UK Debt Set To Reach 24 Billion Pounds In 2008

Fri, 16 Nov 2007

Debt amongst the UK public is set to worsen in 2008, according to new figures from the Credit Services Association (CSA) .

The CSA, which represents the debt collection industry, revealed as much as £24.3 billion worth of debts is set to be passed on to the debt collection industry during 2008 – an increase from the £22.7 billion debt expected to be collected for 2007.

Projections for 2008 stand between £23.9 billion and £24.3 billion, although the CSA warns it could well be higher.

A spokesman for the debt body, said: "Over-indebtedness will be accelerated by more fixed-rate mortgages becoming variable at higher rates and access to new credit becoming harder."

The expected rise in debt is largely due to rises in inter-bank interest rates and the increased losses from the US sub-prime crisis, which has continued to hit financial markets in the UK since the summer.

The credit crunch has made lenders more cautious over lending criteria for both mortgages and personal loans .

"Consumers are tightening their belts against the background of a credit squeeze and access to credit is becoming increasingly difficult as lenders tighten their lending scorecards," the spokesman added.

The amount of debt passed on to debt collection agencies has risen from £5.2 billion in 2000 to a staggering £21 billion in 2006.

According to figures from the Bank of England, Consumers in the UK now owe £1,380 billion in mortgages, loans, credit cards and overdrafts .

In 2006, debt advice agency Citizens Advice helped around 1.7 million people in Britain deal with debt problems, credit card and personal loan troubles accounting for 40 per cent of all cases.
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