Gavekal Capital: A Look at the Dive in Availability of Credit to Households in the U.K.

Tuesday, October 7, 2014

A Look at the Dive in Availability of Credit to Households in the U.K.

The availability of credit for U.K. households over the last three months fell the most since the global financial crisis and marks the first contraction after eight consecutive quarters of expansion:

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(note: in each of these charts, the blue line represents the last three months' actual data while the red line is a forward-looking assessment of credit conditions.)

Conditions tightened for all borrowers, regardless of loan-to-value criteria:

LTV below 75%
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LTV above 75%
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Credit scoring criteria were tightened in the last quarter:

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Consumer demand for mortgages took a dive:

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And mortgage approvals suffered:

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On the bright side, lenders anticipate a pick-up in availability and approvals next quarter.