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Bank Of England: Get Ready For Second Credit Crunch
Posted By admin On July 2, 2010 @ 9:12 am In World News | Comments Disabled
Edmund Conway and Angela Monaghan
London Telegraph 
Friday, July 2, 2010
Households must brace themselves for a return of the credit squeeze, with mortgages far harder to procure in the coming months, new Bank of England research has shown.
Banks and building societies expect to lend less next quarter the first time they have predicted a contraction of credit supply since the height of the financial crisis.
The warning, contained in the Bank’s Credit Conditions Survey , underlines fears that Britain may suffer a dip in economic activity later this year as the impact of austerity measures and the sovereign debt crisis start to bear down on the wider economy. The survey also revealed that in last quarter the corporate sector suffered its biggest shortage of credit since 2008, reinforcing worries about the health of British business.
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The survey found that a balance of 11.4pc of banks said that they expected to lend less in the coming three months, putting this down to expectations that the wholesale markets will continue to tighten in the coming months.
The poor levels of lending to businesses took many by surprise. Three months ago a balance of +22.7pc of lenders said that they expected an improvement in corporate credit availability during the most recent quarter; in the event a balance of only 7.1pc reported an increase in lending the lowest level since the end of 2008.
Melanie Bien, director at mortgage broker Private Finance, said: “Just when it looked as though lending conditions were starting to ease, the Bank is warning that we could face a second credit crunch. For those borrowers who are already struggling to secure mortgage finance, this is nothing short of disaster.”
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 London Telegraph: http://uk.finance.yahoo.com/news/british-households-face-second-credit-crisis-official-survey-warns-tele-173033c7a3b7.html
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