Credit card borrowing falling among homeowners
February 13, 2007 by admin
Filed under News, News-Credit-Cards
Rising base rates are causing a drop in borrowing by householders, according to a new report.
Homeowners who are already paying a mortgage on their home are becoming less willing to take up any more unsecured debt as they are beginning to feel the squeeze, a study by Alliance & Leicester suggests.
Commenting on the report, Chris Rhodes, director of retail banking at Alliance & Leicester, said: “Consumers have shown an unprecedented appetite to reduce their unsecured borrowing while their incomes have continued to grow and interest costs on their unsecured borrowings have fallen.
“This will have taken some of the sting out of the latest increase in base rates.”
Despite that increase, Alliance & Leicester’s report suggests that warnings of a return to 1990 levels of strain on UK consumers’ finances would be premature as the base rate would have to be hiked to 8.5 per cent before people would experience similar problems.
However, conclusions of the report are that, while UK consumers are still in the “comfortable” zone of debt, this position could be damaged if there are any more rises in the base rates of interest.
Other findings of the monthly report show that this unwillingness to take on more credit card or personal loan debt only applies to those with mortgages.
In contrast to a drop in debt of an average £197 among mortgage holders, those without a mortgage increased what they owe by £97.
