Last week the Bank of England published the results of its Credit Conditions survey for Q2 2019. It was interesting to note that default rates on total unsecured credit increased significantly in Q2, driven by a significant increase in default rates on credit card loans. Default rates on lending to small and large businesses also increased slightly in Q2, while remaining stable for medium sized businesses. The survey also suggested that default rates were expected to increase for businesses of all sizes over the next three months.
While default rates on secured credit to households decreased slightly in Q2, and are expected by lenders to decrease slightly over the next three months, earlier this week the Association of Mortgage Intermediaries urged the mortgage market to start preparing for a rise in arrears, so what happens next is by no means predictable. Ascent will be ready for any eventuality, thanks to our stringent approach to resource and capacity planning.
The net percentage balance for changes in default rates for total unsecured lending increased significantly in Q2. This was driven by a significant increase for credit card loans (Chart 6). Lenders expected default rates for total unsecured lending to remain unchanged in Q3.
https://www.bankofengland.co.uk/credit-conditions-survey/2019/2019-q2