British banks and building societies are cutting back their supply of unsecured credit to consumers, according to a survey from the Bank of England.
The survey, which the BoE conducted between Aug. 21 and Sept. 8, found that the availability of unsecured credit fell in the third quarter and is expected to continue declining significantly towards the end of the year. The three-month drop in unsecured loan supply is the biggest since 2009, the Financial Times reported Oct. 12.
The development follows a warning from the BoE on surging consumer credit levels being a risk to the U.K. financial system and a threat to banks' ability to withstand severe recessions.
Firms that participated in the survey said they had become more risk-averse and significantly concerned about the U.K.'s economic outlook, the FT said.
The BoE's survey also found that credit scoring criteria for approving credit card and other secured loans have tightened in the third quarter, while the proportion of unsecured credit applications being approved by banks dropped considerably.