Money and Credit – May 2025
Key points:
Net borrowing of mortgage debt by individuals increased by £2.8 billion to £2.1 billion in May, following a large decrease in net borrowing of £13.8 billion to -£0.8 billion in April.
Net mortgage approvals for house purchases increased by 2,400 to 63,000 in May. Approvals for remortgaging also increased by 6,200 to 41,500 in May, which is the largest increase since February 2024 (6,600).
Net borrowing of consumer credit by individuals was £0.9 billion in May, down from £1.9 billion in the previous month. Within this, net borrowing through credit cards decreased to £0.1 billion in May, from £1.2 billion in April. Net borrowing through other forms of consumer credit decreased slightly to £0.7 billion, from £0.8 billion over the same period.
Private non-financial corporations (PNFCs) borrowed, on net, £1.0 billion of finance in May, following net repayments of £2.3 billion in April.
The net flow of sterling money (known as M4ex) was £5.2 billion in May, compared to £4.0 billion in April. Within this, NIOFCs and households increased their holdings of money by £4.7 billion and £4.3 billion respectively. By contrast, PNFCs decreased their holdings of money by £3.8 billion in May.
The flow of sterling net lending to private sector companies and households (M4Lex) was £8.4 billion in May, compared to £1.4 billion in April. May’s lending was driven by increases of £3.5 billion, £2.5 billion, and £2.4 billion in net lending to households, PNFCs, and NIOFCs respectively.
Mortgage lending:
Net borrowing of mortgage debt by individuals increased by £2.8 billion to £2.1 billion in May, following a large decrease in net borrowing of £13.8 billion to -£0.8 billion in April. The annual growth rate for net mortgage lending increased slightly from 2.5% to 2.6% in May. Gross lending increased to £20.4 billion in May, from £16.9 billion in April. Gross repayments decreased in May to £17.6 billion, from £18.2 billion.
Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, increased by 2,400 to 63,000 in May. This was the first increase since December 2024. Approvals for remortgaging (which only capture remortgaging with a different lender) also increased in May, by 6,200 to 41,500. This is the largest increase since February 2024 (6,600)
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased to 4.47% in May from 4.49% in April. However, the rate on the outstanding stock of mortgages increased slightly, to 3.87% from 3.86%.
Nathan Emerson, CEO of Propertymark, comments:
“It is incredibly positive news to see an increased number of mortgage applications approved. It is one of the loudest signals of them all regarding consumer affordability, and it is also a massive vote of confidence from lenders in the longer-term prospects of the economy too.
“As we head into the summer months, we have witnessed on average the number of viewings per property available see an uplift of around 30 per cent compared to the month previous. On top of this, we have also seen the UK Government make a pledge to create a National Housing Bank which could bring significant investment to help build 500,000 new homes, enabling a potential greater degree of flexibility for those who aspire to buy.”
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