Improved cost and availability of funds is the main contributing factor and partly reflects lending commitments made by lenders to the Government as a condition for participation in the Asset Protection Scheme (APS).
Some lenders expect a further increase in the availability of secured credit to households over the next three months.
Availability of unsecured credit to households, however, has reduced, and over the next three months lenders anticipate a further small reduction in the availability.
Demand for secured lending for house purchase has increased over the past three months while demand for remortgaging had declined further.
Lenders expect that demand for secured lending would remain broadly unchanged over the next three months.
Default rates and losses given default on secured and unsecured lending have risen over the past three months. Lenders expected a further increase in both default rates and losses given default.
Unlike in previous surveys, credit availability to households with loan to value (LTV) ratios above 75 per cent has remained broadly unchanged over the past three months.
Credit availability to high LTV borrowers is expected to improve and lenders anticipate a slight easing in credit scoring criteria for granting loans.
Household demand for loans for house purchase and other lending secured on dwellings has increased in the three months to mid-June. But demand for remortgaging has fallen further.
Lenders reported a further increase in spreads on secured lending, but fees, maximum LTVs and loan to income ratios (LTIs) remained broadly unchanged in the three months to mid-June.
Credit scoring criteria has been tightened. Lenders linked this to concerns about deteriorating credit quality of loan applicants and preparation for increased lending to higher LTV borrowers over the next three months.
Over the next quarter, buy-to-let spreads are expected to increase further while prime spreads, fees and maximum LTIs were expected to remain unchanged.
Lenders anticipated an increase in maximum LTVs, consistent with the expected increase in credit availability to high LTV borrowers.
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