This report presents the results of the 2019 Q2 survey. It was conducted between 3 and 21 June 2019. Find out how to interpret this survey.
Supply
- Lenders reported that the availability of secured credit to households had decreased slightly in the three months to end-May 2019 (Q2) but was expected to increase over the next three months to end-August 2019 (Q3).
- The availability of unsecured credit to households was reported to have decreased slightly in Q2 and was expected to remain unchanged in Q3 (Chart 1). Credit scoring criteria for total unsecured loan applications were reported to have tightened in Q2, although the proportion of applications approved increased slightly. Total unsecured loan approvals were expected to decrease in Q3.
- The overall availability of credit to the corporate sector was reported to have remained unchanged in Q2, and this was the case for small, medium and large businesses. The overall availability of credit to the corporate sector was expected to decrease slightly in Q3.
Demand
- Lenders reported that demand for secured lending for house purchase increased significantly in Q2, and was expected to remain unchanged in Q3. Demand for secured lending for remortgaging decreased significantly in Q2, but was expected to increase slightly in Q3 (Chart 2).
- Overall demand for unsecured lending decreased in Q2; this was due to a reported decrease in demand for credit card lending. Lenders expected an increase in the demand for credit card lending in Q3, and a decrease in demand for other unsecured lending (Chart 3).
- Lenders reported a decrease in demand for corporate lending from small businesses, a slight decrease in demand from large PNFCs and no change in demand from medium sized PNFCs in Q2 (Chart 4). Lenders expected demand for corporate lending in Q3 to remain unchanged for small and medium-sized businesses, and to decrease slightly for large PNFCs.
Loan pricing
- Overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — were reported to have increased significantly in Q2, and they were expected to widen in Q3 (Chart 5).
- Lenders reported that overall unsecured lending spreads decreased slightly in Q2, and were expected to remain unchanged in Q3. The length of interest free periods for balance transfers and new purchases on new credit card lending both decreased significantly in Q2. In Q3, the length of interest-free periods for new purchases and for balance transfers were expected to decrease and decrease significantly, respectively.
- Spreads on corporate lending to small and large businesses were unchanged in Q2, but had widened for medium PNFCs. Spreads on corporate lending to small businesses were expected to tighten, while for medium and large PNFCs they were expected to remain unchanged over the next three months.
Defaults
- The net percentage balance for changes in default rates on secured loans to households decreased slightly in Q2, and is expected to decrease slightly in Q3, as reported by lenders. The net percentage balance for losses given default on secured loans increased slightly in Q2, and were expected to increase in Q3.
- The net percentage balance for changes in default rates for total unsecured lending increased significantly in Q2. This was driven by a significant increase for credit card loans (Chart 6). Lenders expected default rates for total unsecured lending to remain unchanged in Q3.
- The net percentage balance for changes in default rates on loans to corporates increased for small and large businesses in Q2, while they remained unchanged for medium-sized businesses. These balances for defaults were expected to increase for businesses of all sizes in Q3. The net percentage balance for losses given default were unchanged for businesses of all sizes in Q2.
How to interpret this survey
The results are based on lenders’ own responses to the survey. They do not necessarily reflect the Bank’s views on credit conditions. To calculate aggregate results, each lender is assigned a score based on their response. Lenders who report that credit conditions have changed ‘a lot’ are assigned twice the score of those who report that conditions have changed ‘a little’. These scores are then weighted by lenders’ market shares. The results are analysed by calculating ‘net
percentage balances’. The net percentage balances are scaled to lie between ±100.
In this report, changes in balances are described as ‘significant’ if greater than 20 in absolute terms, as ‘slight’ if between 5 and 10 and as ‘unchanged’ if less than 5.
Credit Conditions Survey - 2019 Q2
Results for annex 1, 2 and 3