Bank of England says credit availability will drop
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Credit availability could fall back in the next three months amid lenders’ fears that the wholesale markets will tighten, according to the Bank of England.
In its latest credit conditions survey, the bank says that lenders reported that the availability of secured credit to households had risen slightly in the three months to early June but that this could tail off if lenders’ concerns come true.
The overall availability of credit to corporates was reported to have increased in Q2 2010, although by less than lenders expected. But availability is expected to increase slightly in the next three months.
Demand for secured lending for house purchases fell in the last three months, whereas demand for remortgaging was reported to have risen for the first time since Q4 2008.
The default rate and losses given default on secured loans to households were reported to have fallen unexpectedly in the previous quarter, from a net balance of -23.6 per cent to -21.9 per cent.
Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn says: “Significantly, from a property market perspective, the availability of credit over the past three months appears to have increased both in the residential and the commercial sectors. However, it is noteworthy that this improvement has not been driven by any change in the attitude to risk. In both these areas of the property market, this particular indicator has barely budged after the sharp falls through 2008 and the early part of 2009. This is broadly consistent with anecdotal reports suggesting that, although more finance is now available, large deposits are still required to access it.
“Against this backdrop, the likelihood is that the finance for the property market will continue to be in short supply for some time to come. The construction sector with its need for development finance will be particularly badly affected by this. Interestingly, the forward looking indicator on loan availability for the residential sector in the Credit Conditions Survey spells this out - with the series turning negative for the first time since the end of 2008.”
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Readers' comments (1)
A MORTGAGE PLANNER | 2 Jul 2010 1:59 pm
Ok, great...... just get rid of my job why don't you!! I have been busy in the last 3 months, but if this does happen I won't have a bloody job!
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