Limited Growth in Credit Seen

Posted 2008-01-3

One-quarter of 16- to 44-year-olds surveyed by uSwitch admitted that they were concerned about paying bills that will come due in the New Year.  The study, funded by the Financial Services Authority (FSA), found that more than 50 percent of them could not say how much they spent during the holiday season.

 

Britons’ interest payments have soared to a record high £93 billion, an increase of £12.7 billion.  The numbers suggest that many may find themselves unable to manage their debt load as family finances continue to tumble out of control.

 

Britons have enjoyed easy credit over the past few years.  As lenders start to tighten their standards, however, consumers need to be prepared.

 

In the past six months, 9.5 million adults spent to the limit on at least one source of credit, according to uSwitch.  Nearly one-quarter report that they can no longer manage their debt.

 

Credit applications are being rejected, according to research which shows that 38 percent of those who applied for a credit card were denied.

 

The increase in mortgage interest rates has resulted in higher monthly payments, putting many borrowers in a difficult position.  The average household will pay £3,744 in interest charges, including mortgage interest, an increase of £517 over a year ago, according to uSwitch.

 

Britons have been able to rely on cheap credit for quite some time, says Mike Naylor of uSwitch.  Although the recent drop in interest rates will help, Mr. Naylor worries that it may have come too late to help those in serious trouble.  He advises people to act immediately to prevent a disaster.

 

A further interesting finding of the uSwitch survey:  13 percent of those surveyed said they planned to get their financial situation under control, while 26 percent admitted that they will probably book a holiday or take up a new hobby.

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