UK lenders see slower Q1 credit growth: Bank of England

[LONDON] British banks expect to rein back growth in the supply of lending to households and keep business lending flat in the next three months, a Bank of England survey showed on Tuesday.

The central bank's quarterly Credit Conditions Survey also showed lenders reported the sharpest fall in household demand for mortgages since the third quarter of 2008.

But at the same time, there was the biggest increase in demand for credit card lending since records began in early 2007.

The figures broadly echoed lending data reported over the last few months, which has shown rapid growth in consumer credit while Britain's housing market continues to slow.

Britain's housing market picked up in 2013 and prices were rising by more than 10 per cent in the middle of last year.

But stricter controls, and the impact of the run-up in prices, have reduced mortgage lending. House prices rose at their slowest annual rate in more than a year in December, one survey showed last week.

Bank lending to businesses continues to remain soft, with lenders forecasting no significant pick-up in credit provision, largely due to fears of a sharply worsening economic outlook.

The BoE has long highlighted the lack of credit for companies as a hindrance to Britain's economic recovery.

Data released by the Bank last week showed net lending to businesses in November dropped by 149 million pounds, although that was the smallest fall since August.

A year ago, the BoE and the government refocused their joint Funding for Lending Scheme away from mortgage lending to focus only on lending to businesses.

The BoE expects mortgage lending to be broadly flat over the next three months, after increasing it slightly in the last three months of 2014.

The BoE survey was conducted between Nov 10 and Dec 1.

REUTERS