Households could find it harder to take out a low-deposit mortgage or a credit card in the coming months, a Bank of England survey of lenders has suggested.
Lenders expect mortgage availability to fall slightly between now and mid-September, reflecting a changing appetite for risk, according to the Bank’s Credit Conditions Survey of banks and building societies.
Those surveyed expect the reduction to affect borrowers with deposits of less than 25 per cent, and in particular those with a deposit of less than 10 per cent.
Meanwhile, for the first time since the question was asked in 2015, lenders said they expect the length of interest-free periods on credit card balance transfers to decrease in the coming three months.
Lenders reported the availability of non-mortgage credit to households had decreased in the previous three months, and was expected fall further in the coming three months. The changing economic outlook was said to be affecting expectations.
Lenders’ credit-scoring criteria for granting credit cards and other non-mortgage loans has tightened in recent months and is expected to tighten further in the third quarter of 2017, the report found.
Default rates on credit card and other non-mortgage lending were reported to have increased significantly in the second quarter, and were expected to increase further on credit card lending in the coming three months.
Looking at corporate lending, banks and building societies said there had been a significant increase in demand for borrowing from small and medium-sized businesses in the previous three months – the first increase for either in a year. Demand for loans from small businesses is expected to fall back in the coming three months, while no change is anticipated for medium-sized businesses.
For large firms, demand for loans has decreased in recent months and is expected to fall further in the next few months, with lower capital investment said to be acting as a drag.
Recent lending figures released by the Bank have shown strong annual growth in consumer credit, prompting warnings from charities that some households may be at risk of over-stretching their borrowing as living costs rise and wages stagnate.
Earlierthis month, the Bank told lenders to prove they are not taking on too much risk and ordered firms to provide details by September.