Access to credit became more difficult for both companies and households last quarter, while lenders hit by wholesale funding worries and house price gloom expect to restrict credit even further, the Bank of England said yesterday. Financial Times, The Times, Daily Telegraph, Independent, Guardian
The Bank’s quarterly survey of credit conditions showed lenders had 'materially' reduced availability of mortgage finance in the past quarter, although in the previous quarter’s survey they had expected households to be largely unaffected by the credit squeeze. A net balance of 25% expected to tighten credit further over coming months.
Yesterday’s survey suggests tighter credit availability has been significant in the recent housing market slowdown, although lenders expect demand for all types of mortgages to fall over the next three months and default rates, so far little changed, to increase.
Lenders’ responses suggested their lower risk appetite could reflect increasing difficulty in raising capital or transferring risk off their balance sheets through securitisation. However, their outlook for the coming months was influenced more strongly by concerns about the economy and housing market than by tighter funding conditions.