29th Jun 2026 09:57
(Alliance News) - UK mortgage borrowing slowed sharply in May, while approvals for home purchases fell to their lowest level in almost a year and a half, according to figures published by the Bank of England on Monday.
Net borrowing of mortgage debt by individuals fell to GBP2.9 billion in May from GBP4.4 billion in April. This was below the previous six-month average of GBP5.1 billion and marked the weakest monthly borrowing since May 2025, when net lending totalled GBP1.9 billion.
Net mortgage approvals for house purchases, a leading indicator of future borrowing, fell to 56,200 in May from 66,000 in April, below the FXStreet consensus forecast of 63,000.
The figure was also below the previous six-month average of 63,300 and marked the lowest level since December 2023.
Approvals for remortgaging with a different lender also fell sharply to 33,300 from 51,200.
The effective interest rate on newly drawn mortgages rose to 4.22% in May from 4.08% in April, while the rate on the outstanding stock of mortgages was unchanged at 3.92%.
Consumer credit borrowing remained broadly stable at GBP1.7 billion in May, unchanged from April and slightly below the previous six-month average of GBP1.9 billion.
Within this, net credit card borrowing eased to GBP600 million from GBP800 million, while borrowing through other forms of consumer credit, including personal loans and car finance, increased to GBP1.1 billion from GBP900 million.
The annual growth rate of consumer credit accelerated to 8.9% in May from 8.7% in April, with credit card borrowing growth rising to 12.1% from 11.8%.
Households continued to increase their savings, depositing a net GBP5.4 billion with banks and building societies during May, following GBP5.7 billion in April. The increase was driven mainly by inflows into individual savings accounts and time deposits.
Business borrowing also moderated during the month.
Private non-financial corporations borrowed a net GBP1.1 billion of finance in May, down from GBP5.4 billion in April. Bank loans accounted for GBP1.8 billion of borrowing, compared with GBP4.3 billion the previous month, while net bond issuance totalled GBP1.0 billion and commercial paper issuance GBP500 million. These were partly offset by GBP1.2 billion of equity buybacks.
Overall lending by banks and building societies to UK non-financial businesses totalled GBP1.2 billion, down from GBP5.1 billion in April. Large businesses borrowed GBP1.3 billion, while small and medium-sized businesses repaid a net GBP100 million.
Separately, the Bank of England said the flow of sterling broad money, measured by M4ex, increased to GBP11.0 billion in May from GBP9.2 billion in April, driven by higher holdings among households and non-intermediate other financial corporations.
However, sterling lending to the private sector, measured by M4Lex, slowed sharply to GBP600 million from GBP11.5 billion in April, largely reflecting repayments by financial corporations. The annual growth rate of M4Lex eased to 5.9% from 6.4%.
At its latest policy meeting on June 18, the Bank of England left Bank Rate unchanged at 3.75% in a 7-2 vote. Chief Economist Huw Pill and external Monetary Policy Committee member Megan Greene voted for a 25 basis point increase, while the remaining seven members backed no change.
The central bank has kept rates unchanged at all four meetings this year, following a quarter-point cut to 3.75% in December. The next policy decision is due on July 30.
By Eva Castanedo, Alliance News reporter
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