The 2018 Q3 survey was conducted between 20 August and 7 September 2018.
Supply
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Lenders reported that the availability of secured credit to households had decreased in the three months to end‑August 2018 (Q3) and was expected to decrease again over the next three months to end‑November 2018 (Q4).
- The availability of unsecured credit to households was reported to have decreased slightly in Q3 and was expected to decrease further in Q4 (Chart 1). Credit scoring criteria for total unsecured loan applications were reported to have tightened in Q3, although the proportion of applications approved increased.
- The overall availability of credit to the corporate sector was reported to have been unchanged in Q3. Within this, the availability of credit provided to small businesses was reported to have increased in Q3, and was unchanged for medium and large businesses. The overall availability of credit to the corporate sector was expected to decrease slightly in Q4.
Demand
- Lenders reported that demand for secured lending for house purchase was unchanged in Q3, and was expected to remain unchanged again in Q4. However, demand for secured lending for remortgaging increased significantly in Q3, and demand was expected to increase significantly again in Q4 (Chart 2).
- Overall demand for unsecured lending increased significantly in Q3; this was solely driven by a significant increase in demand for credit card lending. However, lenders expected a slight decrease in the demand for both credit card and other unsecured lending in Q4 (Chart 3).
- Lenders reported a fall in demand for corporate lending from small businesses in Q3, but expected demand to remain unchanged in Q4 (Chart 4). For medium PNFCs, demand for lending was reported to have increased slightly but was expected to remain unchanged in the next quarter. Demand for corporate lending from large PNFCs was reported to have decreased in Q3 and was expected to decrease further in 2018 Q4.
Loan pricing
- Overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — were reported to have narrowed slightly in 2018 Q3 and were expected to narrow significantly in Q4 (Chart 5). Within this, spreads on buy‑to‑let lending were reported to have narrowed significantly and spreads on prime lending were unchanged in Q3.
- Lenders reported that overall unsecured lending spreads narrowed in Q3, driven by a narrowing in spreads on credit cards. Overall unsecured lending spreads were expected to narrow further in Q4. The length of interest free periods for balance transfers and new purchases on new credit card lending decreased in Q3.
- Spreads on lending to businesses remained unchanged for small and medium‑sized firms, and were reported to have narrowed slightly for large firms in Q3. Spreads on loans to firms of all sizes were expected to remain unchanged over the next three months.
Defaults
- Lenders reported that default rates on secured loans to households fell in Q3, and expected these to remain unchanged in Q4. Losses given default on secured loans increased slightly in Q3, and were expected to increase slightly over 2018 Q4.
- Default rates decreased for total unsecured lending in Q3, driven largely by a decrease in default rates on credit card loans. Lenders expected default rates for total unsecured lending to remain unchanged in Q4 (Chart 6).
- Lenders reported that default rates on loans to corporates increased for businesses of all sizes in Q3, although losses given defaults were unchanged. Defaults rates were expected to remain unchanged for businesses of all sizes in Q4.
Credit Conditions Survey - 2018 Q3
Results for annex 1, 2 and 3