Households faced a tightening in both secured and unsecured credit availability during the three months to the end of August, while lenders also recorded weaker demand for mortgages and a rise in unsecured-loan defaults. The Bank of England’s Q3 2026 Credit Conditions Survey presents a mixed picture: access to household borrowing narrowed, but demand for some other forms of unsecured lending held steady or edged up.
The survey covers responses from banks and building societies about lending conditions in the quarter. Its results are expressed as net percentage balances, a measure of the direction and breadth of lenders’ responses rather than a count of individual borrowers or a direct measure of loan volumes. The findings describe the period to the end of August, not developments since then.
Household credit availability fell
Lenders reported that the availability of secured credit to households decreased in Q3. Unsecured credit availability also decreased. The change marks a shift from the preceding quarter, when secured availability was reported as unchanged and unsecured availability had increased.
These measures concern lenders’ assessment of how available credit was, not a guarantee that every applicant experienced the same result. The survey does not provide a household-by-household account, and its aggregate direction should not be read as proof that a particular person was refused a loan or offered different terms.
For Q4, lenders expected availability in both secured and unsecured household credit to increase slightly. That is an expectation for the three months to the end of November, not a realised improvement. Conditions could change, and the survey notes that later developments after its fieldwork are not captured.
Mortgage demand eased, but unsecured borrowing was mixed
Demand for secured lending for both house purchases and remortgaging decreased during Q3. Lenders expected house-purchase demand to increase slightly in Q4, while remortgaging demand was expected to increase. Those outlooks point to anticipated improvement, rather than confirming that activity has already picked up.
Overall demand for unsecured lending was unchanged in the quarter. That headline conceals different movements within the category: demand for credit-card lending was unchanged, while demand for other unsecured lending increased slightly. Lenders expected overall unsecured demand to increase slightly in Q4; expectations for card lending were unchanged, while demand for other unsecured borrowing was expected to rise.
The combination of weaker mortgage demand and steady overall unsecured demand is not evidence of a single explanation for household decisions. The survey records lenders’ reported direction of demand; it does not establish why people sought or avoided borrowing, or whether affordability, prices, employment or another factor drove the pattern.
Unsecured defaults increased
Default rates on total unsecured lending increased in Q3. Defaults rose in both credit-card loans and other unsecured loans. Lenders expected total unsecured defaults to increase again in Q4, although the outlook differed by loan type: credit-card defaults were expected to increase, while defaults on other unsecured loans were expected to decrease slightly.
By contrast, default rates on secured household loans decreased slightly in Q3 and were expected to be unchanged in Q4. The divergence matters: the reported rise relates to unsecured borrowing and should not be generalised to all household debt or treated as a measure of the number of people in arrears.
The business lending results were also uneven. Overall corporate credit availability was unchanged, but availability decreased for small and medium-sized businesses and was unchanged for large firms. Demand for corporate lending fell among small and medium-sized businesses and was unchanged among large businesses. Overall corporate availability was expected to remain unchanged in Q4.
The survey is an account of lender responses, not a conclusion about the Bank’s own view of credit conditions. Its most immediate signal is that household credit supply and mortgage demand weakened over the summer, while unsecured defaults rose. The next quarter’s expectations remain forecasts, and the figures do not establish causes or outcomes for individual households.
