British lenders reported that secured credit availability to households decreased during the three months to the end of August, the Bank of England’s third-quarter survey showed. The net balance fell to minus 15.5 from plus 2.6 in the previous survey. Reuters said it was the first reduction in mortgage and other secured-credit availability for three years. Lenders expected availability to increase slightly by the end of November.
Demand for house-purchase lending fell to a net balance of minus 37.1, from plus 14.9 in the preceding quarter. Remortgaging demand also dropped, to minus 32.5 from plus 42.5. The survey was conducted between 17 August and 4 September, so it does not capture subsequent market developments. The Bank said the responses reflect lenders’ assessments and do not necessarily represent its own view.
SUPPLY TIGHTENED ACROSS HOUSEHOLD CREDIT
The tightening extended beyond mortgages. Lenders reported that unsecured household credit availability decreased, with a net balance of minus 11.0. Credit availability for small and medium-sized businesses also fell, while availability for large businesses was unchanged.
Within secured lending, availability declined for both lower loan-to-value and higher loan-to-value borrowers. The reported balances were minus 12.6 for borrowers at 75% loan to value or below and minus 19.9 for borrowers above that threshold. The proportion of household loan applications approved also fell, recording a balance of minus 10.5.
LENDERS EXPECTED PARTIAL FOURTH-QUARTER RECOVERY
Respondents expected some recovery during the three months to the end of November. The forward balance for secured-credit availability was plus 5.1, while expected house-purchase demand stood at plus 9.8. Expected remortgaging demand was stronger at plus 23.1, but these figures are expectations rather than realised lending.
The survey points to a simultaneous pullback in mortgage supply and borrower demand, while lenders continued to expect a partial fourth-quarter rebound. It also showed rising unsecured-loan defaults even as secured-loan defaults slightly decreased. The next Credit Conditions Survey, covering the fourth quarter, is due on 14 January 2027 and will test whether the predicted recovery materialised.