British lenders expect the availability of secured credit to households to fall in the coming three months amid an expected fall in demand and the defaults rate are forecast to increase, the Credit Conditions Survey from the Bank of England showed on Thursday.
Banks said the availability of secured credit to households fell in three months to August and it is likely to fall slightly over the next three months.
Demand for secured lending for house purchases also decreased in the third quarter and another decline is expected in the coming quarter.
Banks observed that default rates on secured loans to households increased over the last three months. The default rate is forecast to rise further in the fourth quarter.
Regarding unsecured credit to households, the survey showed that availability weakened in the third quarter and it is set to remain unchanged in the coming three months. Meanwhile, demand for unsecured lending increased slightly in the third quarter and it is forecast to rise in the fourth quarter.
Lenders said the default rates for total unsecured lending were unchanged in the third quarter but it will increase over the coming period.
Further, the survey showed that availability of credit to the corporate sector is forecast to remain unchanged in the fourth quarter, as seen in the current period.
On demand for lending, the survey showed an unchanged pattern for small businesses, while demand from medium and large firms decreased in the third quarter. Demand for corporate lending was forecast to decrease slightly for small and medium-sized firms, while an unchanged demand is expected from large companies.
Default rates were expected to increase in the fourth quarter for small businesses, increase slightly for medium-sized businesses, and were expected to be unchanged for large businesses.
