Credit Conditions Survey - 2013 Q3

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

Published on 09 October 2013

The availability of secured credit to households was reported to have increased significantly in the three months to early September 2013. Lenders expected little change in availability over the next three months.
Lenders reported that the availability of unsecured credit to households increased in 2013 Q3, with a further increase anticipated in Q4.
The overall availability of credit to the corporate sector increased slightly in Q3, according to lenders, and a further slight increase was expected in Q4.

Demand for secured lending for house purchase was reported to have increased significantly in 2013 Q3, and was expected to increase slightly further in Q4. Lenders also reported a significant increase in demand for secured lending for remortgaging in Q3.
Lenders reported that demand for credit card lending was unchanged in Q3, and expected little change in Q4. Demand for other unsecured lending products, such as personal loans, increased significantly in Q3, although a slight fall in demand was expected in Q4.
Demand for lending from small and medium-sized businesses was reported to have picked up in Q3, while demand from large companies was little changed. Lenders expected credit demand to increase across all business sizes in Q4.

Lenders reported that both default rates and losses given default on secured loans to households fell significantly in 2013 Q3. Defaults were expected to fall further in Q4, and losses given default were expected to fall significantly further.
Default rates on unsecured lending fell in Q3, with significant falls reported for credit card loans and slight falls for other unsecured loans. Losses given default increased slightly for credit card lending and were little changed for other unsecured loans in Q3.
Default rates on lending to small and medium-sized businesses were reported to have been little changed in Q3, while losses given default for these businesses decreased. The default rate for large businesses increased slightly in Q3, while losses given default for large businesses were little changed.

Lenders reported that overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — narrowed significantly for the fourth consecutive quarter in Q3. And spreads were expected to fall significantly further in Q4.
Spreads on credit card lending were reported to have increased slightly in Q3, having been little changed for most of the last two years. In contrast, spreads on other unsecured lending products fell significantly in Q3, and a further significant fall was anticipated in Q4.
Spreads on corporate lending fell in Q3, with significant reductions reported for large businesses. Medium-sized businesses also saw a significant fall in spreads, and slight falls were reported for small businesses. In Q4, spreads were expected to fall further for large and medium-sized companies, and to be little changed for small businesses.