(Adds details)
LONDON, April 13 (Reuters) - British lenders expect to
rein in the supply of new mortgages in the coming quarter but
there was scant sign of a wider credit crunch following recent
stress in the global banking system, a Bank of England survey
showed on Thursday.
Officials have been watching out for any tightening in
British credit conditions in light of the failures of Credit
Suisse and Silicon Valley Bank last month.
"Despite all the monetary tightening and the turmoil of
March, there is not too much evidence of banks pulling back,"
said Liz Martins, an economist at HSBC - though she noted that
the survey ran from Feb. 27 to March 17, so some responses would
have predated the bank collapses.
Nonetheless, Thursday's credit conditions survey is likely
to allay worries that a widespread seizing-up of credit markets
poses a big risk to Britain's economy, which has shown little
momentum of late.
Lenders signalled that loan spreads - the additional
interest that banks charge to borrowers over and above the
market rate - were likely to narrow in the second quarter.
Spreads on mortgages had widened sharply due to the
financial market turmoil unleashed in September during former
prime minister Liz Truss's short-lived premiership.
Still, Thursday's survey showed weakness in lending
intentions remained centred around the housing market, which has
slowed in recent months as the Bank of England has raised
interest rates to 4.25%, up from 0.1% in December 2021.
The BoE said lenders plan to restrict the supply of secured
lending to households in the second quarter, with mortgage
approvals data already showing signs of a sharp slowdown.
While that may weaken housing market activity in the months
ahead, the survey showed lenders expect to increase the supply
of consumer credit and maintain existing levels of corporate
lending in the coming months.
The quarterly Credit Conditions Survey also showed rising
default rates across mortgages, consumer credit and corporate
loans during the first quarter. Lenders expected them to rise
further in the second quarter.
(Reporting by Andy Bruce; Editing by David Milliken and David
Holmes)
Messaging: @brucereuters))
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