Lending tighter, defaults up in Britain

LONDON, Oct. 2 (UPI) -- The Bank of England said Thursday that British banks had reduced lending to households and small businesses more than expected in the second quarter of 2008.

In the quarter there was also "a sharp decline in demand for all categories of secured lending for house purchase," the central bank's Credit Conditions Survey said.

"Expectations for house prices and concerns about the economic outlook" contributed to the decline in lending, said the report that also warned, lenders expected "additional reductions in credit availability over the next three months."

Credit tightened for both secured and unsecured loans. Corporate credit availability also declined, the report said.

In addition, although defaults had risen, "lenders commented that the increase in defaults was from a low level," the report said.

The price of homes in Britain have fallen for 11 consecutive months, dropping 2.4 percent from a year ago, The Times of London reported.

The average home price is $294,965, the lowest it has been since February 2006, The Times reported.