Credit Conditions Survey - 2009 Q1

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

Published on 02 April 2009

Lenders reported that they had reduced the availability of secured credit to households in the three months to mid-March 2009. Reduced risk appetite and expectations for house prices were reported to have been the main factors contributing to this tightening. A small net balance of lenders was expecting an increase in overall credit availability over the next three months.
Unsecured credit availability to households and small businesses was reported to have been reduced by less than expected. Over the next three months lenders expected unsecured credit availability to remain broadly unchanged.
Corporate credit availability had increased slightly over the past three months, contrary to the small fall expected in the 2008 Q4 survey. A further increase in corporate credit availability was anticipated over the next three months.

Demand for secured lending for house purchase and for remortgaging was reported to have declined over the past three months. Lenders expected demand for secured lending to fall further.
Demand for credit by private non-financial corporations had fallen over the past three months. Reduced demand for lending for capital investment and from the real estate sector had contributed to these falls. A further decline in demand by medium-sized companies was anticipated, but demand by large firms was expected to increase.

Overall, spreads on secured lending to households were reported to have widened over the past three months, significantly more than expected. Non-price terms on secured lending were generally reported to have tightened, with further tightening expected.
Lenders reported a further widening in spreads on corporate lending. They expected spreads to increase further.

Default rates, and losses given default, on secured and unsecured lending to households and lending to private non-financial corporations were reported to have risen over the past three months. Lenders expected a further increase in both default rates and losses given default.