Credit crisis may force people to use more expensive lenders

The global credit crunch and more restrictive borrowing terms that many lenders have implemented may force consumers to go to higher-cost lenders, an expert from Equifax has said.

According to Credit Action, personal debt in the UK stood at £1,421 billion at the end of February 2008.

Total lending in February was up by £9.8 billion on the previous month, of which secured lending accounted for £7.4 billion and consumer credit was £2.4 billion.

Neil Munroe, external affairs director for Equifax, said that if banks reject more loan applications people “may be forced into more high-cost borrowing, so forced down into the subprime or near-prime market, whereas before they might not have considered going there”.

However, he also pointed out that banks have an “appetite” to lend people money, they will simply be more cautious when deciding whether to lend to people who they believe may not be in a position to repay the loan.

Tags: uk, External Commercial Borrowing, consumer credit, equifax, Neil Munroe, loan applications people, credit crisis