Advisor at the BBA, said:

“The data for May shows a sustained increase in unsecured credit relative to earnings. Consumers are increasingly using short-term borrowing for spending, amid uncertainty around the economy and EU referendum.

“Mortgage approvals have bounced back following the sharp drop in April, caused by the initial reaction to the stamp duty surcharge. This increase suggests that claims of a slowdown in house price inflation may be premature.

“There has also been stronger growth in bank lending to manufacturing throughout the year. Businesses have shown stronger demand for finance in 2016 and will be keen that today’s referendum result does not slow activity down.”


Annual borrowing growth rates

Household borrowing

Gross mortgage borrowing of £12bn in the month was 10% higher than in May 2015. Borrowing in the first 5 months of 2016 was £67.5bn compared with £51.7 in the same period of 2015.

Net mortgage borrowing is 3% higher than a year ago.

Consumer credit continues to show annual growth of about 6% reflecting uncertainty and in the case of personal loans and overdrafts favourable interest rates.


Number of approvals

Mortgage approvals

House purchase approval numbers have bounced back a little from the low numbers seen in April (following the surge in the first few months of 2016) but are still some 2% lower than in May 2015.

Remortgaging approvals were 18% higher than in May 2015 and at their highest level since February 2011.

Other advances were 22% higher than a year ago.


Business borrowing annual growth rates

Borrowing by non-financial companies

Borrowing by non-financial companies increased by £228mn in May. This was similar to the growth in March and April and was the fifth consecutive month to show an increase.

Capital market issues by non-financial companies inreased by £2.8bn in May and in the year to May, a total of £23.2bn (net) has been raised. This alternative finance compares with an increase in bank borrowing of £0.7bn (net) over the same period.


Trends in net deposits

Deposits

Personal deposits have been growing more strongly in recent months and annual growth has risen to 4.8%; the strongest growth rate since July 2013.

Cash ISA deposits fell by £600mn in May.

Non-financial companies deposits increased by an average of around £2-3bn a month in 2015 but have fallen back in 2016, taking their annual growth rate down from around 10% in 2015 to about 5% now.