Personal debt in Britain getting out of control

Banks have reported the biggest surge in the number of customers missing loan repayments since the financial crisis. In the most worrying sign yet that household debt is out of control, high street lenders informed the Bank of England that default rates have soared on credit cards, personal loans, overdrafts and car finance.

Default rates on credit cards are expected to get even worse over the summer. According to the Bank of England's latest Credit Conditions Survey, 24.4 per cent more lenders reported default rates on credit cards rising rather than falling over the last three months. The picture is even more worrying on other unsecured borrowing, including personal loans and car finance, with 30.3 per cent more lenders reporting an increase in customers missing repayments.

Banks fear many customers will be unable to pay off these debts – particularly when interest rates finally rise from record lows. Rising inflation has also led to a fall in real wages, which is putting household budgets under pressure.

Wes Streeting, a Labour member of the Treasury Select Committee, said: 'For some time there have been warnings that the rise in unsecured borrowing is becoming unsustainable and Britain is on the brink of a household debt crisis. These figures confirm that this debt crisis has arrived, with a rise in people defaulting on their debts even before a rise in interest rates. We have a perfect storm here of rising borrowing, rising inflation and a rise in interest rates coming down the track.'

Former pensions minister Baroness Altmann said: 'This rise in default rates on loans and credit cards is another siren warning of trouble ahead for over-indebted consumers. Action to curb irresponsible lending should have been taken long ago.'

Neon Knight wrote:http://www.dailymail.co.uk/news/article-4695080/Banks-fear-debt-crisis-default-rates-soar.html

Banks have reported the biggest surge in the number of customers missing loan repayments since the financial crisis. In the most worrying sign yet that household debt is out of control, high street lenders informed the Bank of England that default rates have soared on credit cards, personal loans, overdrafts and car finance.

Default rates on credit cards are expected to get even worse over the summer. According to the Bank of England's latest Credit Conditions Survey, 24.4 per cent more lenders reported default rates on credit cards rising rather than falling over the last three months. The picture is even more worrying on other unsecured borrowing, including personal loans and car finance, with 30.3 per cent more lenders reporting an increase in customers missing repayments.

Banks fear many customers will be unable to pay off these debts – particularly when interest rates finally rise from record lows. Rising inflation has also led to a fall in real wages, which is putting household budgets under pressure.

Wes Streeting, a Labour member of the Treasury Select Committee, said: 'For some time there have been warnings that the rise in unsecured borrowing is becoming unsustainable and Britain is on the brink of a household debt crisis. These figures confirm that this debt crisis has arrived, with a rise in people defaulting on their debts even before a rise in interest rates. We have a perfect storm here of rising borrowing, rising inflation and a rise in interest rates coming down the track.'

Former pensions minister Baroness Altmann said: 'This rise in default rates on loans and credit cards is another siren warning of trouble ahead for over-indebted consumers. Action to curb irresponsible lending should have been taken long ago.'

So why has the government not stopped all this excessive borrowing/lending and debt?

Sary wrote:It is the same way here in the US. Most middle class people do not live within their means,they over spend and do not save for retirement. Working class folks  living week to week to support the welfare class.

Every thing is so expensive and of course people desire to live a comfortable life,give things   to their children,a little extra
Unfortunately the  debt that this generation is accruing,will be a tremendous burden for our children and grandchildren.

Neon Knight wrote:What would be the consequence if money lending and credit buying was severly restricted or stopped altogether?