Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

UK banks expect sharp rise in defaults on unsecured debt

by January 18, 2024
January 18, 2024
UK banks expect sharp rise in defaults on unsecured debt

Britain’s biggest high street lenders expect the sharpest rise in defaults on unsecured lending since 2009, according to a Bank of England survey, as households come under growing pressure amid the cost of living crisis.

The figures from Threadneedle Street show banks expect a marked rise in the number of people who fail to meet repayments on credit cards, loans and other forms of unsecured borrowing over the next three months.

An index of lenders’ expectations for defaults in the first quarter of 2024 showed a reading of +31.7 on the Bank’s credit conditions survey. If the forecasts are accurate, it would mark the sharpest quarterly rise in defaults since late 2009 during the global financial crisis.

Households are coming under mounting pressure from rising borrowing costs after 14 consecutive interest rate rises from the central bank since December 2021, launched in response to the inflation shock triggered by supply shortages cause by the Covid pandemic and Russia’s war in Ukraine.

Defaults on mortgage payments also increased sharply at the end of last year, according to the credit conditions survey, and are expected to continue rising in early 2024 as more borrowers feel the pinch.

Despite a price war in the mortgage market at the start of the year, millions of homeowners are expected to face a sharp rise in borrowing costs as they reach the end of cheaper deals agreed before interest rates began to rise.

Sarah Coles, the head of personal finance at the investment platform Hargreaves Lansdown, said: “There was a massive surge in missed debt repayments at the end of last year, as a huge number of those whose finances had been on a knife-edge, finally tipped over into a debt disaster.”

Lenders have been too pessimistic about potential increases in loan defaults in the recent past. As recently as late 2022, the index for default expectations over the next three months hit +34.3 for the third quarter of 2023, but then fell to +19.9 after the quarter was complete.

The latest survey showed that banks expected demand for mortgages for house purchase and remortgaging to have fallen in the fourth quarter of last year, but would pick up in the first three months of 2024. Demand for unsecured lending also fell at the end of last year, but was expected to increase in the first quarter.

Coles said high street banks had not yet taken steps to clamp down on lending, although they were shortening the period of interest-free credit cards in response to concerns over consumers’ ability to repay.

“However, if the picture worsens again in the coming months, they may well take more steps to limit their lending. It means those who are counting on being able to borrow more to get through could find themselves running into a brick wall,” she added.

Read more:
UK banks expect sharp rise in defaults on unsecured debt

0
FacebookTwitterGoogle +Pinterest
previous post
Tata Steel to cut 3,000 jobs at Port Talbot
next post
The Best Methods For Boosting Your Workplace Confidence

You may also like

Canada and Mexico to be hit with 25%...

January 31, 2025

Work on £1.75bn Midlands Rail Hub to Commence...

February 29, 2024

Government minister set to “simplify accountability for regulators”

November 29, 2023

Trump’s steel tariffs put £2.7bn of UK exports...

March 24, 2025

UK reaches key milestone with one million electric...

February 5, 2024

Britons Spend 800 Years Waiting to Speak to...

May 15, 2024

Radical land tax proposal gains traction with support...

August 27, 2024

Facebook sued for collecting personal data to sell...

November 21, 2022

Specialized translation services offered by agencies

March 28, 2024

Petrol Stations accused of overcharging drivers by £1.6bn...

July 26, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • IVF parents should have right to paid fertility leave, says GMB union

      June 9, 2025
    • Reform UK clashes with Bank of England over interest payments to lenders

      June 9, 2025
    • Trump ally stands firm against ‘big, beautiful bill’ despite pressure: ‘It’ll completely backfire’

      June 8, 2025
    • Rubio condemns assassination attempt on Colombian presidential candidate Miguel Uribe

      June 8, 2025
    • Obama WH physician says Biden doc should have performed cognitive test

      June 8, 2025
    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025

    Categories

    • Business (8,154)
    • Investing (2,019)
    • Politics (15,571)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved