Services sector strength bolsters optimism

BANKS are likely to tighten lending rules as the eurozone’s problems drag on, according to the Bank of England’s credit conditions survey.

By The Newsroom

Published 6th Jan 2012, 06:00 BST

The research, spanning the fourth quarter of 2011, found the UK’s lenders expect to tighten credit scoring for mortgages, as well as make covenants tougher on loans to large and medium-sized businesses.

“While lenders expected credit availability to increase a little to the household and corporate sectors in the coming quarter, factors such as the economic outlook and tighter wholesale funding conditions were expected to have a negative impact on credit availability,” said the survey.

The BoE said demand for credit from households has fallen in recent months, and lenders expect even weaker demand from households and businesses over the next three months.

It added lenders have seen bad debt rates increase for the first time in two years among large and medium-sized firms.

Bank of England