Lenders predict higher demand for consumer credit but supply is set to drop
LENDERS are anticipating an increase in demand for consumer credit in the next three months but are expecting less to be available.
The Bank of England’s second quarter credit conditions survey asked lenders about their opinion on credit conditions and assigned a value to their response, which was then weighted by their market share.
This was then calculated into a net percentage balance, which found that 12.3 per cent of lenders are predicting an increase in demand for loans and overdrafts during the third quarter of 2018.
However, a net balance of 7.7 per cent anticipated availability of credit falling, citing tougher credit scoring and market share objectives.
Looking back at the second quarter, a net balance of 4.4 per cent said demand for unsecured credit had increased, while 4.3 per cent said supply was down.
This was an improvement on the 15.2 per cent who reported a decline in demand in the first quarter of 2017.
Lenders reported an increase in demand for credit card lending in the second quarter, with a percentage balance of 2.3 per cent, while 16 per cent expected it to increase over the next three months.
However, while 15.4 per cent of lenders said demand for loans and overdrafts increased in the previous quarter, 5.8 per cent are expecting a fall over the next three months.
The Bank of England reported that “credit scoring criteria” meant approvals for loans and overdrafts had fallen in the second quarter, with 6.6 per cent reporting a drop, while 19.7 per cent said this could fall again in the third quarter.
However, appetite for credit card approvals was strong in the second quarter of 2018, with 27.4 per cent more reporting an increase and 21.5 per cent more expecting a boost in the next three months.
Read more: FCA chief outlines consumer credit concerns