Lenders have significantly reduced the availability of non-mortgage credit to households in the first three months of 2018, according to a survey from the Bank of England.
A Bank of England survey of banks and building societies found that the reported availability of unsecured credit to households fell between January and March.
It is the sharpest drop in unsecured lending to consumers during the first quarter since records began in 2007.
Much of the recent borrowing has been by people on higher incomes using credit cards and borrowing to buy new cars.
The fall reflects a “changing appetite to risk” amongst lenders, who have been encouraged by the Bank of England to rein in risky household lending.
The survey also found that interest-free periods for balance transfers reduced significantly and credit scoring criteria for credit card and loan applications tightened during the period.
No change in the availability of credit is expected over the next three months, the report claims.
Meanwhile, the availability of credit to businesses was reported as being unchanged in the three month period, with no change expected in the next quarter.
There was no change in demand for credit from businesses, but lenders expect an increase in demand for business credit from medium and large-sized firms in the next financial quarter.
Demand for credit from small businesses is expected to remain the same in the next quarter.
Thomas Fox, Licensed Insolvency Practitioner at Umbrella Accountants said: “The Bank of England has been worried about unsecured household credit for some time because, although real wages have been falling, people have continued to spend.
“If you rely on credit to help make ends meet then you may have found it tougher to borrow in 2018. And things are unlikely to get easier anytime soon unless you take positive action.”
To find out how Umbrella.uk can help you tackle rising debts, speak to a member of the team today. Call: 0800 611 8888 or visit www.umbrella.uk