This is according to the latest Credit Conditions Survey from the bank of England.
The availability and pricing of new secured credit was broadly unchanged in 2010 Q1, according to lenders. Demand for secured credit for house purchase was reported to have fallen over the same period, largely reflecting one-off factors, but was expected to increase in Q2.
The report said: “In recent discussions, most major UK lenders reported that effects from the severe weather around the turn of the year and the removal of the stamp duty relief at the year end had dissipated and were not affecting approvals or lending in March. Looking forward, the major UK lenders expected the impact of the new stamp duty land tax relief announced in Budget 2010 to have some positive impact on mortgage activity from first-time buyers, though obtaining the deposit for house purchase - rather than the cost of stamp duty - was perceived by some lenders to be the greater constraint to house purchase.”
The flow of net lending to UK businesses remained negative in February, though less so than in January, according to the survey. Business contacts of the Bank of England’'s network of agents continued to report that credit availability was easing, though by less for smaller businesses than their larger counterparts. In recent discussions, the major UK lenders expected corporate credit demand to remain subdued in coming months.
Effective interest rates on consumer credit edged higher in February, and spreads over Bank Rate and Libor remained significantly wider than in late 2008. Lenders reported little change in credit availability in 2010 Q1, but expected availability to increase in 2010 Q2. Demand for credit was reported to remain subdued, and most major UK lenders expected their stock of consumer credit to remain flat or to fall over the next twelve months.
