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Worries about finances affecting borrowing levels

July 8, 2009 by admin  
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It has recently been reported that the level of borrowing amongst consumers in the UK has been negatively affected as a result of so many consumers being worried about their financial situations.

The global coupled with the ongoing recession has left many people facing a very uncertain financial future, and this has been reflected in borrowing levels amongst consumers.

Industry figures that were released showed the trends in various types of borrowing, and when it came to personal loan levels the numbers were said to be down by around 40 percent compared to a year ago.

Whilst the base interest rate is now at its lowest in the three hundred and fifteen year history of the Bank of England, at 0.5 percent, it was also shown that the level of refinancing amongst homeowners had fallen to its lowest level since 1999 in April.

A spokesperson from the British Banker’s Association recently stated: “Households’ uncertain financial circumstances not surprisingly continue to dictate consumer behaviour, both in the housing market and in generating only low demand for new personal loans.”

According to another industry expert: “Even if people have the funds at their disposal, to actually commit in this turbulent, uncertain market is a leap of faith that many are simply unwilling to make. This is a demand-led, as much as a supply-led slowdown.”

A mortgage broker added: “Other loans, specifically remortgages, continue to decline as people take a ‘wait and see’ approach. For those at higher loan-to-values, this could prove very costly, as the general consensus is that fixed rates are as cheap as they are likely to get, with lenders anxious to keep their margins high in order to claw back some much needed profit.”

Tags: behaviour, Cognition, Business Finance, personal finances, External Commercial Borrowing, personal finance, financial crisis

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