CONVERA
we see companies and households having to adjust to a new rate environment .
While we don ’ t expect credit conditions to tighten much more , the lagged negative effect of tighter conditions is yet to be experienced by businesses and households .
This could be particularly true for mortgage holders . In the UK , mortgage debt has shifted from being responsive to changing interest rates to stagnant over longer periods as many consumers have elected for fixed mortgage rates in blocks of two or five years .
With this lagged impact on consumers in mind , financial conditions – particularly consumer spending – could tighten further in 2024 when both sovereign credit and mortgages come due for refinancing . We are already seeing tighter bank lending standards due to rising interest rates , which may start to crimp down on credit flowing to businesses and households , particularly those households with mortgages due for refinancing .
In the Eurozone , the Bank Lending Survey ( BLS ) reported demand from firms for loans or drawing of credit lines in
Global credit cycle remains negative , but is improving
Change in G5 central bank ’ s balance sheets as a share of global GDP , in % terms
1 : 2 :
Note : Global GDP forecast taken from the IMF for Q1 and Q2 2023 Source : Convera , IMF , Macrobond – August 2023
1 : 1st global contraction 2 : 2nd global contraction
46 October 2023