Consumers struggling to repay debts as credit dries up
Since the tightening of lending criteria has been adopted by banks, mortgages and credit have been hard to come by and a recent survey conducted by PricewaterhouseCoopers (PwC) revealed that 20% of UK credit customers are worried about the future availability of credit.The survey was carried out by PwC as part of 'Precious Plastic', its annual commentary on the consumer credit market, and also discovered that while the majority of UK consumers still feel comfortable with their current levels of debt, 16% are already struggling to repay their current debts.
According to PwC, households in the UK now borrow £1.5 trillion, an average debt of approximately £40,000 per adult of working age and more than double the level eight years ago.
Furthermore according to PwC, growth in secured borrowing has fallen significantly but unsecured borrowing has continued to increase at 6% per annum, suggesting that in spite of the current economic slump, some people are still prepared to spend and borrow.
Richard Thompson of PwC said after years of easy credit, access to this is drying up. The survey shows that some people are still prepared to borrow despite the tough market conditions, rising unemployment, a depleted housing market and the increasing sense that they will be unable to repay debt in the future.
This clearly spells tough times for both consumers and credit companies alike, warns Mr Thompson.
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