A survey by the Bank of England has revealed that the number of consumers that are defaulting on loan repayments has increased, and is expected to keep on rising over the coming months.
The figures were gathered together from a poll of UK banks and building societies, and the picture that was revealed was a fairly gloomy one, as more people are now unable to afford payments on mortgages and other debts.
The poor economic situation, coupled with rising unemployment, was the main driving factor behind the rising figure. Record numbers of consumers are seeking debt advice, in a bid to avoid complete financial collapse, and signing up for Debt Management Plans or IVAs.
The figures also showed that lending to businesses had not increased in line with expectations during the last quarter, with many banks facing criticism from corporate leaders for the lack of available funding. In answer to this, the banks are confident that the availability of credit, for business, will increase during the next quarter.
The next three months could be interesting, with predictions that secured borrowing is likely to increase, whereas the financial institutions are expecting a fall in the uptake of unsecured personal loans and credit card debt.
The banks that are most likely to increase lending levels in the near future are those that are part government owned, in an effort to boost the economic recovery. A quick return to the lending levels that were seen before the credit crunch seems very unlikely.
