Mortgage and business lending default rates are expected to rise in the fourth quarter, the Bank of England has found.
The bank’s latest credit conditions survey also revealed that default rates on secured loans to households remained unchanged in July, August and September.
“Default rates on secured loans to households remained unchanged in the third quarter, but was expected to increase in the fourth quarter,” the survey said.
“The net percentage balance for changes in losses given default on secured loans increased slightly in the third quarter and was expected to increase further in the fourth quarter.”
Furthermore, default rates for total unsecured lending dropped in the three months to September but was forecasted to rise in the three months to December.
The default rates on loans for small businesses remained unchanged in the third quarter but increased for medium and large firms and was predicted to rise for all business sizes in the last quarter of the year.
Also, according to the survey, lenders reported that demand for secured lending for house purchases increased in the third quarter and was expected to remain unchanged in the fourth quarter.
In the three months to September, demand for unsecured lending dropped, but this was predicted to rise in the three months to December.
Lenders reported that demand for corporate lending from small businesses increased in the third quarter.
Meanwhile, in the last three months of the year, a fall in this demand was predicted for small and large businesses while a slight increase was forecasted for medium-sized businesses.