Source: Sharecast
Publishing its latest credit conditions survey, the BoE found that the availability of secured credit to households was unchanged in three months to May end, and was expected to increase over the next three-month period. However, while demand for secured lending for house purchase increased in the three months to May end, it was expected to decrease in the period to August end.
Demand for credit card lending fell slightly in the three months to May, the survey also showed, while defaults for credit cards and other loans increased. Respondents said they expected a further rise in credit card defaults in the three months to August end.
The survey comes amid an uncertain backdrop for UK consumers. The BoE’s rate-setting Monetary Policy Committee had been widely expected to continue cutting interest rates this year, but the outbreak of war between the US and Iran at the end of February means Bank Rate has so far been left on hold at 3.75%.
The conflict sent global energy prices soaring, reigniting inflationary risks. The two countries have now agreed to reopen the Strait of Hormuz and cease fighting while a permanent peace deal is negotiated. Oil prices have fallen sharply in response, although tensions remain high.
In the UK, inflation has yet to pick up substantially, but economic growth remains tepid at best. Recent data showed the unemployment rate had ticked lower, but vacancies also fell sharply as wage growth slowed.
The summer is also a traditionally quieter period for the housing market.
The quarterly survey of banks and building societies is designed to give the central bank insight into trends and developments in credit conditions. It covers secured and unsecured lending to households, and lending to non-financial corporations and small businesses.
The data were collected between 26 May and 12 June, just head of Washington and Tehran striking their memorandum of understanding.
The next survey will be published in early October.