Borrowers ‘could have to turn to plastic’
Many consumers could be forced to increase their credit card borrowing if banks continue to tighten their lending criteria, according to a financial expert.
A report on consumer credit by PricewaterhouseCoopers (PWC) found that the average adult now has debts of £33,000, compared with £17,000 in 2000.
It also warned that the figure could rise as more and more people approach the end of two-year fixed-rate mortgage deals taken out when interest rates were more favourable.
Unless they are able to remortgage to a better deal they face transferring to their lender's standard variable rate and seeing their monthly repayments rise by an average of £140, but PWC partner Richard Thompson said not everyone will be able to switch to a more competitive mortgage.
"Banks are continuing to take action in response to the rise in consumer debt by tightening their credit acceptance policies. Many consumers will find it increasingly difficult to obtain credit in the run-up to Christmas," said Mr Thompson.
This situation could lead many people to increase their credit card borrowing in order to continue to meet their mortgage repayments, the report concluded.
A recent study by the housing charity Shelter found one million Britons used a credit card to make a monthly mortgage or rent payment in the past 12 months.
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