Interest-free periods on credit cards cut, Bank survey finds

January 16, 2020 9:48:23 AM

Lenders tightened their credit scoring criteria and chopped zero-interest periods on new credit card lending towards the end of 2019, a Bank of England survey has found.

Banks and building societies reported that the availability of unsecured (non-mortgage) credit to households decreased slightly in the fourth quarter of 2019.

The length of interest-free periods for balance transfers and new purchases on credit card lending both decreased, the Bank’s Credit Conditions Survey found.

The findings from the latest survey were released at a time when many households will be looking to shift their debts after their Christmas spending.

Some may be looking at moving their debt to a new zero-interest deal as an option.

Lenders said that, despite tightening their criteria towards the end of last year, the proportion of loans being approved is expected to remain unchanged over the next three months.

Looking at mortgages, the survey found that the availability of home loans increased towards the end of 2019, as lenders ramped up competition to meet their market share objectives.

Mortgage availability is expected to fall back in early 2020.

The availability of credit to companies generally fell slightly towards the end of the year, but remained unchanged for smaller firms.

Credit availability to the corporate sector is predicted to decrease slightly over the next few months.

Lenders expect to see an increase in demand for loans from small businesses in the next few months, but a decrease from medium and large firms.

The Bank asks lenders about credit trends every quarter, as part of its role to help maintain financial stability.

The latest survey was carried out between November 25 and December 20 2019.

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