UK lenders expect record increases in access to unsecured credit


British five pound banknotes can be seen in this illustration dated November 14, 2017. REUTERS / Benoit Tessier / Illustration / File PhotoIllustration

LONDON, July 15 (Reuters) – UK lenders expect a record spike in the availability of unsecured credit for households over the next three months as the country’s economy recovers from its lockdown slump, a Bank of England survey found Thursday .

Lenders also expect the availability of new mortgages to increase – although demand would likely fall – while the supply of credit to businesses remained unchanged.

The numbers come from a quarterly survey of UK banks and building societies conducted June 1-18, and support signs of a rapid recovery from the coronavirus pandemic.

UK consumer borrowing collapsed during the lockdowns as people had fewer options to spend and vacation benefits for millions of workers who would otherwise have been unemployed.

Previously released BoE data for May showed the first net increase in consumer borrowing since August, although separate June figures released Thursday by the Office for National Statistics showed the first monthly decline in credit and debit card spending since January. Continue reading

The expected increase in the availability of unsecured credit to households over the next three months was the largest since the survey began in 2007.

Demand for credit card loans and other types of unsecured debt with longer interest-free periods on credit cards to attract borrowers has increased.

Unsecured loan default rates have fallen over the past three months but are likely to rise again.

Reporting by David Milliken; Adaptation by Kate Holton and William Schomberg

Our standards: The Thomson Reuters Trust Principles.

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