October 2016 figures for high street banks

The BBA has released high street bank figures for October. Dr Rebecca Harding, BBA Chief Economist, said “Consumer credit is now growing at its fastest rate since November 2006, reflecting strong retail sales growth. Consumer confidence remains robust as borrowers take advantage of record low interest rates. Mortgage approvals ticked up a little October.  There has only been a relatively modest increase in activity since the Bank of England cut rates in August.

“Finally, there was a slight increase in business borrowing in October but this was driven by a one-off factor and will probably unwind next month. However, businesses are increasingly going back to capital markets as a means to raise funding. They also continue to hold cash deposits, suggesting that they are building up cash reserves for ready access to resources should the need arise.”

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Annual borrowing growth rates

Household borrowing

Gross mortgage borrowing of £12.2bn in the month was 4% lower than in October 2015.

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

Consumer credit is now showing annual growth of over 7% reflecting strong retail sales growth in October supported in the case of personal loans by favourable interest rates.

Number of approvals

Mortgage approvals

House purchase approval numbers are 10% lower than in October 2015 and in the first ten months of 2016 were 4% lower than in the same period of 2015.

Remortgaging approvals were similar to those in October 2015 but in the first ten months of 2016 were 13% higher than in the equivalent period of 2015.

Other advances were 9% higher than a year ago.

Business borrowing annual growth rates

Borrowing by non-financial companies

Borrowing by non-financial companies increased by £1.4bn in October, however the borrowing was largely short term and will probably unwind next month.

Net capital market issues by non-financial companies increased by £3.3bn in October and in the ten months to October 2016, a total of £17.2bn (net) has been raised. This alternative finance compares with an increase in bank borrowing of £7.9bn (net) over the same period.

Trends in net deposits

Deposits

Personal deposits have been growing more strongly in recent months and annual growth was 5% in October. In the first ten months of 2016 personal deposits have grown by £32bn compared with £19bn in the same period of 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 4.0%. In the first ten months of 2016 non-financial companies deposits have grown by £8bn compared with £22bn in the same period of 2015.