Credit Conditions Survey - 2022 Q4 - About Mortgages, Loans and Credit

21st January 2023

It is a dull sounding report by the Bank of England but reveals the huge changes happening in the lending markets. Higher interest rates are reducing demand and at the same time the number of people struggling to make payments on mortgages and credit cards are increasing month on month. With more interest hikes likely to come in in the next few months the position will worsen.

The report highlights -
Lenders reported that the availability of secured credit to households decreased in the three months to end-November 2022 (Q4). Lenders expected the availability of secured credit to decrease further over the next three months to end-February 2023 (Q1) (Chart 1).
Lenders reported that the availability of unsecured credit to households decreased in Q4 and was expected to decrease further in Q1 (Chart 2).
Lenders reported that the overall availability of credit to the corporate sector was unchanged in Q4. Within this, the availability of credit to small and large businesses remained unchanged in Q4, but decreased for medium-sized firms. Overall, corporate availability was expected to slightly decrease in Q1.

emand
Lenders reported that demand for secured lending for house purchase decreased in Q4, and was expected to decrease further in Q1. Demand for secured lending for remortgaging decreased in Q4, but was expected to increase slightly in Q1 (Chart 3).
Lenders reported that overall demand for unsecured lending decreased in Q4, and was expected to decrease slightly in Q1. Within the overall figure, demand for both credit card lending and other unsecured lending decreased in Q4. Demand for other unsecured lending was expected to decrease in Q1, while demand for credit card lending was expected to decrease slightly (Chart 4).
Lenders reported that demand for corporate lending from small and medium-sized businesses decreased in Q4, while demand from large firms was unchanged (Chart 5). Demand for corporate lending in Q1 was expected to be unchanged for small businesses, but was expected to decrease for medium-sized and large businesses.

Defaults
The net percentage balance for changes in default rates on secured loans to households was unchanged in Q4, and was expected to increase in Q1. The net percentage balance for changes in losses given default on secured loans was unchanged in Q4, and was expected to increase in Q1.
The net percentage balance for changes in default rates for total unsecured lending increased in Q4, and was expected to increase in Q1.
The net percentage balance for changes in default rates on loans to corporates increased for small businesses, slightly increased for medium businesses, and was unchanged for large businesses in Q4. These were expected to increase for businesses of all sizes in Q1 (Chart 6).

Read the report with graphs HERE