UK lending to individuals slowed in December

The rate of growth in money supply in the UK slowed at the end of last year but some economists were sanguine that corporations, especially larger ones, retained access to financing if needed, the same as individuals.

Money supply, measured on the basis of the M4ex monetary aggregate, which excludes intermediate other financial corporations, increased by 0.2% month-on-month or 3.5% year-on-year to reach £1.791.7bn, according to the Bank of England.

Lending to households rose by 0.3% month-on-month to reach £1.261bn, while that to private non-financial corporations declined 0.3% to £368.9bn, the BoE said.

Loans to non-intermediate 'other financial corporations' increased 0.4% to £162.1bn.

Lending to individuals and consumers grows less than expected

Lending to individuals grew by 0.3% on the month and 3.3% over the year to £1.455bn, the BoE said, with that secured on dwellings up by 0.2% month-on-month or £3.2bn (£3.6bn) to reach £1.278bn.

That followed a rise of £3.8bn in the month before.

The number of mortgages approved for home purchase increased from 70,424 in November to 70,837 in December (consensus: 69,600).

Consumer credit grew 0.7% on the month or £1.2bn to hit £178.7bn, a shade below analysts´ forecasts for £1.3bn.

"December’s easing back in unsecured consumer credit may dilute some of the recent increased concern that consumers are borrowing more and saving less to finance their spending.

"Increased consumer willingness to borrow has likely been a consequence of relatively high consumer confidence and extended low interest rates," Dr.Howard Archer, chief UK+European economist at IHS Global Insight said in a research note sent to clients.

Private non-financial corporations raised £0.5bn in net finance from MFIs and capital markets in December.

"Overall, access to capital does not appear to be a problem for most companies - although some smaller, higher risk companies may have difficulties. Significantly, the Bank of England’s regional agents reported in their January 2016 survey of business conditions that

"“Credit availability had remained above normal for larger companies, with strong competition to lend. Access to finance for small companies was reported to be around normal”," Dr. Archer added.