UK lenders anticipate an increase in default rates on secured loans to households during the fourth quarter, as revealed by the Credit Conditions Survey from the Bank of England. In contrast, default rates for total unsecured lending experienced a slight decline in the three months leading up to August, and lenders expect these rates to remain stable in the upcoming fourth quarter.
In terms of loans to businesses, lenders reported that default rates across all business sizes remained unchanged in the third quarter and are expected to stay the same in the fourth quarter as well. The availability of secured credit to households saw an uptick in the third quarter, with expectations for it to hold steady over the next three months. Meanwhile, the availability of unsecured credit to households rose slightly during the third quarter and is forecasted to increase again in the fourth quarter.
Banks have noted that the overall availability of credit to the corporate sector did not change in the third quarter. Credit availability for small businesses remained stable, while there was a slight rise in availability for medium-sized and large enterprises. This overall availability is anticipated to remain unchanged through the fourth quarter.
When it comes to demand, lenders observed that the demand for secured lending for home purchases did not fluctuate in the third quarter but is projected to grow in the fourth quarter.
Lenders also indicated that demand for unsecured lending is expected to decrease slightly in the fourth quarter following a period of stability in the third quarter. Although overall demand for unsecured lending remained unchanged in the third quarter, it is anticipated to dip slightly in the forthcoming three months.
Demand for corporate lending from businesses across all sizes remained stable in the third quarter. However, a slight decrease in demand for corporate lending is expected for small businesses, while a modest increase is anticipated for medium-sized enterprises and a rise in demand is predicted for large businesses.
