Lenders report growing demand for borrowing in Q2

Lenders said they lifted the availability of household secured credit in the three months to the end of May and expect to do so again over the coming quarter, according to a latest Bank of England survey. 

The survey found that lenders reported that the availability of both secured and unsecured credit to households increased in the three months to end-May 2025 (Q2) and was expected to increase further in Quarter 3 (Q3).

Lenders reported that demand for mortgage borrowing rose through Q2 but was expected to decrease in Q3. Demand for unsecured lending (and credit card lending specifically) rose in Q2, and was expected to be unchanged in Q3.

Default rates on secured and unsecured loans to households remained unchanged in Q2 and were expected to be unchanged in Q3.

Richard Pinch, Senior Director, Risk at Broadstone, said “Households and lenders appear to have looked through the market volatility driven by ‘Liberation Day’ with a loosening in the supply of credit for secured and unsecured lending.

“Lenders expect to see a further expansion in the availability of credit over the coming months which should further stimulate economic activity in the UK off the back of 0.7% growth in GDP through Q1, a significant increase compared to the prior quarter.

“Increasing demand for borrowing in Q2 suggests strengthening consumer confidence, but the growth in demand for mortgage borrowing is likely to have been driven by the end of the Stamp Duty holiday at the end of March.

“Market volatility never appears far away – as yesterday’s movement in bond and currency markets reminded investors – and the likelihood of tax rises at the Autumn Budget is growing, but for now market sentiment remains resilient.”