UK Banks To Further Tighten Unsecured Lending To Households: BoE

Marco Green
October 12, 2017

The Bank of England's warnings about excessive consumer borrowing appear to be getting through to lenders according to the central bank's latest credit conditions survey.

Meanwhile, availability of secured credit to households increased slightly in three months to mid-September and lenders forecast its availability to be unchanged in the fourth quarter.

Consumer credit grew at an annual rate of 9.8 per cent in August, according to the Bank, reflecting booming auto loans and credit card borrowing.

Recent BoE changes to bank capital requirements for different types of consumer loans had been expected to slow the pace of lending to households during the months ahead. A significant decrease in availability is expected for the fourth quarter.

The credit survey released on Thursday showed that there was a fall in demand for corporate lending from business of all sizes in third quarter of 2017, especially small firms.

Credit availability for businesses remained stable during the third quarter although demand dipped a touch from its earlier level.

Further, default rates on credit card lending were reported to have increased slightly, while those on other unsecured lending increased significantly.

A net balance of 2pc of banks said house prices slipped in the past three months, but lenders expect prices to stay steady in the coming quarter.

However, lenders expected demand for loans for capital investment in businesses to fall at the fastest rate since the third quarter of 2011.

Other reports by Click Lancashire

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