The annual rate of growth in the stock of lending to UK businesses was negative in the three months to February, according to a new Bank of England report. The stock of lending to small and medium-sized enterprises continued to contract.
The annual rate of growth in the stock of secured lending to individuals was broadly unchanged. Mortgage approvals by all UK-resident mortgage lenders for house purchase fell over the three months to February, though were higher than the same period last year. Net monthly consumer credit flows remained subdued and were lower, on average, in the three months to February compared to the previous three months.
Conditions in longer-term wholesale funding markets improved in 2012 Q1, according to the major UK lenders. Spreads over reference rates on new lending widened for businesses in 2012 Q1, according to the Bank of England’s Credit Conditions Survey, and were expected to widen further in Q2. Spreads over Bank Rate on some quoted floating-rate mortgages have widened over the past six months. Effective rates on interest-bearing credit cards were broadly unchanged in the three months to February.
Credit availability was broadly unchanged for businesses and households, according to respondents. A survey of businesses conducted by the Bank’s network of Agents indicated that for most businesses, credit availability was little changed since last summer. In recent discussions, some major UK lenders noted that demand from small and medium-sized enterprises remained muted over the quarter. The availability of secured lending to households was unchanged in 2012 Q1 and was expected to fall slightly in Q2.