Credit to become more readily available over coming months
According to a recent report lenders have said that there is a good chance that credit will become more readily available for businesses and consumers over the coming months, although demand for credit is likely to remain subdued for some time to come.
This comes after interest rates dropped through the floor and the government launched its quantitative easing programme, which could see up to £150 billion ploughed into the economy through the purchase of corporate and government bonds.
The data comes from the Credit Conditions Survey from the Bank of England. The central banks said that in the first three months of this year lenders restricted availability to finance even further to try and cut risks and because of expectations of further falls in house prices. However, lending conditions are set to improve over the coming months, with greater availability to finance for households and businesses over the coming months.
The survey said: “The economic outlook was not longer expected to be a factor bearing down on credit availability. Improvements in the cost and availability of funds were expected to support increased credit availability over the next three months.”
However over the past few months demand for finance such as mortgage loans has fallen, and lenders have predicted that it will continue to fall over the coming months.
The survey also said: “Overall spreads on secured lending to households were reported to have widened over the past three months, significantly more than expected. Lenders reported a further widening of spreads on corporate lending. They expected spreads to increase further.”
The last three months have also seen default rates on loans and mortgage rise, with the report stating: “Lenders expected a further increase in both default rates and losses given default.”
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