Lenders expect to make more credit available

The Bank of England's (BoE) latest Credit Conditions Survey has revealed lenders expect to make credit more readily available to households and businesses over the next three months, after increasing lending over the last quarter.

The BoE’s quarterly report showed lower funding costs had boosted the availability of secured credit to households in the second quarter for the first time since the third quarter of 2007.

“While concerns about the economic outlook had continued to bear down on credit availability, the impact had been smaller than in previous surveys,” the report said.

Demand for secured lending for house purchase was reported to have increased over the past three months while demand for secured lending for remortgaging declined further. Lenders expected that demand for secured lending would remain broadly unchanged over the next three months.

Default rates on lending to households and to private non-financial corporations rose over the same period, with lenders expecting a further increase in both default rates and losses given default.