LONDON, June 23 Lenders expect the rate of
household loan approvals to fall significantly in the third
quarter, a Bank of England survey showed on Monday.
The central bank's quarterly Credit Conditions Survey showed
some banks cited a tightening of mortgage standards as one
reason why mortgage lending would ease off next quarter.
The survey also showed demand for secured lending by
households - essentially mortgages - increased significantly in
the second quarter.
"Some lenders noted that changes introduced as a result of
the Mortgage Market Review might reduce approval rates
somewhat," the Bank said.
"In addition, some lenders suggested that a tightening in
lending standards on large loans with high loan-to-income ratios
may also push down their approval rate a little."
The Mortgage Market Review introduced tougher tests to check
borrowers' ability to pay back their mortgages earlier this
Separately, Lloyds and RBS introduced limits to the amount
people can borrow against their income.
The BoE also said there was no change in the availability
of secured loans with a high loan-to-value ratio of above 75
percent in the second quarter.
However, there was an increase in willingness to lend at
ratios above 90 percent.
The figures come ahead of the publication of recommendations
from the Bank's Financial Policy Committee on Thursday, which
are likely to include measures to curb excessive mortgage
Economists polled by Reuters last week said this might
comprise capping loan to income ratios on mortgages.
Official data last week showed house prices soared 9.9
percent in April, their biggest annual rise since June 2010,
heightening concerns that a bubble may be developing in the
The BoE said lenders expect to increase credit availability
to businesses in the third quarter. Data from the Bank at the
start of the month showed lending to non-financial businesses
shrank by 2.4 billion pounds in April, compared with a fall of
2.5 billion pounds in March.
(Reporting by Andy Bruce and Ana Nicolaci da Costa)