Interest-free periods on credit cards are expected to increase as Christmas approaches, according to a new survey of banks and building societies. The Bank of England's Credit Conditions Survey found that lenders had already increased the length of zero-interest periods for both balance transfers and purchases in recent months.
However, defaults on credit cards are also expected to rise in the coming months. The quarterly survey forms part of the Bank's role in maintaining financial stability but does not represent the Bank of England's own views.
Survey findings and timing
The latest survey covered the third quarter of this year and was conducted in September. Lenders reported changes for the three months ending in August compared to the previous quarter, and provided expectations for the three months ending in November.
Mortgage market remains stable
Demand for mortgages from home buyers remained unchanged in recent months and is expected to stay flat in the coming quarter. However, demand for re-mortgaging increased over the past few months and is expected to continue rising.
Corporate lending shows growth
Demand for corporate lending from small and large businesses increased slightly in recent months, while demand from medium-sized firms remained unchanged. Corporate lending demand is expected to increase slightly across all business sizes in the next three months.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Lenders remain keen to lend and have the funds available to do so. The past few months has seen them easing affordability criteria, increasing the borrowing potential of many mortgage applicants."
Sources used: "PA Media" Note: This article has been edited with the help of Artificial Intelligence.
