The Bank of England has been keeping a close eye on the ever-increasing amount of personal debt owed by UK consumers which, as I’ve often discussed, has been fuelled by credit cards, car loans and second mortgages. It has now warned that worried lenders are ‘putting the brakes on’ and plan to get tougher on credit card users.
In a recent survey by the Bank of England, it found that the percentage of lenders expecting to restrict access to credit between April and June of this year was at its highest since the 2008 financial crisis. The fear comes as the ratio of personal debt to household income, which fell after the financial crisis, has begun to rise. These high levels of debt are leaving households in increasingly vulnerable circumstances and should there be even a small rise in interest rates, which is expected to happen soon, it could result in many falling into problematic debt.
As well as restrictions by credit lenders, this month the Financial Policy Committee (FPC) announced it was launching a review into the credit quality of new lending by looking at the underwriting standards and the risk models used by banks. But these changes are believed to be too little too late by many, with the damage already done, especially when it comes to people who have gotten into persistent debt.
The FCA estimates that 2 million people are currently carrying persistent debt on their credit cards alone, this means that they have paid more in fees and charges over an 18-month period that the amount borrowed to begin with.
If you have fallen into unmanageable debt and are struggling to get out, please contact us today! We can help you find a solution – you are never alone. Click here to contact us or call Clive on 01656 661426.