Credit Conditions Survey - 2008 Q4

This quarterly survey of banks and building societies is aimed at improving our understanding of trends and developments in credit conditions.

Published on 02 January 2009

Lenders reported that they had reduced the availability of secured credit to households in the three months to mid-December 2008. As in the Q3 survey, expectations for house prices and concerns about the economic outlook were reported to have been factors contributing to this tightening. A further decline was expected over the next three months.
Unsecured credit availability to households was reported to have been reduced in line with expectations. A further fall was expected.
Corporate credit availability had been tightened over the past three months. Lenders anticipated a further reduction over the next three months.

Demand for secured lending for house purchase and for remortgaging was reported to have remained broadly stable over the past three months, in contrast to lenders’ expectations. Demand for other secured lending was reported to have fallen.
Demand for credit by private non-financial corporations had declined in the three months to mid-December. As in the Q3 survey, reduced demand for credit for capital investment, for mergers and acquisitions activity, and from the real estate sector were reported to have contributed to these falls. A further decline in demand was anticipated.

Overall spreads on secured lending to households were reported to have widened over the past three months, in contrast to lenders’ expectations. Spreads were expected to remain broadly unchanged.
Lenders reported a further widening in spreads on corporate lending. They expected spreads to increase further going forward.

Default rates, and losses given default, on secured lending to households were reported to have risen over the past three months. Lenders expected a further increase in both default rates and losses given default on household secured borrowing.
Default rates, and losses given default, on unsecured lending to households had increased. Further increases were expected.
Lenders reported that default rates, and losses given default, on lending to private non-financial corporations had increased over the past three months. A further rise was anticipated over the next three months.