The 2017 Q1 survey was conducted between 20 February 2017 and 10 March 2017.
Supply
- The availability of secured credit to households was reported to be broadly unchanged in the three months to mid-March. It was expected to increase over the next three months, to mid-June 2017, with lenders’ market share objectives reported to be the main anticipated driver of this. The availability for borrowers across both low and high loan to value was reported to be unchanged, except for borrowers with housing equity worth less than 10% of the value of their home, to whom lenders reported some reduction in their willingness to lend.
- Lenders reported that the availability of unsecured credit to households decreased slightly in Q1, and was expected to decrease further in Q2. Credit scoring criteria for granting both credit card and other unsecured loans were reported to have tightened in Q1. Lenders expected credit scoring criteria on credit card lending to tighten significantly in Q2.
- The overall availability of credit to the corporate sector was again reported to have been unchanged in Q1. This was the case for lending to firms of all sizes and to the commercial real estate sector.
Demand
- Lenders reported that demand for secured lending for house purchase decreased in Q1. Within this, demand for prime lending decreased slightly and demand for buy-to-let lending decreased significantly. Lenders expected total demand for secured lending for house purchase to increase in Q2, driven by an increase in prime lending. Demand for remortgaging was reported to be unchanged in Q1, but was expected to increase in Q2.
- Demand for credit card lending was reported to be unchanged in Q1, but was expected to increase slightly in Q2. Lenders reported that demand for other unsecured lending products increased slightly in Q1, but expected a slight decrease in Q2.
- Following significant falls in demand for corporate lending from both small and medium-sized businesses reported in Q4, lenders reported further falls in demand for lending from medium-sized businesses in Q1, but no change in demand from small businesses. Demand for lending from large corporates was reported to be unchanged in Q1. Lower capital investment was reported to be exerting a significant drag on demand for corporate lending in Q1, although increased merger and acquisition activity had 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 have narrowed significantly in Q1, consistent with what lenders had previously expected. This was the case for spreads on both buy-to-let lending and prime lending. Lenders expected spreads on prime lending to remain unchanged in Q2, but expected a further narrowing of spreads on buy-to-let lending.
- Lenders reported that spreads on credit cards narrowed slightly in Q1. In contrast, spreads on other unsecured lending products were reported to have widened slightly and were expected to widen slightly further in Q2. The length of interest free periods for both balance transfer offers and purchases on credit card lending were reported to have increased in Q1, and lenders expected further increases in Q2.
- Spreads on lending to small businesses widened in Q1, having previously been reported unchanged for five consecutive quarters. Lenders expected fees and commissions on loans to both small and medium-sized businesses to increase in Q2. Lenders reported spreads on lending to large businesses to have narrowed in Q1 and were expecting them to narrow slightly further in Q2.
Defaults
- Lenders reported that default rates on secured loans to households remained unchanged in Q1, and expected these to remain unchanged in Q2. Losses given default on secured loans to households fell slightly in Q1, and were expected to decrease further in Q2.
- Default rates on credit card lending to households were reported to have fallen in Q1, as were losses given default. The latter were expected to fall again in Q2. Default rates on other unsecured lending were reported unchanged in Q1, but were expected to rise in Q2.
- Lenders reported that default rates on loans to small businesses decreased in Q1, following a slight increase in 2016 Q4. Default rates were reported as unchanged on loans to medium businesses, while they were reported to have increased slightly on loans to large businesses. Losses given default on loans were unchanged for small, medium and large businesses in Q1.
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Results for Annex 1, 2 and 3