Telegraph.co.uk

The Bank’s latest credit conditions survey revealed that lenders raised the level of secured credit available to households for the first time since the third quarter of 2007, when the survey was first published.

It also noted that lending to the corporate sector had increased over the past three months, and that lenders also expected to increase lending both to companies and households in the coming three months.

The findings will be welcomed by the Bank in the midst of a financial crisis which has been characterised by an acute lack of credit availability, bringing some financial markets and the housing market to a virtual standstill.

“While concerns about the economic outlook had continued to bear down on credit availability, the impact had been smaller than in previous surveys,” the report said.

However, some economists questioned whether the scale of the lending will be enough to drive the economy forward.

'The survey gives no indication of how much lending might rise by,' said Vicky Redwood, an economist at Capital Economics. 'Overall, we continue to doubt that lending will rise by enough to support a strong and sustained recovery in the wider economy.'

Unsecured credit availability to households was reduced however, and further reductions were expected over the next three months, most likely reflecting the risk aversion which has arisen since the onset of the crisis.

In a positive sign for the housing market, demand for loans for house purchase was up. However, default rates on secured and unsecured loans to households and non-financial companies rose, and were expected to rise over the next quarter.

“All told, while there are some encouraging signs in the credit conditions survey, the UK is certainly not out of the woods yet,” said Colin Ellis, European economist at Daiwa Securities.

In a separate report former policymakers urged governments and regulators around the world to establish new tools and agree on which authorities should do what to prevent further crises in the future.

Authors, including Charles Goodhart, a former member of the Bank’s Monetary policy Committee, said that talk should translate into action.