Mortgage availability increased in Q1 2026 as lenders loosened supply and reduced pricing even as arrears edged higher according to the latest Bank of England Credit Conditions Survey.
Lenders reported a rise in the availability of secured credit to households in the three months to end-February, with a further increase expected in Q2. Availability of unsecured credit was unchanged in Q1 but is also forecast to improve in the coming months.
Demand for house purchase lending remained flat during the quarter, reflecting ongoing affordability pressures and wider market uncertainty. However, remortgaging activity picked up, with lenders expecting demand across both segments to strengthen in Q2.
Pricing conditions improved over the period, with spreads on secured lending narrowing relative to Bank Rate and swap rates, signalling increased competition among lenders. Pricing is expected to stabilise in the near term.
DEFAULT RATES
Despite this, lenders reported a slight rise in default rates on secured loans in Q1, although these are expected to fall modestly in the months ahead. Losses given default remained unchanged.
In contrast, unsecured lending conditions showed signs of increased caution, with defaults rising across credit cards and other borrowing and expected to increase further. Lenders also widened spreads on unsecured products and extended interest-free periods, pointing to a more risk-sensitive approach.
