BoE survey shows tightening of credit criteria

John Hewitt Jones

October 14, 2016

Credit scoring criteria tightened in the third quarter of the year, according to the Bank of England credit conditions survey.

Lenders reported that the availability of unsecured credit to households increased in Q3, suggesting consumers may be turning to forms of unsecured credit.

The figures show demand for prime and buy-to-let lending has decreased significantly, and the latter recorded the largest fall since the Credit Conditions Survey began in 2007 Q2.

Matt Andrews, managing director of Bluestone Mortgages, said: “It is unsurprising that today’s results continue to show the gap between supply and demand for affordable lending options. The lack of availability of affordable loans to creditworthy borrowers is a concern – there are still far too many people being locked out of homeownership by the high street lenders.

“Borrowers need and deserve a more personal and tailored underwriting experience which takes account of their individual circumstances and opens the door to appropriate lending options. The ‘typical’ borrower is changing, and the market needs to reflect that in its approach to lending criteria. A balance needs to be struck between accelerating the mortgage decision process using technology and intelligent, human underwriting to ensure the customer’s needs are taken into account and that lending decisions are made on a case-by-case basis.”

The research also indicates the positive news that default rates on secured loans to households fell in the third quarter of 2016.

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