UK lenders fear biggest rise in household loan defaults since 2009

LONDON (Reuters) – British lenders expect the biggest rise since 2009 in defaults by households with unsecured loans, a Bank of England survey showed on Thursday.

The BoE’s quarterly Credit Conditions Survey showed a reading of +31.7 in an index of lenders’ expectations for unsecured household loan defaults for the three months to the end of February.

If realised this would represent the biggest increase in loan defaults since late 2009, during the depths of the global financial crisis.

However, lenders have been too pessimistic about loan defaults in the recent past, with an expectation of +34.3 in late 2022.

The survey showed a +23.5 reading for loan defaults in its Q4 2023 period which covers the three months to the end of November 2023.

The BoE’s Credit Conditions Survey of British banks and building societies was carried out from Nov. 20 to Dec. 8.

(Reporting by David Milliken; Editing by William Schomberg)