Credit Conditions Review - 2016 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 2016

The Review covers data and intelligence gathered up to end-June 2016. Unless stated otherwise, the data reported cover lending in both sterling and foreign currency, expressed in sterling.


Having been little changed through most of Q2, measures of banks’ long-term wholesale funding spreads increased following the outcome of the EU referendum. But spreads remained significantly below levels seen a few years ago, and the increase in spreads was offset by a fall in swap rates over the same period. In discussions conducted at the end of June, most major UK lenders expected wholesale funding spreads to remain somewhat higher in Q3, but low swap rates and retail funding costs were expected to limit the impact of this on transfer prices. UK lenders had continued to issue wholesale term debt in public markets in Q2. Retail deposit rates remained low, and retail deposit growth remained strong relative to recent years.

Secured credit availability to households tightened slightly in the three months to mid-June, according to lenders responding to the Bank of England’s Credit Conditions Survey. Despite this, quoted rates on a range of two-year fixed-rate mortgages remained broadly flat in recent months and close to historical lows. In discussions that took place after the EU referendum, the major UK lenders expected the availability of secured credit to be little changed in the near term but the demand for secured credit to fall. Respondents to the Credit Conditions Survey suggested that both the supply of and demand for unsecured credit continued to rise in the three months to mid-June.

The cost and availability of credit to companies of all sizes was unchanged in the three months ahead of the EU referendum, according to lenders responding to the Credit Conditions Survey. But lenders reported a fall in availability to the commercial real estate sector for the first time since 2012 Q2. Demand for credit from large corporates slowed prior to the referendum according to lenders responding to the Credit Conditions Survey. In discussions conducted after the referendum, the major UK lenders expected the availability of credit to the corporate sector to remain steady, although a further tightening was expected for the commercial real estate sector. Lenders expected the demand for credit to fall back in the near term.

  PDFDownload PDF

  ExcelBank funding data

  ExcelHousehold credit conditions data

  ExcelCorporate credit conditions data

Other related publications