Demand for secured lending for house purchase and remortgaging increased in the first quarter of the year, said the Bank of England in its latest Credit Conditions Survey.
It added that lenders expected this demand to increase further in the second quarter of the year.
Supply was up in line with demand, according to the quarterly survey.
Lenders reported that the availability of secured credit to households increased in the three months to the end of February 2024, and they expect supply to rise further over the three months to the end of May.
Defaults up
Lenders also said that default rates on secured loans to households increased and losses given default fell in the first quarter. Both were expected to increase in the second quarter of this year, too.
There was also a rise in defaults on unsecured lending (such as loans and credit cards), which is expected to continue.
Richard Lane, chief client officer at StepChange debt charity, said: “It was always a concern that the worst impact of high inflation could take a while to filter through to household finances, and worryingly that may now be the case.
“Some people’s finances may have bounced back from this crisis, but for others, cost-of-living pressures are still persisting. Last year, we saw debt across household bills increase by 10% among StepChange clients, while total unsecured debt reached its highest level for a decade. With the price of most essentials continuing to rise, many will resort to borrowing to afford them.
“We would urge lenders to be aware of how many of their customers may just be facing the ramifications of two years of high inflation now.”
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