Credit Market Analysis by Lloyds TSB

Credit conditions have improved, but talk of ‘green shoots’ and a low in swap rates may be premature

Credit conditions have improved, but talk of ‘green shoots’ and a low in swap rates may be premature

Credit conditions improve, as willingness to lend and the availability of funds rise

Latest bank lending surveys show that the pace of credit tightening has started to ease, though credit conditions remain very tight relative to historical norms. The Bank of England’s credit conditions survey indicates that corporate credit availability actually rose, with the continued reduction in credit for commercial real estate more than offset by remaining corporate sectors. A net 8% of banks said that they increased the availability of corporate credit in Q1,
compared with a net 28% saying they reduced corporate credit in Q4, as chart a shows. The improvement was driven by an improvement in lenders’ willingness to lend and in the cost and availability of funds. Further, a net 26% of banks said they expect to improve credit availability in Q2, with the economic outlook seen to be less negative. There were similar outturns in the current and expected provision of credit for households.

Full Report