Credit availability holding firm

The Bank of England has published a largely positive credit conditions survey, revealing that the availability of credit is set to be stronger than had been expected.

Defaults on secured loans were lower than expected over the past quarter, the study found, with the availability of both secured and unsecured credit set to relatively constant over the next three months.

While the survey findings related to a pre-Northern Rock market, the study nonetheless acknowledges that lending constraints were beginning to make themselves felt - and yet, on the whole, lenders said they expected demand for mortgages to strengthen in the prime sector moving forwards.

"The funding constraints arising from the slowdown in the interbank lending market were already apparent [in this survey]," commented Michael Coogan, director general at the Council of Mortgage Lenders.

"Against this backdrop, it is encouraging to see that the lenders contributing to the Bank survey largely expect the supply of mortgage lending to hold up," Mr Coogan added.

The study also found that remortgaging demand remained roughly unchanged over the past three months, though this is expected to pick up over the next quarter.


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