On 13 April 2016, the Bank of England published the quarterly Credit Conditions Survey for Q1 2016. The survey covers secured and unsecured lending to households and lending to non-financial corporations, small businesses, and to non-bank financial firms, with the input coming from bank and building society lenders answering a set of questions on the past three months and the oncoming three months.
They key points resulting from the survey are:
- Supply: Supply for secured and unsecured credit remained unchanged for the most part, with slight increases in secured lending for loans with loan to value (‘LTV’) lower than 75% and other unsecured credit products, such as personal loans. It is expected supply for unsecured credit will increase further in Q2.
- Demand: Demand for secured lending and buy-to-let (‘BTL’) lending increased. Demand for unsecured lending increased significantly for the third consecutive quarter, whilst demand for credit cards remained unchanged. It is expected that in Q2 demand for secured lending will increase slightly, with demand for BTL decreasing slightly.
- Loan pricing: Spreads for secured household lending widened significantly, after 13 quarters of narrowing, and are expected to continue widening in Q2. Spreads on credit cards and other unsecured lending also widened in Q1. Spreads on other unsecured lending products are expected to continue widening in Q2, but credit card spreads are expected to remain unchanged.
- Default: For 11 consecutive quarters, the default rates on secured loans to households fell and these rates are expected to continue falling in Q2. Default rates on credit card lending to households and other unsecured credit products did not change.
This report details the results of the 2016 Q1 survey and was conducted between 22 February 2016 and 11 March 2016.