Credit Conditions Survey - 2013 Q2

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

Published on 03 July 2013

The availability of secured credit to households was reported to have increased in the three months to end-May 2013, with a further increase expected by lenders over the next three months.
Lenders reported that the availability of unsecured credit to households also rose in 2013 Q2, with a significant further increase anticipated in Q3.
The overall availability of credit to the corporate sector was reported to have increased in Q2. Availability increased across all firm sizes, with the most significant increase for large companies. Lenders expected overall credit availability to the corporate sector to be little changed in Q3.

Demand for secured lending for house purchase was reported to have risen significantly in 2013 Q2, and was expected to increase significantly further in Q3. Lenders also reported a significant increase in demand for secured lending for remortgaging in Q2.
Demand for total unsecured lending was reported to have fallen significantly in Q2, reflecting a fall in demand for credit card lending. Demand for total unsecured lending was expected to be broadly unchanged in Q3.
Lenders reported increased corporate demand for credit across all firm sizes in Q2. In Q3, credit demand was expected to increase significantly for large businesses, to increase a little for medium-sized businesses and to be broadly unchanged for small businesses.

Lenders reported that default rates on secured loans to households were little changed in 2013 Q2, with little change expected in Q3. Losses given default were also broadly flat, and were expected to fall a little in Q3.
The default rate on total unsecured loans fell slightly in Q2 and was expected to fall a little further in Q3. Losses given default increased slightly and were also expected to pick up a little in Q3.
Default rates for large and medium-sized companies were little changed in Q2, while the default rate on small business loans was reported to have increased significantly. Losses given default were reported to have increased for medium-sized companies and to have increased slightly for small businesses in Q2. No significant changes in corporate loan performance were expected in Q3.

Lenders reported that overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — fell significantly for the third consecutive quarter in 2013 Q2, and were expected to fall significantly further in Q3.
Spreads on total unsecured lending were reported to have been broadly unchanged in Q2, and were expected to fall a little in Q3. While spreads on credit card lending remained broadly flat in Q2, spreads on other unsecured lending products were reported to have fallen significantly.
Changes in spreads on corporate lending varied across firm size in Q2, with significant falls reported for large firms, a slight decrease for medium-sized firms, and little change for small businesses. While spreads were expected to fall significantly further for large firms in Q3, spreads on lending to small and medium-sized firms were expected to be unchanged.