Credit Conditions Survey - 2010 Q1

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

Published on 01 April 2010

Lenders reported that the availability of secured credit to households was broadly unchanged in the three months to mid-March 2010. The level of credit availability was not expected to change significantly over the next three months.
Unsecured credit availability to households was reported to have stabilised. Lenders expected availability to increase over the coming quarter.
The overall availability of credit to corporates was reported to have continued to increase in 2010 Q1. A further increase in availability was expected in Q2.

Demand for secured lending both for house purchase and for remortgaging was reported to have fallen over the past three months, due to the effects of temporary factors, but was expected to increase over the next quarter as those effects waned.
Lenders reported that demand for unsecured credit had also fallen, in particular for credit card lending. Lenders expected demand to increase in 2010 Q2.
Demand for credit by private non-financial corporations (PNFCs) in 2010 Q1 rose more strongly than anticipated for small and medium-sized businesses and was unchanged for large PNFCs. Demand was expected to rise further over the coming quarter.

Contrary to expectations of a rise, default rates on secured lending to households were reported to have fallen over the previous quarter. Losses given default also fell, by more than lenders had expected. Default rates and loss given default rates on secured lending were expected to remain broadly unchanged in Q2.
Default rates on unsecured lending to households fell by more than had been expected while losses given default continued to rise.
Default rates on lending to private non-financial corporations fell unexpectedly over the past three months for medium and large firms and were unchanged for small businesses. Loss given default rates were generally stable.

Lenders reported that spreads on secured lending to households had stabilised, with little change expected over the next three months. Maximum loan to value ratios had continued to increase while other non-price terms remained stable.
Terms on unsecured lending to households had tightened in 2010 Q1, especially for non credit card lending, but were expected to stabilise in Q2.
Spreads and fees on corporate lending had narrowed for medium and large PNFCs over the past three months while they had widened slightly for small businesses.