UK: Sharp drop in credit demand – RBC CM

Research Team at RBC Capital Markets, notes that the Bank of England’s Credit Conditions Survey for Q3 reported a sharp decline in demand for credit, both by households for mortgages and by corporates of all sizes.

Key Quotes

“It is possible, as mentioned by the commentary in the BoE report, that some of the drop in reported demand is temporary as some could be waiting for lower interest rates still before pulling the trigger on loans. Nevertheless, we think developments in credit demand should be watched carefully from this juncture. The BoE’s response to Brexit in August helped to ensure the supply of credit wasn’t impaired, but if demand remains notably weaker, cautious expectations for GDP in 2017 will look more justified.”