Lenders are expecting the availability of secured credit to decrease in the coming months, research by the Bank of England (BoE) has suggested.

According to the BoE’s latest Credit Conditions Survey for Q1 2022, lenders reported that the availability of secured credit to households was unchanged in the three months to the end of February, and expect this availability to fall in the three months to the end of May.

The BoE’s quarterly survey of banks and building societies is aimed at improving the Bank’s understanding of trends and developments in credit conditions. Lenders were asked to report changes in the three months to end the end of February 2022, relative to the period between September and November 2021, as well as expected changes in the three months to the end of May 2022, relative to the period between December and February.

In terms of the demand for secured lending for house purchases, lenders reported it had slightly increased in Q1, and was expected to increase in Q2. The Bank’s survey also showed this was the same case for secured lending for remortgaging.

Lenders also reported that overall spreads on secured lending to households – relative to the BoE’s base rate or the appropriate swap rate – narrowed in Q1, with this expected to be unchanged in Q2.

Commenting on the findings, Hargreaves Lansdown senior personal finance analyst, Sarah Coles, said: “Demand for loans and credit cards boomed at the start of this year. With inflation gathering momentum, and eye-watering price rises for many of the essentials, it has forced more of us to borrow to make ends meet. Credit card borrowing grew faster than any other month on record in February, the most recent month we have data for.

“But while this feels like a solution in the short-term, you’re building up problems for the future, because you’re adding interest and repayments to the ever-growing mountain of monthly costs, which makes it harder and harder to stay on top of our finances each month.”

She added: “For mortgage borrowers, lending is getting tougher too. A growing number of banks are also factoring higher prices into their mortgage calculations, so borrowers may not be able to get the size of loans they were expecting. Mortgage lenders say they expect to tighten lending as we go through the spring, which could start to apply the brakes on the housing market.”

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