Credit Conditions Survey - 2016 Q1

This quarterly survey of banks and building societies is aimed at improving our understanding of trends and developments in credit conditions.
Published on 13 April 2016

The 2016 Q1 survey was conducted between 22 February 2016 and 11 March 2016.


  • The availability of secured credit to households was reported to have been unchanged in the three months to mid-March. Lenders expected availability to increase in Q2. Lenders reported that availability to borrowers with loan-to-value ratios exceeding 75% increased slightly in Q1, while availability to borrowers with a loan-to-value ratio less than 75% was reported to be unchanged.
  • Lenders reported that the availability of unsecured credit to households increased slightly in 2016 Q1. Within this, availability of other unsecured lending products, such as personal loans, appeared to have increased in Q1: credit scoring criteria were reported to have loosened significantly and the proportion of loan applications approved increased slightly.
  • Despite this apparent easing, the credit quality of new other unsecured lending was reported to be unchanged. The availability of total unsecured credit was expected to increase further in 2016 Q2.
  • The overall availability of credit to the corporate sector was reported to be unchanged in Q1. Within this, lenders reported that availability was unchanged for firms of all sizes for the second quarter in a row. But for small businesses the proportion of loan applications approved increased for the fourth consecutive quarter.


  • Lenders reported that demand for secured lending for house purchase increased again in 2016 Q1. Within this, demand for prime lending increased and demand for buy-to-let lending increased slightly. Overall demand was expected to increase slightly further in Q2, although demand for buy-to-let lending was expected to fall significantly.
  • Demand for other unsecured lending products was reported to have increased significantly in 2016 Q1 for the third consecutive quarter. Demand for credit card lending was unchanged in Q1.
  • Demand for corporate lending was reported to have fallen slightly for small businesses, and decreased for medium-sized companies, in Q1. But demand from small and medium-sized businesses was expected to increase in Q2. Demand from large companies was unchanged in 2016 Q1 and expected to remain so in Q2.

Loan pricing

  • Overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — were reported to have widened significantly in 2016 Q1 after 13 quarters of narrowing. Spreads were expected to widen further in Q2.
  • Lenders reported that spreads on credit cards, and to a lesser extent on other unsecured lending products, widened in 2016 Q1. Spreads on other unsecured lending products were expected to widen next quarter, while spreads on credit cards were expected to be unchanged.
  • Spreads on lending to small businesses remained unchanged in 2016 Q1 but narrowed slightly for medium-sized companies, while fees and commissions facing both small and medium-sized companies fell. Spreads for large companies had been narrowing between 2012 Q4 and 2015 Q4. But both spreads and fees and commissions for large companies were unchanged in Q1, and expected to remain so in Q2.


  • Lenders reported that default rates on secured loans to households fell in 2016 Q1, and were expected to fall slightly in Q2. Lenders have reported falling default rates on secured loans for eleven consecutive quarters.
  • Default rates on credit card lending to households remained unchanged in Q1. Default rates on other unsecured lending
    products increased, having fallen significantly in the previous quarter.
  • Default rates on lending to medium and large companies were unchanged in Q1, and fell significantly on lending to small

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