United Kingdom lenders see sharp tightening of consumer credit in coming months

Credit cards are harder to come by as banks tighten up their lending criteria under pressure from the Bank of England
Credit
Philippe Wojazer  REUTERS

Credit cards are harder to come by as banks tighten up their lending criteria under pressure from the Bank of England Credit Philippe Wojazer REUTERS

United Kingdom banks and building societies have told the Bank of England they expect to tighten up on non-mortgage lending to households in the coming three months.

A survey of the UK's credit conditions among retail banks suggested that the years of soaring growth in unsecured lending to British households may now be stalling as lenders react to warnings from the Bank of England about rising debt levels.

The survey showed the net balance of lenders' expectations for the availability of unsecured lending to households over the next three months fell to -28.6 from -16.2, indicating the sharpest fall since the fourth quarter of 2008, when the United Kingdom economy contracted by 2.2%.

This tightening has already started, however, and the...

The latest Bank credit survey also showed that the net balance of lenders reporting demand for unsecured lending fell to 0.9 per cent in the third quarter of 2017, down from 9.3 per cent in the second quarter.

The Bank's Financial Policy Committee warned last month that United Kingdom lenders are underestimating their potential losses on credit cards and other unsecured loans to customers, and said it was compelling them to hold an extra £10bn of capital to protect their balance sheets in the event of an economic shock.

Corporate demand for capital investment lending over the next three months was expected to be the lowest since 2011, the survey also found.

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