Borrowers paying off debts 'due to recession'

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Borrowers paying off debts 'due to recession'

Fri 29th Jan 2010

Consumers who had debts before the recession have focused on paying them off, which has resulted in a smaller debt crisis than had been feared, in the view of one specialist.

Pierre Williams, head of research at MoneyExpert.com, said that fears about job security have prompted many people into paying off their debts faster than they may have planned to before the recession.

Lenders for their part have also played a role in cutting the amount of debt by becoming more selective over who they give loans to, he believes. As a result, there has not been as much of a debt crisis as had originally been feared.

He further warned that it may be some time until lending rates begin to fall again, meaning that borrowing on a credit card will continue to be too expensive an option for many consumers.

The latest statistics from the Bank of England have shown that default rates on unsecured debts have fallen, when many experts had anticipated that these would rise.

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