UK lenders predict scarcer, costlier and riskier lending, BoE says

LONDON (Reuters) - British lenders expect loans for many categories of borrower to become scarcer or more expensive, and for more households and businesses to default on their debts, a Bank of England survey showed on Thursday.

After a surge in lending to businesses driven by government-backed coronavirus credit programmes, banks said they expected the supply of credit to increase only slightly over the next three months, and for loan spreads to widen for large firms.

Mortgages and unsecured lending to households is expected to continue to fall in the third quarter, and the cost of mortgage finance is predicted to increase.

Across all categories of lending, the volume and size of loan defaults is predicted to rise, according to the BoE's quarterly survey of major lenders.

(Reporting by David Milliken, editing by Andy Bruce)