Credit to firms remains unchanged in Q4
Households could face a tougher time getting credit in the coming months, while the corporate sector saw no change in supply and demand over the last quarter of 2017, according to a new Bank of England survey of lenders.
The Credit Conditions Survey for the final three months of last year found that availability of non-mortgage credit to households was reported by banks and building societies to have decreased across all four quarters of 2017.
Lenders tightened their credit-scoring criteria for loan applications towards the end of 2017, and expect to become much stricter in the first quarter of 2018.
Howard Archer, chief economic adviser at EY Item Club, said the latest findings would be “good news” for the Bank of England, following recent concerns about levels of growth in credit. “However, the persistent squeeze on consumer purchasing power is likely continuing to fuel the need for some consumers to borrow.”
The overall availability of credit to the corporate sector was reported to have been unchanged again in the fourth quarter on the supply side, while from a demand perspective, total demand for corporate lending from SMES remained the same.
Graham Toy, chief executive of the National Association of Commercial Finance Brokers, said while the survey “doesn’t paint the rosiest of pictures, it has to be remembered that this is a snapshot of lending amongst banks and building societies… alternative routes to finance are still seeing a healthy level of demand”.