The flow of net lending to UK businesses remained negative in February, though less so than in January, according to the Bank of England.
Spreads over reference rates on new lending to medium and large businesses continued to narrow in 2010 Q1, according to the Bank’s Credit Conditions Survey. Business contacts of the Bank’s network of Agents continued to report that credit availability was easing, though by less for smaller businesses than their larger counterparts. In recent discussions, the major UK lenders expected corporate credit demand to remain subdued in coming months.
The flow of net mortgage lending by all UK-resident mortgage lenders was little changed in February. Gross lending for house purchase increased in March according to data from the major UK lenders, and their mortgage approvals for house purchase rose after falls in the previous three months. The availability and pricing of new secured credit was broadly unchanged in 2010 Q1, according to lenders in the Credit Conditions Survey. Demand for secured credit for house purchase was reported to have fallen over the same period, largely reflecting one-off factors, but was expected to increase in Q2.
Total net consumer credit flows rose in February. The annual rate of credit growth turned positive, though remained very low. Effective interest rates on consumer credit edged higher in February, and spreads over Bank Rate and Libor remained significantly wider than in late 2008. Lenders reported little change in credit availability in 2010 Q1, but expected availability to increase in 2010 Q2. Demand for credit was reported to remain subdued, and most major UK lenders expected their stock of consumer credit to remain flat or to fall over the next 12 months.