Credit Conditions Survey - 2012 Q4

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

Published on 03 January 2013

The availability of secured credit to households was reported to have increased significantly in the three months to mid-December 2012, driven in part by the Funding for Lending Scheme. A further significant increase was expected over the next three months.
Lenders reported that the availability of unsecured credit to households also rose slightly in 2012 Q4, with a further increase anticipated in 2013 Q1.
The overall availability of credit to the corporate sector was reported to have increased significantly in Q4. Large and medium-sized companies experienced the largest increase in credit availability, with a slight increase for small companies. The overall availability of credit to the corporate sector was expected to increase further over the next three months.

Demand for secured lending for house purchase was reported to have increased in Q4, and lenders expected a further increase in 2013 Q1. This rise in demand was spread across demand for prime lending and buy-to-let lending.
Demand for both credit card and other unsecured lending increased significantly in Q4. Demand for other unsecured lending was expected to rise significantly further in 2013 Q1, while credit card demand was expected to remain unchanged.
Lenders reported a slight increase in demand for credit from medium-sized companies in Q4, but a reduction in credit demand from small companies. Looking forward, demand for credit was expected to increase slightly from small and medium-sized firms in 2013 Q1, but demand from large firms was expected to remain broadly unchanged.

Lenders reported that default rates on secured loans to households had continued to fall slightly in the three months to mid-December, but losses given default on secured lending had risen slightly. Both defaults and losses given default on secured lending were expected to remain broadly unchanged in 2013 Q1.
Default rates on total unsecured loans fell in Q4, with a further slight fall expected in 2013 Q1. However, losses given default on total unsecured loans had risen slightly, but were expected to be broadly unchanged over the coming quarter.
Lenders reported a rise in default rates on loans to firms of all sizes during Q4, and default rates were expected to rise slightly further in 2013 Q1. Losses given default had also risen for large and medium-sized firms, but were expected to remain broadly unchanged over the next quarter for firms of all sizes.

Lenders reported that overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — tightened significantly in Q4, and were expected to tighten significantly further in 2013 Q1.
Spreads on credit card lending had remained unchanged in Q4, although spreads on other unsecured lending had tightened significantly. This pattern was set to continue over the next quarter, with expectations of a further slight tightening of spreads on other unsecured lending, but unchanged spreads on credit card lending.
Lenders reported that spreads on lending to large and medium-sized firms had tightened significantly over the last quarter, but had remained broadly unchanged for small firms. A further tightening in spreads was expected for medium-sized firms, and a slight tightening for large firms, in 2013 Q1. Spreads on lending to small firms were expected to remain unchanged.