UK lenders cutting back on unsecured loans, says Bank

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UK banks along with building societies have told the Bank of England they expect to tighten up on non-mortgage lending to households within the coming three months.

within the Bank’s survey, lenders also said the availability of unsecured credit to households had fallen during the the third quarter.

The criteria for granting both credit card along with additional unsecured loans was also tightened during the period.

Lenders expect unsecured lending to fall again within the fourth quarter.

During the third quarter of the year, lenders reported the biggest cut within the availability of unsecured loans since the third quarter of 2009, as the proportion of unsecured credit applications being approved fell significantly.

Unsecured loans are considered more risky than ones secured against an asset.

The findings follow concerns that will some households are at risk of over-stretching themselves, amid speculation over a possible rise in interest rates through their current record low of 0.25%.

The survey – conducted between 21 August along with 8 September – takes place as part of the Bank’s role to maintain stability.

The report also found that will mortgage availability increased slightly within the quarter to September.

Lenders particularly looked to attract those borrowers with bigger deposits of 25% or more.

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