Friday 3rd of July 2009
Many lenders believe that an increasing number of borrowers will default on their unsecured loan payments, a new report by the Bank of England said.
Individual voluntary arrangement (IVA) advice could help those Britons who are struggling to meet their financial commitments, such as loans.
Lenders have also seen a rise in losses which come from unsecured loan defaults, although an IVA could help people get back on top of their repayments by freezing the interest charges.
However, more households may be tackling their debt through an IVA, rather than by turning to more credit. The Bank’s research revealed that lenders have seen a drop in demand by households for unsecured loans.
"Over the next three months household demand for secured credit was expected to remain broadly unchanged while demand from small businesses was expected to pick up," the report stated.
Chris Tapp, director of Credit Action, recently said that consumers need to learn to be patient, rather than seeking instant gratification and buying things without saving, which could include using a loan for large purchases.
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Information on IVAs could help credit card users exercise caution
