Experts warn tough times ahead for potential borrowers
October 16, 2007
Many experts are warning that potential borrowers in the UK are facing tough times in the coming months, with lenders being far more stringent with regards to checks and with many being far more careful about who they lend to.
Those looking for loans, mortgages, and other forms of credit could find that the process is far more complicated and long winded than they imagined, as lenders try and protect themselves against the effects of the global credit crunch.
According to recent report credit card customers are already feeling the effects of the credit crunch, with many facing difficulties in switching credit cards. The turmoil in the sub-prime markets have also resulted in far more stringent lending practices, and some lenders have withdrawn some of their sub-prime products or hiked up the interest rates to make it almost impossible for customers to afford to take on the loans.
One industry professional stated: ‘Banks have had to tighten up because they simply have less to lend – they have suffered losses in the market turmoil. Borrowers with less than a perfect track record will either not get a look in or they will have to pay a premium to borrow money.’
One official from Equifax stated: ‘Lenders are looking far deeper into people’s credit histories. They will be looking for early warning signs of how borrowers deal with credit. Lenders are more interested in how borrowers service their debt than simply whether they have kept up with payments in the past.’
He also added: ‘There has been a number of reports from credit card organisations stating that bad debts are rising and bank’s are increasing their provisions to tackle this. Credit card tarts, those who are moving their balances onto 0% deals, are also finding they are getting turned down more and often it is the case that there is nothing wrong with their credit history but the lenders are just saying no.’
Alan Wright
6th October 2007
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