Lending criteria on loans to be tightened

5 October 2009

A report by the Bank of England has suggested that banks are to tighten their lending criteria on loans and credit cards, the Telegraph reports.

The Bank`s Credit Conditions Survey suggested that lenders are to place `stricter limits` on the people they lend money to and lower credit card holders` limits in the run-up to the festive period.

The Survey warned that more borrowers were expected to default on (fail to keep up with) their loan repayments over the next three months.

Banks also commented on the reduced availability of loans for home purchase during the past quarter, but mentioned that they expect this to improve over the next three-month period.

An economist at the Council of Mortgage Lenders, Paul Samter, said: "There are encouraging signs that households are coping better than expected with difficult conditions. Despite this, however, we still expect payment problems to increase in the coming months, given the weak economy and jobs market."

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