Bank of England Credit Conditions Survey: Mortgage Demand Fell Sharply in Q3 as Lending Tightened

What happened in the Bank of England credit conditions survey

The Bank of England published its Credit Conditions Survey for 2026 Q3 on Thursday 8 October 2026. Lenders were asked about the three months to the end of August 2026, compared with March to May, and about what they expect in the three months to the end of November. The survey was carried out between 17 August and 4 September 2026, so it does not cover anything that has happened since then.

Lenders said the supply of secured credit to households fell in Q3. Supply of unsecured credit, such as credit cards and personal loans, also fell. Credit for companies overall was unchanged, although small and medium sized firms saw a fall while large firms saw no change.

Demand fell at the same time. Requests for house purchase lending dropped, and requests for remortgaging dropped too. Overall demand for unsecured borrowing was unchanged, with credit card demand flat and demand for other unsecured loans up slightly.

On price, the news was better for borrowers. Lenders said the spreads they charge on secured lending, measured against Bank Rate or the matching swap rate, got narrower in Q3, and they expect them to narrow again in Q4. Spreads on unsecured borrowing were unchanged, and the length of interest free periods on credit cards was also unchanged.

On missed payments, mortgage defaults fell slightly in Q3. Defaults on unsecured borrowing rose, covering both credit cards and other unsecured loans, and lenders expect unsecured defaults to rise again in Q4. Company loan defaults were unchanged.

Key numbers from the survey

The survey is reported as net percentage balances. A negative balance means more lenders, weighted by market share, reported a fall than a rise. The Bank treats a balance below minus 10 as a decrease, and a balance between minus 5 and minus 10 as a slight decrease.

Source: Bank of England Credit Conditions Survey, 2026 Q3, published 8 October 2026, annex tables.

The expectation lenders got wrong last time

In the Q2 survey, lenders expected the availability of secured credit to increase in Q3. It fell instead, with a balance of -15.5. That miss matters for readers: the Q4 expectations in this survey, including a small rise in availability and a rise in remortgage demand, are lenders’ views at the time of asking, not promises. Treat them as a direction to watch, not as a guarantee that deals will get easier.

What it means for your money

If your mortgage fix is ending: availability tightened in Q3, but the cost lenders add on top of market rates narrowed, and lenders expect remortgage demand to rise in Q4. That combination makes shopping around worth the effort, because a narrower spread on a large loan is real money. As a worked example with our own arithmetic, a spread that is 0.25 percentage points lower on a £200,000 mortgage saves about £500 a year in interest, roughly £42 a month, before repayments of the loan itself are counted. Your own saving depends on your loan size and rate. Start with our remortgaging guide and compare the total cost, including fees, not just the headline rate.

If you are buying a home: fewer people were asking for house purchase loans in Q3, and lenders were supplying less secured credit. That does not mean loans have stopped. It means a clean application helps: check your credit file before you apply, keep paperwork ready, and do not rely on one lender only.

If you use credit cards or personal loans: unsecured credit also got harder to get in Q3, while defaults on cards and other unsecured loans rose and are expected to rise again. If your balance is growing, act early: pay more than the minimum where you can, and talk to your lender before a payment is missed. You can check your credit score for free before any new application, so you can fix errors first.

If you run a small business: credit availability fell for small and medium sized firms in Q3, even though the overall company figure was unchanged. If you will need borrowing before the end of November, lenders expect no overall change in Q4, so there is no clear gain in waiting for an easier market.

Common questions about the credit conditions survey

Are banks lending more mortgages now?
No. Lenders reported that the availability of secured credit fell in the three months to the end of August 2026, with a balance of -15.5. They expect it to rise slightly in the three months to the end of November.

Why did mortgage demand fall if spreads narrowed?
The survey does not give one single reason. It shows both things happened in the same quarter: fewer households asked for house purchase and remortgage loans, while the price lenders charged above market rates on secured loans got narrower.

Are credit card defaults rising?
Yes. Lenders reported that default rates on total unsecured lending rose in Q3, with a balance of +23.4, covering both credit cards and other unsecured loans. They expect unsecured defaults to rise again in Q4.

When is the next survey?
The Bank says the 2026 Q4 Credit Conditions Survey will be published on 14 January 2027.

Source: Bank of England, Credit Conditions Survey, 2026 Q3, published 8 October 2026. Survey carried out 17 August to 4 September 2026. This article is information only, not financial advice.