Credit Conditions Survey - 2016 Q2

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

The 2016 Q2 survey was conducted between 23 May 2016 and 10 June 2016.

Supply

  • The availability of secured credit to households was reported to have decreased slightly in the three months to mid-June. Lenders expected availability to be unchanged in Q3. Lenders did report an increased willingness to lend to borrowers with housing equity less than 10% of the value of their home in Q2.
  • Lenders reported that the availability of unsecured credit to households increased significantly in the three months to mid-June. The availability of other unsecured lending products, such as personal loans, appeared to increase further in Q2: credit scoring criteria continued to loosen significantly and the proportion of loan applications approved increased.
  • The overall availability of credit to the corporate sector was reported to have been unchanged in 2016 Q2 for the ninth consecutive quarter. Lenders did report that the availability of credit to the commercial real estate sector had fallen in Q2 for the first time since 2012 Q2.

Demand

  • Lenders reported that demand for secured lending for house purchase increased significantly in 2016 Q2. Within this, demand for prime lending increased significantly, but demand for buy-to-let lending decreased slightly. Lenders expected overall demand to increase slightly in Q3, but demand for buy-to-let lending was expected to fall again.
  • Demand for other unsecured lending products was reported to have increased significantly in the three months to mid-June for the fourth consecutive quarter. Demand for credit card lending increased in Q2 and was expected to increase again next quarter.
  • Lenders reported that demand for corporate lending decreased significantly for large companies in the three months to mid-June, but demand for lending from small businesses increased, and demand from medium-sized businesses increased slightly.

Loan pricing

  • Overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — were reported to have widened in 2016 Q2, but lenders expected them to narrow significantly next quarter. Fees on secured lending decreased slightly in Q2 for the first time in a year.
  • Lenders reported that spreads on other unsecured lending products widened in Q2, while spreads on credit card lending were unchanged. Looking ahead, spreads on other unsecured lending products were expected to widen significantly over the next quarter, and spreads on credit cards were also expected to widen.
  • Spreads on lending to businesses of all sizes were unchanged in 2016 Q2. But lenders reported that fees and commissions on loans to small businesses decreased and fell slightly for medium-sized companies.

Defaults

  • Lenders reported that default rates on secured loans to households fell in 2016 Q2 and were expected to fall again in Q3. Losses given default on secured loans to households also decreased in Q2.
  • Default rates on credit card lending and on other unsecured lending to households were reported to have been unchanged in Q2.
  • Lenders reported that default rates on loans to small businesses decreased significantly in Q2, and remained unchanged for medium and large companies.

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Excel Results for Annex 1, 2 and 3
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