Mortgage conditions remain balmy, as unsecured lending criteria tightens - BoE
Mortgage credit availability improved slightly in the final quarter of 2017, but there was a fall the in amount of unsecured consumer credit being made available amid a further tightening of lending standards.
The Bank of England’s credit conditions survey on Thursday showed the availability of household mortgage finance increased by a balance of 1.5% in the fourth quarter. Lenders reported the subdued economic backdrop and expectations for fairly flat house price growth had little effect on the availability of credit.
As the Bank of England hiked the base rate from 0.25% to 0.5%, demand for re-mortgaging at the end of the year recorded a sizeable increase, with a 49% balance of lenders reporting an increase.
As for unsecured or non-mortgage lending, availability to households was reported to have decreased again, marking a fall for all four last year. Lenders, which have been tightening criteria for unsecured loans, generally said they expect a significant decrease in the start of 2018 Q1.
Banks and other credit card providers said demand broadly held up in the final months of 2017, though demand for other types of unsecured lending had fallen significantly, the first material fall seen in two years.
Looking at the outlook for commercial property, this was more subdued, with lenders expecting credit availability to deteriorate in the first quarter of 2018, as the net balance dropped from 0% to -10.9%. However, with a net balance of 0%, lenders do not seem concerned that pricing will limit activity in the quarter ahead.
Banks were more upbeat about residential mortgage availability and, while some lenders are more concerned about the economic outlook over the next three months, they do not expect this to affect lending to those making higher loan-to-value house purchases.