The 2016 Q4 survey was conducted between 21 November 2016 and 9 December 2016.
Supply
- The availability of secured credit to households was reported to be unchanged in the three months to mid-December 2016, and was expected to increase slightly over the next three months to mid-March 2017. Market share objectives continued to be the main factor reported as pushing up on credit availability. The availability for borrowers with high-LTV (more than 75%) decreased slightly in Q4, but was expected to increase slightly in 2017 Q1.
- Lenders reported that the availability of unsecured credit to households increased slightly in Q4, but was expected to decrease slightly in Q1. Credit scoring criteria for credit cards were reported to have tightened in Q4. In contrast, credit scoring criteria on other unsecured lending, such as personal loans, were reported to have loosened in Q4.
- The overall availability of credit to the corporate sector was again reported to have been unchanged in Q4. Within that, lenders reported that the availability of credit was unchanged for firms of all sizes and for the commercial real estate sector.
Demand
- Lenders reported that demand for secured lending for house purchase increased slightly in Q4. Within this, demand for prime lending increased slightly and demand for buy-to-let lending increased significantly. Demand for remortgaging also increased significantly. Lenders expected overall demand and demand for prime secured lending to be unchanged in Q1, but for demand for buy-to-let lending to decrease.
- Demand for credit card and other unsecured lending products were reported to have increased in Q4. Lenders expected demand for other unsecured lending to increase in Q1, while demand for credit card lending was expected to be unchanged.
- Lenders reported that overall demand for corporate lending from small and medium-sized businesses decreased significantly in Q4. Demand for lending from small businesses was expected to decrease again in Q1, while for medium businesses it was expected to increase slightly. Lenders reported that demand for corporate lending by large companies was unchanged after falling significantly in Q3. Significant reductions in capital investment and commercial real estate were reported to be the main factors contributing to changes in corporate lending demand in Q4, while merger and acquisitions activity has pushed up on demand.
Loan pricing
- Overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — were reported to be unchanged in Q4. Within this, spreads on buy-to-let lending widened slightly. Fees on secured lending were also reported to be unchanged. Lenders expected secured lending spreads to narrow significantly in Q1.
- Lenders reported that spreads on credit card and other unsecured lending narrowed slightly in Q4, for the first time since 2015 Q3, and are expected to narrow further in 2017 Q1. The length of interest-free periods on credit cards with balance transfer offers was reported to be broadly unchanged in Q4.
- Spreads on lending to large businesses widened slightly in Q4, and were expected to widen slightly further in Q1. Lenders reported spreads on lending to small businesses were unchanged in Q4, but were expected to widen in Q1.
Defaults
- Lenders reported that default rates on secured loans to households fell in 2016 Q4, and are expected to remain unchanged in 2017 Q1. Losses given default on secured loans to households fell significantly in Q4, and are expected to remain unchanged in Q1.
- Default rates on other unsecured lending rose significantly again in Q4, and losses given defaults rose slightly. Default rates were expected to fall in Q1. Default rates on credit card lending to households were reported to have increased in Q4 but losses given default were reported to have fallen.
- Lenders reported that default rates on loans to small businesses increased slightly for the first time since 2014 Q3. Default rates on loans to medium businesses also increased. Losses given default on loans were unchanged for small, medium and large businesses.
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Results for Annex 1, 2 and 3