Thursday July 2, 09:45 AM
UK lenders see credit availability increasing in Q3 -BoE
LONDON, July 2 (Reuters) - British lenders expect to make credit more readily available to households and businesses over the coming quarter but are not expecting much of a pick-up in demand, a survey by the Bank of England showed on Thursday.
The central bank's quarterly credit conditions survey showed lower funding costs had boosted the availability of secured credit to households in the second quarter -- the first increase since the third quarter of 2007.
'This partly reflects lending commitments made by lenders to the government as a condition for participation in the Asset Protection Scheme,' the BoE said.
'While concerns about the economic outlook had continued to bear down on credit availability, the impact had been smaller than in previous surveys,' it added.
A net balance of lenders expect to increase credit further over the next three months, with more lending to borrowers with high loan-to-value ratios.
However, lenders expected demand for mortgages to remain steady while demand from small businesses was expected to pick up.
'Over the next three months household demand for secured credit was expected to remain broadly unchanged while demand from small businesses was expected to pick up,' the BoE said.
Spreads on secured lending to households and businesses widened in the second quarter. Lenders expected spreads to increase further, particularly for other financial corporations.
Default rates, and losses given default, rose in the second quarter and were expected to rise further.
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