A survey undertaken by the Bank of England has forecast that lenders will make it easier for householders and businesses to get credit during this year.
Lenders have announced that during the second quarter of the year, there is the expectation that they will be offering more loans, although they have been very cautious about loaning secured credit during the first three months of 2009. Mortgage demand has also fallen in the same period and is expected to drop further through the year.
Despite the best efforts to keep interest rates down, borrowing costs have risen steeply. The Bank of England has reduced interest rates to a record 0.5 per cent and in March attempted to kick-start the economy with a ?75 billion pound asset purchase scheme.
In addition, it has begun to buy government and corporate bonds. This is a booster attempt to enhance and enable more lending to businesses and households.
According to the survey, as the economic climate has worsened, businesses and households have been hit by rising default rates on secured and unsecured loans.
The survey reported: ?The economic outlook was not longer expected to be a factor bearing down on credit availability. Improvements in the cost and availability of funds were expected to support increased credit availability over the next three months. Lenders reported a further widening of spreads on corporate lending. They expected spreads to increase further.?
