Credit Conditions Survey - 2009 Q2

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

Published on 02 July 2009

Lenders reported that they had increased slightly the availability of secured credit to households in the three months to mid-June 2009. Improved cost and availability of funds was reported to have been the main contributing factor. A net balance of lenders was expecting a further increase in the availability of secured credit to households over the next three months.
Unsecured credit availability to households was reported to have been reduced. Over the next three months lenders anticipated a further small reduction in the availability of unsecured credit.
Corporate credit availability had increased over the past three months, driven by improved cost and availability of funds and lenders’ market share objectives. A further increase in corporate credit availability was expected.

Demand for secured lending for house purchase was reported to have increased over the past three months while demand for secured lending for remortgaging had declined further. Lenders expected that demand for secured lending would remain broadly unchanged over the next three months.
Demand for credit by private non-financial corporations had remained broadly unchanged, but an increase in demand from medium-sized companies over the next three months was anticipated by a net balance of lenders.

Default rates, and losses given default, on secured and unsecured lending to households and 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.

Consistent with higher expected future losses, spreads on secured lending to households were reported to have widened, but lenders expected spreads to remain broadly unchanged over the next three months. Some non-price terms on secured lending had also tightened, but lenders anticipated a general easing in non-price terms over the next three months.
Lenders reported a further widening in spreads on corporate lending. They expected spreads to increase further, particularly for other financial corporations.