Mortgage Lending

Mortgage Lending is the Bank of England headline for net borrowing of mortgage debt by individuals. Net borrowing means the change in mortgage balances caused by household behaviour after removing revaluations and reclassifications. It covers sterling lending secured on dwellings to United Kingdom resident individuals, reported by banks, building societies and specialist lenders. It appears in £ billions with seasonal adjustment, while tables show £ millions.

The series excludes approval counts, house prices, mortgage rates, consumer credit and business lending. Positive readings mean net borrowing and negative readings mean net repayment, with no target or threshold. Policy committees use the statistics to understand economic trends and developments in the banking system.

Each edition reports a calendar cycle, with balances at end cycle dates and the transactions change for that cycle. Publication arrives on the twenty first working day after the reference period, at half past nine London time. Data appear with seasonal adjustment and without seasonal adjustment. Levels measure amounts outstanding, while the flow measures transactions based change.

Each edition carries the three part release with Tables A to N, plus summary tables. The Highs and Lows companion and the Effective Rates companion appear alongside the release. Each edition sets the flow against the previous cycle and multi cycle averages. Approvals for house purchase serve as a signal of future borrowing, not as the flow itself.

Revisions arrive at the earliest opportunity, usually in a later edition, when fresh information appears. Revisions rarely extend beyond two years, and substantial revisions receive identification and explanation. An edition can reissue outside the scheduled timetable after a major error, with explanation. Methodology changes receive prior announcement through a statistics article.

Net borrowing rises when new lending outpaces repayments and falls when repayments dominate or approvals soften. Credit conditions, housing demand and refinancing activity shape the balance between advances and redemptions.

• Net lending: the headline flow, meaning new lending minus repayments after adjustments, in £ billions with seasonal adjustment.
• Gross lending: total loans advanced in the period, excluding repayments and other adjustments, and excluding short term bridging loans.
• Repayments: principal repaid as scheduled payments, full redemptions on moves or lender switches, and partial lump sums.
• House purchase approvals: firm lender offers for home purchase loans, net of cancellations, as a leading signal of future borrowing.
• Remortgaging approvals: new loans on the same home with a different lender, also as a signal of future flows.
• Other approvals and growth: existing borrowers raising more debt with the same lender. The annual growth rate compounds monthly flows.

For example, gross 22.7 minus repayments 20.0 gives 2.7, while published net is 4.3, leaving a gap of 1.6. The gap reflects adjustment on break adjusted levels with different coverage across the three series. Seasonal adjustment runs on levels, not by subtracting adjusted repayments from adjusted gross lending. Deadline effects can shift borrowing between cycles.

• Levels: collect end cycle amounts outstanding, called levels, without seasonal adjustment, from banks and building societies and specialist lenders.
• Break adjustment: remove other changes in value, such as reclassifications and write offs and coverage changes, using a ratio series that offsets breaks.
• Seasonal adjustment: adjust break adjusted levels with a standard filter using multiplicative decomposition, then re inflate through the ratio series.
• Net flow: derive published net lending from adjusted levels, not by subtracting repayments from gross lending, because adjustment sits on levels.
• Growth rates: divide the cycle flow by the prior balance, then compound for three cycle and twelve cycle rates.
• Publication: publish the adjusted flow in £ billions with seasonal adjustment, with £ millions in tables.

Approval counts only signal future borrowing and never equal lending, because offers can lapse and never lead to advances. Gross minus repayments never checks net, because adjustment sits on levels with different coverage. The flow will not necessarily equal the difference between outstanding balances, because write offs and other adjustments apply.