Lenders are poised to extend interest-free periods on credit cards as the festive season approaches, a new survey of banks and building societies reveals.
The Bank of England’s Credit Conditions Survey reported that interest-free terms for both balance transfers and purchases have already lengthened in recent months, a trend expected to continue over the next three months.
However, the same quarterly report also anticipates a rise in credit card defaults in the coming months.
Conducted in September for the third quarter of this year, this survey forms part of the Bank’s role in maintaining financial stability, though its findings do not necessarily reflect its official views.
Lenders provided data covering changes up to the end of August.
They were also asked for their expectations for the three months to the end of November, relative to the three months from June to August.
Lenders said that demand for mortgages from home buyers was unchanged in the past few months and was expected to be unchanged in the three months ahead.
Demand for re-mortgaging increased in the past few months and was expected to increase in the three months ahead.
The report also found that demand for corporate lending from small and big businesses slightly increased while demand from medium firms was unchanged in the past few months.
Demand for corporate lending in the next few months was expected to increase slightly for small, medium and large businesses.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders remain keen to lend and have the funds available to do so.
“The past few months has seen them easing affordability criteria, increasing the borrowing potential of many mortgage applicants.”
Karim Haji, global and UK head of financial services at KPMG said: ”With the recent energy price cap rise and inflation still elevated, lenders will be watching closely to ensure affordability pressures don’t translate into wider credit stress.”
