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Credit supply bleaker than predicted

The supply of credit on secured households has been reduced by more than lenders predicted in the last quarter.

According to the Bank of England’s latest Credit Condition Survey, credit availability amongst those with more than 75 per cent loan to value mortgages has reduced by significantly more than lenders predicted in June.

Demand for purchases and remortgages also sharply declined, but lenders predicted a further dip that was seen by the Bank.

Over the next three months lenders expect spreads to narrow between the supply and demand of higher and lower LTV mortgages.

Lenders say the decline in available credit was down to the changing economic outlook across the UK and beyond and changing appetites to risk.

The survey revealed unsecured credit availability reduced with last quarter’s predictions.

The general consensus of lenders is that there will be tighter credit conditions across secured and unsecured lending over the next three months, according to the survey.

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