In the wake of decreased lending at the end of 2019, UK banks are expecting higher credit card borrowing in the coming months, the Bank of England predicts.

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Overall demand for unsecured lending decreased in the last quarter of last year. This was driven by a reported decrease in demand for both credit card and other unsecured lending.

Lenders responding to the central bank’s survey expected the demand for credit card lending to increase in the first three months of this year. However, demand for other unsecured lending was expected to remain unchanged.

The BoE’s gauge of demand for credit card borrowing by households over the next three months rose to 14.3.

Demand for unsecured lending by loan type

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Lenders reported a decrease in demand for corporate lending from businesses of all sizes in the last quarter of last year. For the current quarter, however, they expect corporate lending to increase slightly for small businesses. They foresee a decrease for medium and large businesses.

Supply of unsecured credit

The availability of unsecured credit to households was reported to have decreased slightly in the last quarter of 2019. It was however expected to remain unchanged in the current quarter.

Credit scoring criteria for total unsecured credit applications were reported to have tightened in Q4 of last year. But the proportion of total applications approved was unchanged and were expected to remain unchanged in this quarter.

Household unsecured credit availability

The overall availability of credit to the corporate sector was expected to decrease slightly in the first three months of 2020.

The BoE survey was conducted between 25 November and 20 December, straddling the 12 December election that gave Prime Minister Boris Johnson a large parliamentary majority. The election helped ease the Brexit uncertainty and bring back a measure optimism about the UK economy.