Lenders reported that overall demand for non-mortgage lending had risen in the last few months and was expected to rise further in the coming months
Default rates on mortgages, credit cards and other household loans have recently risen and are expected to increase further in the coming months, according to a Bank of England survey of lenders.
Demand for credit card borrowing rose in recent months, and is expected to rise further by the end of May, as per the report.
Lenders reported that overall demand for non-mortgage lending had risen in the last few months and was expected to rise further in the coming months.
Karim Haji, global and UK head of financial services at KPMG, commented: Considering inflation is now dropping and is anticipated to drop to below the BoE’s 2% target in the months ahead, increasing demand for credit card lending in (the first quarter of 2024) suggests a more positive economic outlook has not fed through to household finances yet.
He said: Defaults across all unsecured (non-mortgage) lending rising over the same three-month period suggests many people are still struggling to meet their day-to-day costs. Lenders will need to be vigilant and continue to offer support for borrowers in the interim.
Lenders reported that mortgage availability to households rose in the three months to the end of February and is expected to rise over the three months to the end of May.
Demand for mortgages for house purchase and remortgaging is also forecasted by lenders to rise.
The availability of non-mortgage credit to households was unchanged and was expected to remain broadly the same in the three months to the end of May.
Lenders reported that the length of interest-free periods on credit cards for balance transfers had dropped in the last few months and was expected to remain unchanged by the end of May.
The length of interest-free periods on new credit cards for purchases had marginally risen in recent months and was expected to be unchanged by the end of May.
Looking at loans to businesses, default rates have also marginally risen for small and medium businesses but were unchanged for bigger firms in recent months, the BoE’s Credit Conditions Survey found.
Default rates are expected to rise for small and medium-sized businesses in the next few months and be unchanged for bigger firms.
Lenders reported that the overall availability of credit to the corporate sector had been unchanged in the last few months. The overall availability of credit to businesses was expected to marginally rise by the end of May.