Households may find it harder to get new credit in coming months

Households may find it tougher to take on new borrowing the coming months – as a Bank of England survey of lenders has found the availability of non-mortgage credit is expected to decrease.

The availability of non-mortgage credit to households was reported to have decreased in the first three months of 2019 and was expected to fall further in the second quarter of this year, the Bank’s Credit Conditions Survey found.

Lenders said they had tightened their credit scoring criteria for loan applications sightly, with the proportion of loans being approved also edging down.

The lengths of interest-free periods for balance transfers and new purchases on new credit card lending decreased significantly in the first quarter and are expected to fall significantly again in the next three months.

The Bank surveys banks and building societies about credit conditions every quarter as part of its role to maintain financial stability.

Lenders are asked about the past three months and the coming three months and the latest survey was carried out between March 4 and March 22.

In contrast to lending to households, the survey found the overall availability of credit to the corporate sector remained unchanged in the first quarter and was expected to see no change in the second quarter.

Looking at mortgages, demand for house purchase lending is expected to fall in the coming three months, having remained unchanged in the first quarter.

But demand for re-mortgaging is predicted to increase in the second quarter, having seen a significant increase in the first quarter.

Mortgage availability is expected to remain unchanged over the coming three months.