The 2017 Q3 survey was conducted between 21 August 2017 and 8 September 2017.
Supply
- The availability of secured credit to households was reported to have increased slightly in the three months to mid-September 2017 (Chart 1). This was focused on borrowers with low loan to value ratios (75% or less) and was driven by lenders’ market share objectives. Lenders expected availability to be unchanged over the next three months to mid-December.
- Lenders reported that the availability of unsecured credit to households decreased in Q3 and expected a significant decrease in Q4 (Chart 2). Credit scoring criteria for granting both credit card and other unsecured loans were reported to have tightened again in Q3, while the proportion of unsecured credit applications being approved fell significantly.
- The overall availability of credit to the corporate sector was reported to have been unchanged again in Q3.
Demand
- Lenders reported that overall demand for secured lending for house purchase fell slightly in Q3. This was driven by a slight fall in demand for prime lending. Lenders expected total demand for secured lending for house purchase to be unchanged in Q4.
- Demand for both credit card and other unsecured lending products was reported to be unchanged in Q3, and was expected to be unchanged again in Q4.
- Lenders reported a fall in demand for corporate lending for businesses of all sizes — and small businesses in particular (Chart 3). Demand from all businesses was expected to be unchanged in Q4.
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 Q3 and were expected to do so again in Q4 (Chart 4). This was the case for spreads on both buy-to-let and prime lending.
- Lenders reported that overall unsecured lending spreads were unchanged in Q3. The length of interest free period for balance transfers on new credit card lending decreased slightly in Q3 — the first reported reduction since this question was first asked in 2015 Q1 — and was expected to be unchanged in Q4. The length of interest free period for purchases on new credit card lending was reported to have increased slightly in Q3.
- Spreads on lending to businesses of all sizes widened in Q3 (Chart 5). They were expected to widen further on lending to small and large businesses in Q4.
Defaults
- Lenders reported that default rates on secured loans to households fell significantly in Q3, and expected these to fall further in Q4. Losses given default on secured loans to households increased in Q3, the first reported increase since 2016 Q1.
- Default rates on credit card lending were reported to have increased slightly in Q3, while those on other unsecured lending increased significantly (Chart 6). A further slight increase was expected for credit card lending only in Q4. Losses given default were reported to have increased slightly on credit card lending while remaining unchanged on other unsecured lending. Both were expected to be unchanged in Q4.
- Lenders reported that default rates on loans to businesses of all sizes remained unchanged in Q3. Losses given default on loans were reported to have increased for medium and large businesses in Q3, but were unchanged for small businesses.
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Results for Annex 1, 2 and 3