The Debt Clinic

Let's Make Your Finances Better

 

Easy Product Advisor

Which solution is right for you?
Our test will give you an unbiased look at which service can help you

Start Test

Borrowers feel the bite as banks get tough on IVAs and the credit crunch

Borrowers feel the bite as banks get tough on IVAs and the credit crunch According to a report by PricewaterhouseCoopers LLP, consumers ought to beware of seeking further credit from banks as lenders enforce stricter policies around borrowing and consider introducing annual fees once more.

Although credit card debts and the number of personal insolvencies have dropped in the last 12 months, if mortgage repayments get even higher next year then there is a fear that borrowing may increase again. PwC’s study, Precious Plastic, has shown that the average adult in the UK now owes £33,000 – up from £17,000 in 2000. With more than a million people preparing to come off of fixed-rate mortgages in 2008, banks refusing more applications for credit, and the current backlog in processing IVAs, it looks likely that there will be a sharp rise in bankruptcies.

The average monthly mortgage repayment could increase by around £140 if those home-owners cannot refinance at lower interest rates again. To cope with this extra expenditure, people may look to borrow more money but Richard Thompson, a partner at PwC, said: “There are tough times ahead for both consumers and credit card companies. Banks are continuing to take action in response to the rise in consumer debt by tightening their credit acceptance policies. Many consumers will find it increasingly difficult to obtain credit in the run-up to Christmas.”

Lenders have accused IVA companies of charging high fees and have rejected almost 20 per cent of applications. With poor credit, more people defaulting on loan repayments, and fewer means to get out of debt, it seems that banks could bring back annual fees on cards to recoup their losses. Far from being a happy new year it seems more and more borrowers will have to seek out credit card debt help and IVA advice.

IVA News posted on 27 November 2007

Have your say - Post a new Comment!

Heading:
Comment:
Anonymous:


Bez Bankrupt for the Second Time
The 2005 Celebrity Big Brother winner has become one of the 15,651 Britons declared bankrupt in the first quarter of 2008.

OFT Warns Over Misleading Bankruptcy Ads
The Office of Fair Trading has warned that companies are targeting IVA-holders with misleading mailings urging debtors to ditch the agreement and opt for bankruptcy.

Company Insolvencies Increase While Personal Insolvency Falls Over Past Year
New Insolvency Service figures reveal a rise in the number of company bankruptcies since 2007, although individual insolvencies are gradually falling.

 
 

© Copyright 2007 - All Rights Reserved - The Debt Clinic - 24 Ardens Way, St Albans, Herts, AL4 9UJ