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26 Novembar 2007 The nation's overall credit card debt is likely to increase if mortgage costs rise, a new report has warned. Over-borrowing by consumers may also result in a spike in the number of personal insolvencies next year, according to accountancy firm PricewaterhouseCoopers (PwC). Its annual latest report on consumer credit claims UK households have already stretched their borrowing capacity, with the average adult now owing £33,000 in unsecured debts – up from £17,000 in 2000. The study – entitled Precious Plastic - warns the situation could be exacerbated when current holders of fixed-rate mortgage deals see their fixed-rate deals expire in the coming months. More than a million people are expected to come off their existing fixed-rate home-loan deals in 2008, with PwC warning their average monthly mortgage repayments could increase by £140 as a result. Further pressure is likely to be placed on consumer spending due to higher home-loan costs, according to the report – which suggests more people may also default on loan repayments. Meanwhile the anticipated rise in personal insolvencies could prompt lenders to increase charges for bad debt and borrowing, with PwC stressing it is "only a matter of time" before annual fees are introduced for credit card use. "There are tough times ahead for both consumers and credit card companies," said PwC partner Richard Thompson. "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," he stressed. Source : http://www.inthenews.co.uk |