Do not read the M4Lex headline too lazily. Strip out the NIOFC swing and May looks far less dramatic — but it does not look healthy. Broad money is no longer flashing red. The credit-sensitive parts of the economy — housing, SMEs, household borrowing — are simply soft.
| Series | Apr 2026 | May 2026 | Change |
|---|---|---|---|
| M4ex flow (£bn) | 9.2 | 11.0 | ▲ +1.8 |
| M4Lex flow (£bn) | 11.5 | 0.6 | ▼ -10.9 |
| — of which NIOFCs (£bn) | +2.1 | -6.9 | ▼ -9.0 |
| — of which households (£bn) | 5.0 | 4.2 | ▼ -0.8 |
| — of which PNFCs (£bn) | 4.4 | 2.2 | ▼ -2.2 |
| Net mortgage borrowing (£bn) | 4.4 | 2.9 | ▼ -1.5 |
| House purchase approvals | 66,000 | 56,200 | ▼ -9,800 |
| Remortgage approvals | 51,200 | 33,300 | ▼ -17,900 |
| Consumer credit growth (%) | 8.7 | 8.9 | ▲ +0.2pp |
| PNFC net finance raised (£bn) | 5.4 | 1.1 | ▼ -4.3 |
| SME bank loan borrowing (£bn) | +1.2 | -0.1 | ▼ -1.3 |
This is not the data of an economy revving up. Broad money stabilised in May: M4ex rose £11.0bn, after £9.2bn in April, and annual growth ticked up to 4.8%. That matters. It suggests the monetary squeeze is no longer intensifying.
But the lending side was much weaker. M4Lex fell from £11.5bn in April to just £0.6bn in May. The caveat is important: most of that fall came from non-bank financial firms — pension funds, insurers and other NIOFCs — swinging from £2.1bn of borrowing to £6.9bn of repayment. Households and ordinary businesses softened rather than collapsed. Even so, the message is clear enough: credit is no longer giving the economy the support it gave in April.
The housing market gives the cleaner read. Net mortgage borrowing fell to £2.9bn, the weakest since May 2025. House purchase approvals dropped to 56,200, the lowest since December 2023. Remortgage approvals with a different lender fell sharply, from 51,200 to 33,300. Rates explain much of the pressure: the effective rate on newly drawn mortgages rose to 4.22%, while the outstanding stock held at 3.92%. The refinancing drag has not gone away. It is still moving through household balance sheets.
Consumer credit needs careful handling. Annual growth rose to 8.9%, and credit card debt is still growing at 12.1% year on year against a 21.45% effective rate. But May itself was not a month of accelerating card borrowing: the monthly card flow fell to £0.6bn from £0.8bn. The pressure is in the stock, not the latest card-flow print.
Business finance also cooled. PNFCs raised just £1.1bn of net finance in May, down from £5.4bn in April. SMEs were net repayers of bank loans. Large firms borrowed less. This is not what a private sector gearing up for expansion looks like.
The overall message is simple. Broad money is no longer flashing red. But the credit-sensitive parts of the economy — housing, SMEs and household borrowing — are not strong. Strip out the NIOFC swing and May looks less dramatic than the headline M4Lex number. It does not look healthy.
Money and credit data matter because they show policy working through the real economy. The Bank does not control GDP directly; it changes the terms on which households and firms borrow, refinance, spend and invest. May gives a split signal: broad money is stabilising, consistent with inflation settling over time, but lending to the parts of the economy most exposed to rates is weak. The danger is reading the headline too lazily — M4Lex looks dreadful, but much of that is NIOFC noise. Strip it out and the picture is less dramatic, but still soft. That is the point.
This is not an overheating economy. It is not a monetary collapse either. It is an economy where broad money has stabilised, but the credit-sensitive sectors are still labouring under the after-effects of higher rates. For the Bank, the implication is obvious: do not panic over the M4Lex headline, because the NIOFC swing flatters the drama — but do not ignore the underlying weakness either. Housing is rolling over again, SMEs are not borrowing, and households are carrying expensive unsecured debt. That is not a boom. It is a private sector still adjusting to the tightening already delivered.