Credit Conditions Survey - 2012 Q3

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

Published on 26 September 2012

The availability of secured credit to households was reported to have increased significantly in the three months to beginning-September 2012. A further significant increase was expected over the next three months, with the Funding for Lending Scheme cited as an important contributing factor.
Lenders reported that the availability of unsecured credit to households had remained unchanged in 2012 Q3, but was expected to increase slightly in 2012 Q4.
The overall availability of credit to the corporate sector was reported to have remained unchanged for small, medium and large companies in 2012 Q3, and was expected to remain unchanged for firms of all sizes in the next three months.

Lenders reported that demand for prime lending for house purchase had increased slightly in 2012 Q3, while demand for buy-to-let lending had fallen slightly. In the coming quarter, lenders expected overall demand for secured lending for house purchase to increase slightly further.
Demand for overall unsecured lending was reported to have remained unchanged over the past three months. Lenders expected demand to increase slightly in 2012 Q4.
Lenders reported that demand for credit from small and large companies had fallen in the three months to beginning-September 2012, although demand from medium-sized firms was unchanged. Demand was expected to increase slightly from medium-sized firms in Q4, but demand from large and small firms was expected to remain unchanged.

Lenders reported that the default rate on secured loans to households fell slightly in the three months to beginning-September, but losses given default on secured lending were broadly unchanged. Both defaults and losses given default on secured lending were expected to remain unchanged in Q4.
Default rates and losses given default on total unsecured lending remained unchanged in 2012 Q3, and were expected to remain unchanged in Q4. Within total unsecured lending, however, the performance of other unsecured lending had improved: default rates and losses given default fell, and losses given default were expected to fall further next quarter.
Lenders reported that default rates on loans to small and large firms rose during Q3, and were expected to rise slightly further in Q4. Default rates for medium-sized firms were also expected to rise. Losses given default on loans to large businesses increased in Q3, and were expected to increase for large and medium-sized firms in Q4.

Lenders reported that overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — widened in 2012 Q3. Lenders expected this pattern to reverse in Q4, with a marked tightening in spreads.
Spreads on overall unsecured lending had remained broadly unchanged, although spreads on other unsecured lending had widened. Lenders expected a tightening in other unsecured spreads and a slight tightening in credit card spreads in Q4.
Lenders reported that spreads on lending to medium-sized firms had widened slightly, but had remained unchanged for small and large firms. And spreads were expected to widen slightly for small firms in Q4, but to remain unchanged for medium and large firms.