Bank of England: second `credit crisis` on the way

The Bank of England has predicted the first contraction in the supply of credit since the height of the financial crisis.

In its Credit Conditions Survey for the second quarter of the year (Q2), the Bank said that banks and building societies expect to lend less this quarter (Q3).

11.4% of banks said they expect to lend less due to tightening in the wholesale lending markets.

An expert at debt management company Gregory Pennington said: "A shortage of credit in the future could cause real problems for people who need it most.

"In particular, homeowners who are unable to remortgage may have to start paying their lender`s standard variable rate [SVR], which could be difficult to keep up with if interest rates rise."

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