Credit conditions set to tighten further says survey

LONDON (Reuters) - The credit squeeze for households and businesses looks set to intensify in the coming months, despite unprecedented measures to recapitalise the banking system to get lending flowing again, a survey showed on Friday.

The Bank of England's quarterly Credit Conditions survey showed lenders had reduced the availability of secured credit to households in the three months to mid-December 2008, amid concerns about house prices and the economic outlook.

"A further decline was expected over the next three months," the survey said.

The findings will disappoint the government which has pumped 37 billion pounds of taxpayers' money into some of Britain's biggest banks and offered sweeping guarantees to encourage them to lend.

The survey also showed that demand for mortgage credit remained broadly steady in the fourth quarter, in contrast to lenders' expectations. Demand for other secured lending, however, was reported to have fallen.

Spreads on corporate lending widened in Q4 and were expected to increase further going forward, the survey showed.