While a small net balance of lenders reported that they had reduced the availability of secured credit to households in the three months to mid-September 2009, an increase in overall credit availability is expected over the next three months. Improved prospects for house prices and the economic outlook more generally were reported to be the main contributing factors supporting this expectation.
Household demand for secured lending for house purchase was reported to have increased in the three months to mid-September, contrary to an expectation of no change. This was driven by demand for prime lending, with demand for buy-to-let and other lending secured on dwellings reported to be broadly unchanged. Demand for remortgaging had also stabilised in line with expectations, having fallen in the first half of 2009.
Demand for secured lending for house purchase was expected to decline somewhat over the next three months, which some lenders partly attributed to seasonality in the mortgage market. Nevertheless, demand for remortgaging was expected to grow.
Contrary to expectations, default rates and losses given default on secured lending to households were reported to have fallen. But a net balance of lenders expected them to rise somewhat over the next three months. For unsecured lending to households and lending to private non-financial corporations default rates and losses given default had continued to rise, with further increases expected.
Commenting on the survey, Oliver Gilmartin, RICS senior economist, said: "Today's credit conditions survey confirms that the turnaround in the real estate market has been achieved despite an ongoing restrictive financial climate. Whilst there were some improved signs that the credit freeze to corporates may be thawing, the survey is yet to signal any significant improvements in the availability of credit to households or within the property market in general…
"In the residential market, demand for mortgage credit rose at a much faster pace although mortgage spreads were reported to have continued edging upwards. However, the recent stabilisation in the housing market may be encouraging the banks to loosen their purse strings at the margin, with the availability of credit to households expected to increase in the coming quarter."
