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BoE Q4 Credit Conditions Survey: "Default rates on mortgages rising slightly shows borrowers are still feeling the pinch"

ended 16. January 2025

The Bank of England has just published its Credit Conditions Survey for the fourth quarter of last year. Key findings below. Newspage asked brokers and property investors for their views, bottom.

  • Lenders reported that the availability of secured credit to households increased in the three months to end-November 2024 (Q4) and was also expected to increase over the next three months to end-February 2025 (Q1)
  • Lenders reported that demand for secured lending for house purchase increased in Q4, but was expected to decrease in Q1. Demand for secured lending for remortgaging also increased in Q4, but was expected to decrease in Q1
  • Lenders reported that overall spreads on secured lending to households – relative to Bank Rate or the appropriate swap rate – were unchanged in Q4, and were expected to narrow slightly in Q1.
  • Lenders reported that default rates on secured loans to households slightly increased in Q4, but were expected to be unchanged in Q1. Losses given default on secured loans increased in Q4, and were expected to increase slightly in Q1.
  • Lenders reported that default rates for total unsecured lending decreased in Q4, but were expected to increase in Q1. Within this, over the past three months defaults for both credit cards and other loans decreased. Defaults for credit card borrowing were expected to increase in Q1, while defaults for other loans were expected to increase slightly.

7 responses from the Newspage community

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Darryl Dhoffer
Founder at The Mortgage Geezer
Many borrowers are desperate, crippled by the crushing weight of debt. This grim reality is evident in the rise of default rates on secured loans, a chilling testament to the mounting pressure faced by households. The economy remains highly uncertain and is casting a long shadow over borrowers already struggling to keep their heads above water. Until we have economic stability and growth, borrowers will remain trapped in a vicious cycle of debt, their financial futures hanging by a thread.
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Patricia McGirr
Founder at Repossession Rescue Network
The Bank of England’s Credit Conditions Survey reveals a market on edge. Demand for secured lending rose in the fourth quarter, but lenders are bracing for a drop at the start of this year. This isn’t confidence, it’s a sign of buyers scrambling before affordability worsens. Defaults are creeping up, losses are rising and households are stretched thin. Yet lenders expect spreads to narrow? That feels wildly out of sync. The real story is that affordability is tightening its grip, and if lenders don’t adapt, they risk being caught off guard as cracks in the market deepen.
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Kelsey Phillips
Head of Specialist Lending at Arose Finance
Inline with this data, we notice a number of our secured lending partners are engaging with new funding lines to increase their lending capacity over the coming year. This bodes well for investors and developers alike, who would benefit from provider's increased willingness to lend. Investors will also be delighted to see narrowing spreads in Q1. This could be symptomatic of lenders expecting to compete for loan balances over the next three months in light of the anticipated surge in transaction volumes before the second home Stamp Duty thresholds revert on April 1st.
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Ben Perks
Managing Director at Orchard Financial Advisers
Default rates on mortgages rising slightly shows borrowers are still feeling the pinch. The demand for borrowing is up, which demonstrates an eagerness to borrow and lend, but we need economic stability to drive rates down and make payments more manageable for borrowers.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
It's curious that lenders are expecting demand to decrease until the end of February given the number of transactions that are being driven by the stamp duty deadline. December was unseasonally busy, and we were rushed off our feet all the way up until Christmas from people keen to buy. Even though rates have been edging up slightly in January, demand has still been fairly robust. It's a concern that default rates rose slightly in the three months to the end of November and shows the pressure many households are under. Hopefully the Bank of England delivers some rate cuts this year, starting next month.
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Ken James
Director at Contractor Mortgage Services
The uk market continues to be resilient and there are those who swim strongly against the current. Some will begin to tire and begin to sink. More and more we hear about the daily struggles to keep heads above water as the cost of living and high mortgage rates pull them down. This may be a difficult year for many and as brokers we need to be ready to do our best to help keep people afloat.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
The Bank of England’s Q4 Credit Conditions Survey offers a snapshot of both resilience and challenges ahead. Secured credit availability grew in late 2024 and looks set to rise further, but demand for house purchases and remortgaging is expected to cool off in the first quarter. Meanwhile, default rates for secured loans ticked upward, and unsecured borrowing shows warning signs for the three months to the end of February after a brief reprieve in the fourth quarter. With lending spreads holding steady but set to narrow, the data raises big questions for the housing market, consumer confidence, and lender strategies.