Britain's banks and building societies are set to make credit more easily available to homeowners and businesses, according to a Bank of England report.It said lenders had been tightening the availability of secured credit to households, as home prices continued to fall in the first quarter of 2009.

But lenders are now set to boost available credit in the second quarter.

It comes as Nationwide's survey found house prices rose 0.9% during March, the first rise in 16 months.

"The economic outlook was no longer expected to be a factor bearing down on credit availability," the Bank of England survey said, of the lenders' new outlook.

"Improvements in the cost and availability of funds were expected to support increased credit availability over the next three months."

Lending demand

Demand for secured lending for house purchases and for remortgaging was reported to have declined over the past three months, with lenders expecting demand for secured lending to fall further.

But the majority of the banks and building societies quizzed for the Bank's Credit Conditions Survey said they expected an increase in lending to households in the next three months.

There have been complaints from the business community that banks have been pulling back on lending, leaving then hamstrung during the downturn.

But the survey shows that corporate credit availability increased slightly in the first three months of 2009, despite an anticipated fall.

This increase in available credit to businesses is likely to continue in the next three months, with the majority of lenders saying demand for credit from small businesses would rise.

This article is from the BBC News website. © British Broadcasting Corporation