The Bank of England survey on credit conditions and bank liabilities 11 January 2018

  • Lenders report availability of secured credit to households was unchanged 3-months to mid-Dec 2017 No change expected over the next three months to mid-March 2018
  • Availability of unsecured credit to households decreased again in Q4 2017 Lenders expect a significant decrease in Q1 2018


  • Household demand for secured lending for remortgaging increased significantly in Q4 2017
  • Q4 2017 saw largest q/q change in demand for this type of lending since the falls reported in early 2009
  • Demand for secured lending for house buys increased slightly in Q4 2017
  • Demand for credit card lending was reported to be broadly unchanged in Q4
  • Demand for other unsecured lending was reported to have fallen significantly; most since Q4 2015

Loan Pricing

  • Overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — were reported to have narrowed significantly in Q4 2017
  • Overall spreads on secured lending to households were expected to be unchanged in Q1 2018
  • Overall unsecured lending spreads tightened in Q4, and expected to be unchanged in Q1 2018
  • Spreads remain stable on lending to businesses for medium-sized firms in Q4, but widened on loans to small businesses
  • Spreads were expected to widen on lending to small and medium sized businesses in Q1 2018


  • Default rates and losses given default on secured loans to households fell significantly in Q4, expected to fall further in Q1 2018
  • Default rates on loans to corporates increased slightly for small businesses, remained unchanged for medium and large PNFCs
  • Survey was conducted between 20 November and 8 December 2017.

The broad gist is mortgage and re-mortgage borrowing was steady, consumers weren’t over stretching themselves on credit card and unsecured borrowing. Business borrowing was stable but there was a widening on SME spreads. Bad loans were down but small firm defaults were up. It’s a steady report and it’s not flagging any major problems.

Ryan Littlestone

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