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Credit Cards & Loans

Consumers may find it more difficult to get credit in Q2

Paloma Kubiak
Written By:
Paloma Kubiak

A survey of banks and building societies has revealed they expect credit card lending to tighten “significantly” in the second quarter of 2017.

According to the Bank of England’s latest Credit Conditions Survey, a quarterly survey of bank and building society lending, lenders said the availability of unsecured credit to households decreased slightly in Q1 and was expected to decrease further in the second quarter.

They cited a tightening of credit scoring criteria for granting credit card and other unsecured loans, adding that they expect credit scoring criteria on credit card lending to “tighten significantly” in Q2.

While demand for credit card lending was unchanged in Q1 from the previous three months, they said they expect it to increase slightly in the next quarter. Demand for other unsecured lending products increased slightly in Q1 but they expect a slight decrease in the next three months.

On interest-free periods for both balance transfer offers and purchases on credit cards, the lenders reported an increase in Q1 and they expect further increases in Q2.

Default rates on credit card lending to households is reported to have fallen as were losses given default. The latter was expected to fall again in Q2 while default rates on other unsecured lending was unchanged in Q1, though they expect it to rise in Q2.