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Demand for credit cards and personal loans has rebounded since Covid-19 lockdown measures were eased, although more than a third of borrowers are still unable to access credit.
A report published by Experian, a credit referencing agency, found 38pc of people searching for a loan in July were unable to find a deal that met their requirements. However, this is a significant improvement compared with 60pc in March.
There are tentative signs the market is returning to normal. Personal loan rates are once again competitive for those who can be accepted for finance, according to uSwitch, a price comparison website.
It said a borrower seeking a £10,000 personal loan over five years can currently borrow from TSB with an interest rate 2.8pc, the cheapest on the market.
Credit card interest-free periods have been slower to return, although some cards will now offer 20 months of interest-free credit on spending, such as those from M&S Bank and TSB.
However, the deals on offer are still excluding the millions of people who have been furloughed or seen their income fall during the pandemic. This cohort will still likely to find it hard to access credit.
As well as cards and loans, mortgage borrowers whose finances have been squeezed have also found it much harder to take out property loans.
Sarah Coles of Hargreaves Lansdown, the fund shop, expected the nervousness at banks to continue for the remainder of the year despite some deals returning for those needing loans.
“It goes to show just how worried banks are about the state of the economy, and what could happen to jobs and house prices,” she said. “Life is going to get even tougher for borrowers.
“Lending will be even harder to come by, and at the same time, the end of lockdown means demand is going to rebound. So more people are going to be left struggling to find the lending they need.”
Much of the bank’s hesitancy could be down to the number of people who needed support with their credit repayments at the height of the pandemic.
Some 1.2 million credit card and personal loan customers told their bank that they were unable to meet their monthly repayments with providers mandated to offer assistance to those who asked.
A Bank of England report showed that lending by banks dried up faster in March, April and May than it did during the credit crunch. Across the three month period, the number of loan and credit card applications being rejected increased sharply. Credit card interest-free periods were also cut, its report said.
Elsewhere, the Financial Conduct Authority, the City watchdog, has set out plans to help so-called mortgage prisoners. This is term used to describe borrowers who have expensive mortgages but are unable to switch providers because they would fail affordability tests applied by other banks.
Many of these homeowners are with inactive lenders – or "zombie banks" – which do not offer new, cheaper deals to consumers. The FCA has proposed new rules that will make it easier for customers to switch from inactive lenders to sister companies which do offer new loans.
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