Unsecured debt on the rise in UK

UK (online-unsecured-loans) January 8: Banks and building societies are expecting debts to soar in the first three months of the year, as financially struggling borrowers face tremendous monetary strain.

According to a CBI survey, 30 % of banks and 78 % of building societies were expecting a rise in bad loans from January to March this year.

John Hitchins, banking leader for PricewaterhouseCoopers, UK, which undertook the survey with CBI, said: “We know there has been a problem with bad loans rising in 2006 and, while the majority think they have hit the peak, one third of banks are still saying they think it will keep rising because of the level of [personal] insolvencies.”

The growth of unsecured consumer lending like credit cards and personal bank loans has alarmingly increased. With the people spending prodigally over the festive season, the problem is likely to escalate.

Adds Mr. John Hitchins: “Traditionally the main reason for people defaulting on loans is divorce or unemployment, but this time people are unable to pay their debts because they have simply borrowed too much.”