Credit Conditions Survey - 2011 Q3

This quarterly survey of banks and building societies is aimed at improving our understanding of trends and developments in credit conditions.
Published on 28 September 2011

Supply

  • The availability of secured credit to households was reported to have increased slightly in the three months to early September 2011. Lenders expected availability to increase a little further in the next three months.
  • Lenders reported that the availability of unsecured credit to households had also increased in 2011 Q3. Availability was expected to be broadly unchanged in Q4.
  • The availability of credit to corporates was reported to have been broadly unchanged for large and medium-sized companies and slightly higher for small businesses in 2011 Q3. Availability was expected to remain broadly unchanged in Q4 for corporate of all sizes.
  • In both the household and corporate surveys, lenders pointed to adverse wholesale funding conditions as a key factor which might constrain future lending. More recent discussions with some of the major lenders suggested that although these factors had not yet led to reduced credit availability, a period of sustained tight funding conditions could act to constrain their ability to extend loans going forward.

Demand

  • Lenders reported that demand for secured lending for house purchase had increased in 2011 Q3. Lenders expected demand to be broadly unchanged in the coming quarter. Demand for prime lending was reported to have picked up for the first time since 2009 while demand for buy-to-let lending was reported to have risen substantially in Q3.
  • Demand for unsecured lending was reported to have been broadly unchanged over the past three months. Lenders expected a pickup in demand for unsecured lending in the next three months.
  • Lenders reported a fall in demand for credit from small businesses and large companies, although demand from medium-sized companies was reported to have picked up a little. Demand for credit from the corporate sector was expected to fall across companies of all sizes in Q4.

Defaults

  • Lenders reported that the default rate on secured loans to households fell over the previous quarter and was expected to be broadly unchanged in the coming quarter. Losses given default were reported to have been broadly unchanged in 2011 Q3 but were expected to increase in Q4.
  • Default rates on unsecured lending were reported to have fallen sharply in Q3, marking the eighth successive quarter in which lenders reported a fall. Losses given default were also reported to have fallen. In Q4, default rates and losses given default were expected to fall further.
  • Over the past three months, default rates and losses given default on loans to private non-financial corporations (PNFCs) fell — to varying degrees — for companies of all sizes. Default rates and, to a lesser extent, losses given default were expected to pick up in Q4 for large and medium-sized companies and remain unchanged for small businesses.

Terms and conditions

  • Lenders reported that spreads on secured lending to households decreased in 2011 Q3. Lenders expected secured lending spreads to fall further in Q4.
  • Spreads on credit card lending were reported to have fallen slightly over the previous quarter and were not expected to change in the coming quarter. Spreads on other unsecured lending products were reported to have increased in 2011 Q3 but were expected to fall in Q4.
  • Spreads on lending to medium-sized and large PNFCs were reported to have fallen in Q3 and were expected to continue to fall over the coming quarter. For small businesses, spreads were reported to have been broadly unchanged in 2011 Q3, but were expected to increase slightly in Q4.

PDFCredit Conditions Survey - 2011 Q3

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