Credit Conditions Survey - 2009 Q3

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

Published on 01 October 2009

While a small net balance of lenders reported that they had reduced the availability of secured credit to households in the three months to mid-September 2009, some increase in overall credit availability was expected over the next three months.
Unsecured credit availability to households was reported to have been reduced a little, with further reductions anticipated over the next three months.
Corporate credit availability had increased over the past three months, driven by improvements in the cost and availability of funds to banks. A further increase in corporate credit availability was expected.

Demand for secured lending for house purchase was reported to have increased, but lenders expected it to decline somewhat over the next three months. Demand for secured lending for remortgaging had stabilised, with increases anticipated over the next quarter.
Demand for credit by private non-financial corporations had increased in line with expectations for medium-sized companies, but had fallen slightly for larger companies. An increase in corporate demand was anticipated over the next three months by a net balance of lenders.

Contrary to expectations, default rates and losses given default on secured lending to households were reported to have fallen. But a net balance of lenders expected them to rise somewhat over the next three months. For unsecured lending to households and lending to private non-financial corporations default rates and losses given default had continued to rise, with further increases expected.

A small net balance of lenders reported that spreads on secured lending to households had widened. A compression of spreads was expected over the next three months. Non-price terms on secured lending were broadly unchanged over the past three months.
Lenders reported a further widening in spreads on corporate lending over the past three months. But they expected a reduction in spreads and fees on lending to private non-financial corporates in the next three months.