Credit Conditions Survey - 2012 Q1

This quarterly survey of banks and building societies is aimed at improving our understanding of trends and developments in credit conditions.
Published on 29 March 2012

Supply

  • The availability of secured credit to households was reported to have been broadly unchanged in the three months to early March 2012. Lenders expected availability to fall slightly in the next three months.
  • Lenders reported that the availability of unsecured credit to households was broadly unchanged in 2012 Q1. Availability was expected to decrease in 2012 Q2.
  • The overall availability of credit to the corporate sector was reported to have been broadly unchanged for small, medium and large companies in 2012 Q1. Availability was expected to remain unchanged for firms of all sizes in the next three months.
  • In contrast, lenders reported that the amount of credit made available to the commercial real estate sector had decreased slightly in the past three months and was expected to fall significantly during Q2.

Demand

  • Lenders reported that demand for prime lending for house purchase had increased in 2012 Q1, but the demand for buy-to-let lending had decreased slightly. In the coming quarter, lenders expected overall demand for secured lending for house purchase to increase.
  • Demand for credit card lending was reported to have decreased over the past three months, whereas demand for other unsecured lending had increased. Lenders expected overall demand for unsecured lending to be broadly unchanged in the next three months.
  • Lenders reported that credit demand from small businesses fell in 2012 Q1 but was expected to increase in Q2. Demand from large and medium-sized companies was reported to have fallen slightly over the past three months and while demand from medium-sized companies was expected to increase in Q2, a further slight reduction in demand was expected from large companies.

Defaults

  • Lenders reported that the default rate on secured loans to households fell slightly over the previous quarter and was expected to be broadly unchanged in 2012 Q1. Losses given default were reported to have fallen slightly in 2012 Q1 but were expected to increase significantly in the coming quarter.
  • Default rates on unsecured lending to households were reported to have fallen sharply in Q1, continuing the trend that had been observed throughout 2010 and 2011. However, overall default rates were expected to stabilise over the coming three months. Losses given default on total unsecured lending were reported to have fallen in Q1 and were expected to fall slightly further in Q2.
  • Lenders reported a pickup in default rates on loans to medium-sized firms during Q1, with a further marked increase expected in the coming three months. Defaults rates for large firms had increased slightly in the past three months, and a further small increase was expected during Q2. In contrast, default rates on loans to small businesses were broadly unchanged, and no change was expected in the next three months. Lenders reported an increase in losses given default on loans to small, medium and large companies in the past three months. Losses given default were expected to increase significantly during Q2 for medium and large companies, but were expected to be broadly unchanged for small businesses.

Terms and conditions

  • Lenders reported that spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — widened markedly in 2012 Q1. Lenders expected a further significant widening of spreads in Q2.
  • Spreads on overall unsecured lending were reported to have been broadly unchanged over the previous quarter. Lenders expected spreads to remain unchanged in 2012 Q2.
  • Spreads were reported to have widened significantly on lending to large and medium-sized companies in Q1, and further widening was expected over the next three months. Spreads on lending to small businesses had widened slightly during Q1 and a further slight widening was expected in Q2.

PDFCredit Conditions Survey - 2012 Q1

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