Consumer borrowing increases in December

25th January 2017

The British Bankers’ Association (BBA) has releases it’s latest figures indicating a growth in consumer borrowing during December, but there are signs that demand may soften in 2017 as consumers and businesses anticipate higher interest rates.

  • Gross mortgage borrowing totalled £12.6bn, up 3.6% from December 2015; while net mortgage borrowing grew by 2.5% compared to December 2015.
  • Consumer credit grew by 6.6%, despite weak retail sales
  • Business borrowing fell by £2.8bn to £261.7bn, mainly due to seasonal reductions in demand from the construction and agriculture sectors.

Commenting on the figures Rebecca Harding, Chief Economist at the BBA said  “Overall, we’ve seen high levels of consumer and business borrowing, although there are early indications that 2017 could see softer demand for credit from business and households, as they anticipate future interest rate rises and wait for further clarity on Brexit.Consumer credit continued to be strong in December despite weaker retail sales.

“Re-mortgaging approvals were 30% higher than December 2015, reflecting borrowers’ desire to “lock in” lower interest rates ahead of potential rise later this year.

“However, reduced demand for business borrowing may signal plans for investment are being deferred or funded through retained earnings until there is more certainty on the UK’s economic prospects after Brexit.”

Annual borrowing growth rates

Household borrowing

Gross mortgage borrowing of £12.6bn in the month was 3.6% higher than in December 2015. In 2016 as a whole the high street banks gross mortgage lending was £154bn, 11.6% higher than in 2015.

Net mortgage borrowing is 2.5% higher than a year ago.

Consumer credit annual growth rose in December to 6.6% despite weaker retail sales. Growth continues to be supported in the case of personal loans by favourable interest rates.

Number of approvals

Mortgage approvals

House purchase approval numbers were slightly higher than in December 2015 but in 2016 as a whole were 4.1% lower than in 2015.

Remortgaging approvals were 30% higher than those in December 2015 and were at their highest level since October 2008. In the whole of 2016 remortgaging approvals were 15% higher than in 2015.

Other advances were 6.5% higher than a year ago and in 2016 were 18% higher than in 2015.

Business borrowing annual growth rates

Borrowing by non-financial companies

Borrowing by non-financial companies decreased by £2.8bn in December with the seasonal fall in borrowing by the construction and agricultural sectors being the main contributors to the fall. However in 2016 as a whole borrowing by non-financial companies grew at an annual rate of 2%.

Lower demand for finance may reflect companies reducing investment plans and preferring to use internal funds rather than borrowing.

Net capital market issues in 2016 were £17.2bn (net), compared with bank borrowing of £3.9bn (net) over the same period.

Trends in net deposits


Personal deposits have been growing more strongly in recent months and annual growth was 4.1% in December. In 2016 personal deposits have grown by £32.8bn compared with £25.4bn in 2015.

Non-financial companies deposits grew at an average annual rate of over 8% in 2015 but fell back in the first half of 2016 and are currently growing at an annual rate of 3.3%. In 2016 non-financial companies deposits have grown by £10.8bn compared with £26.3bn in 2015.