Credit Conditions Review - 2015 Q2

This publication presents our assessment of the latest developments in bank funding and household and corporate credit conditions. It draws on sources including the results of the Bank Liabilities Survey and Credit Conditions Survey, other statistics we have collected and surveys from other organisations.
Published on 13 July 2015

The report covers data and intelligence gathered up to end-June 2015. Unless stated otherwise, the data reported cover lending in both sterling and foreign currency, expressed in sterling.


Longer-term wholesale funding costs for UK banks increased in 2015 Q2, but remained low. Reflecting this, transfer prices rose slightly in Q2, having fallen in each quarter since 2013 Q3, according to respondents to the Bank Liabilities Survey. Retail funding spreads fell slightly. Issuance of wholesale term funding in 2015 Q2 was a little lower than in the previous quarter. Retail deposit growth was steady. Respondents to the Bank Liabilities Survey expected their total funding volumes to increase slightly in Q3.

Mortgage approvals for house purchase were higher in April and May than the average in Q1 and the net flow of mortgage lending increased slightly in the three months to May. This is consistent with the increase in demand for secured lending reported in the 2015 Q2 Credit Conditions Survey. Mortgage rates fell slightly further and remained at historically low levels. Unsecured credit continued to grow robustly.

Growth in the stock of lending to UK businesses picked up in 2015 to date. And net finance raised by UK businesses, which also includes funds raised in capital markets, was positive. The pickup in corporate borrowing is likely to reflect the improvement in the availability of credit since late 2012. Demand for credit from small and large companies also increased in 2015 Q2, according to respondents to the Credit Conditions Survey. Some surveys suggested that the overall level of demand for bank lending from small and medium-sized enterprises, however, remained subdued.

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