LONDON: A Bank of England survey underscored the consumer-led nature of Britain’s economic growth on Wednesday, showing that banks planned to ramp up mortgage lending while business lending was expected to rise by the smallest margin in four years.
The quarterly survey showed lenders expected to keep the availability of credit to businesses broadly static over the next three months, but lending for mortgages and other consumer borrowing would rise at its fastest rate in 18 months.
Some of the weak growth expected in business lending might reflect the preference of large businesses for raising money on bond markets rather than from banks. The BoE said overall credit availability for large companies “remains plentiful”.
Britain’s relatively strong economic growth since 2013 has been driven mostly by the country’s consumers, frustrating hopes among policymakers for a more sustainable recovery led by business investment and exports.
A survey published earlier this month showed that uncertainty about the outcome of Britain’s in-out referendum on the country’s membership of the European Union is diminishing the appetite for companies to invest.
The BoE survey showed declining demand for credit from businesses, though banks expected a rebound in smaller firms’ appetite to borrow.
Mortgage lending – which has been propelled in recent months by landlords buying properties before a tax rise – is set to become even more readily available. Banks said they wanted to boost market share and believed the economic outlook was brighter.
The BoE said banks also saw strong demand from prospective homeowners and that car dealers remained a growing source of lending.
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