Credit Conditions Survey - 2010 Q3

This quarterly survey of banks and building societies is aimed at improving our understanding of trends and developments in credit conditions.
Published on 30 September 2010

Supply

  • Lenders reported that the availability of secured credit to households had risen slightly in the three months to early September 2010 despite a tightening in wholesale funding conditions. Availability was expected to remain broadly unchanged in the next three months.
  • Unsecured credit availability to households was reported to have remained broadly unchanged for a third consecutive quarter, but some lenders expected availability to increase somewhat in the next quarter.
  • The overall availability of credit to corporates was reported to have increased for a seventh consecutive quarter, with a larger increase reported in availability to small businesses than for larger companies. Overall availability was not expected to change in Q4.

Demand

  • Lenders reported that demand for secured lending for house purchase had fallen slightly in Q3, in contrast to expectations of a rise. Demand for secured lending for remortgaging was broadly unchanged in Q3 and was not expected to change in Q4.
  • Demand for credit card lending fell unexpectedly over the previous three months, while demand for non credit card lending rose unexpectedly. Lenders expected demand for credit card lending to increase over the next three months and demand for non credit card lending to stabilise.
  • In Q3, demand for credit from medium and large private non-financial corporations (PNFCs) was broadly unchanged. Demand from large corporates was expected to fall in the next quarter. Among small businesses demand fell unexpectedly over the previous three months, but was not expected to change over the next three months.

Defaults

  • The default rate and losses given default on secured loans to households were reported to have continued to fall, contrary to expectations. The default rate was expected to fall further in the next quarter, but losses given default were not expected to change.
  • Default rates on unsecured loans to households fell for the fourth consecutive quarter and default rates on credit card lending were expected to fall further in Q4. Losses given default in Q3 rose unexpectedly for credit card lending, but fell unexpectedly for non credit card lending. Losses given defaults for unsecured lending were expected to fall slightly in Q4.
  • Default rates on loans to private non-financial corporations fell unexpectedly over the previous three months among medium and large companies and were expected to fall further over the next three months, as were losses given default. For small businesses, the default rate fell slightly, while losses given default were expected to rise in Q4.

Terms and conditions

  • Lenders reported that spreads on secured lending to households had fallen for a second consecutive quarter in Q3 and were expected to fall further in Q4. Credit scoring criteria had been tightened slightly for the second consecutive quarter and were expected to tighten further over the coming quarter.
  • Spreads on unsecured lending to households rose slightly in Q3, but a further rise was not expected in Q4. Lenders reported a continued tightening in credit scoring criteria for non credit card lending, though further tightening was not expected in Q4.
  • Spreads on corporate lending fell for the fourth consecutive quarter for large PNFCs in Q3, but were unchanged for medium PNFCs and for small businesses.

PDFCredit Conditions Survey - 2010 Q3

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