Lenders report increase in households defaulting on loans

Lenders have recorded a rise in households defaulting on loans over the past three months, according to new data.

The Bank of England’s regular Credit Conditions Survey also found that default rates are expected to “increase further” over the coming months.

Lenders, such as high street banks, said that the default rate on secured loans increased over the three months to the end of February.

The Bank was also told by lenders that the availability of secured credit was broadly unchanged over the latest quarter, despite previous expectations that households would find availability tougher.

However, lenders cautioned that availability is expected to become weaker over the three months to May.

Credit to the corporate sector was unchanged over the latest quarter and is predicted to remain flat.

Secured lending for house purchases declined over the past quarter, the survey said.

Lenders added that lending activity is expected to return to growth over the new quarter, with a rise in remortgaging.

The Credit Conditions Survey of banks and building societies is carried out every quarter, as part of the Bank’s mission to maintain financial stability.

The findings do not necessarily reflect the Bank’s own views on credit conditions.