Families have been warned of a looming credit drought as banks and building societies stop handing out cards and overdrafts to hard-pressed households
Industry experts have said that lenders are clamping down on debt applications for fear that borrowers default as the economy worsens.It is the latest evidence of how the financial markets crisis is affecting households and follows news that mortgage companies are primed to increase their interest rates, causing more hardship for hundreds of thousands of households due to renew their home loans in the coming months.
Equifax, a company that provides credit checks, said households would find it increasingly difficult to borrow money in the coming months, as lenders started to refuse more and more applications. FULL STORY
I think this will have a quantum effect on retail sales... perhaps even accelerate mortgage defaults. I know plenty of folks who are doing the credit card boogie to make their over-committed ends meet, all the while building more and more debt. Another signal we bush economists take note of.
2 comments:
Just before I left Aust I applied for everything I could get my hands on. Rest assured I have zero balances on all of them, but you never know when you might need access to funds and not having a job means the banks over here don't want to talk turkey with me. I wonder if they'll wind in the credit limits as well?
ASX.G
It has been happening already in the UK apparently (winding down credit limits), don't know about anywhere else.
It's going to be a bit of a worry for a lot of people who have been relyng on them for cash flow :-0
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