This is concerning stuff, especially given the recent rise in interest rates, I suppose unsurprising. So asking the question what has changed… it also makes for some grim reading… [highlights mine]
- Supply: The availability of secured credit to households has decreased, indicating that it may be more challenging for individuals to obtain loans secured by assets. This could affect those seeking financing for housing or other purposes. The availability of unsecured credit is expected to decrease slightly, which may impact individuals relying on unsecured loans.
- Demand: While there was an increase in demand for secured lending for house purchase and remortgaging, it is expected to decrease in the next quarter. This suggests a potential slowdown in the housing market. There has been an overall increase in demand for unsecured lending, including credit card lending. However, it is worth monitoring if this trend continues, as increased borrowing can lead to higher debt levels.
- Loan Pricing: Spreads on secured lending to households are expected to widen, indicating that the cost of borrowing may increase in the future. Additionally, the length of interest-free periods on credit cards is expected to decrease, which could result in higher interest charges for credit card users.
- Defaults: Losses and default rates on secured loans to households have increased and are expected to continue rising. This indicates a potential increase in the number of individuals failing to repay their loans, which could have negative implications for lenders and borrowers alike. Default rates for unsecured lending are also expected to increase slightly, particularly for other types of loans.
… not great news on the economic environment.
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