Credit Conditions Review - 2015 Q4

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 15 January 2016

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


Long-term wholesale funding spreads for UK banks increased slightly, on average, in 2015 Q4 and remained higher than the post-crisis lows reached in the early part of 2015. Those higher wholesale funding spreads continued to push up transfer prices in 2015 Q4 according to lenders responding to the Bank Liabilities Survey, although the survey suggested that the increase in transfer prices was smaller than in the previous quarter. Retail funding spreads remained low. Wholesale term funding issuance by UK lenders was subdued in Q4, while deposit growth picked up a little and, within this, corporate deposit growth remained
particularly strong.

Secured lending growth continued to pick up in recent months; growth in the stock was 3.5% on a three-month annualised basis in November. This is likely to partly reflect favourable credit conditions: lenders reported a further slight increase in credit availability in the 2015 Q4 Credit Conditions Survey, and most mortgage spreads have fallen in 2015 particularly at higher loan to value ratios. Consumer credit continued to grow strongly, particularly for other loans and advances such as personal loans and overdrafts. Though quoted and effective rates on personal loans have increased a little in recent months, they remain close to historically low levels.

Lending to UK businesses picked up in recent months, with annual growth in the stock of lending on the all currency loans measure reaching 2.1% in November. Net lending increased across most industrial sectors. The pick-up in corporate borrowing is likely to partly reflect the improvement in credit availability since late 2012, as well as a more recent increase in demand. While the improvement in credit conditions has been apparent across all business sizes, smaller SMEs appear to have experienced a more gradual improvement than larger companies.

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