Reduced demand an ulterior motive for expensive loans
The ability to source cheap loans and other forms of low cost credit has been quashed, as lenders tighten the reigns on their product portfolios.
Borrowers are being forced to consider more expensive borrowing alternatives, (regardless of credit conduct) if they are adamant that they must have credit. One of the UK’s leading debt charities has stated that lenders have become “super cautious” with regards as to whom they lend to, in response to the current conditions affecting the financial markets.
The unfortunate thing however, is that it is not just customers with bad credit who are being knocked back, individuals with perfect credit pasts are also being refused competitive rates (in some instances).
However, it also acknowledged that many consumers are also reducing their dependency on credit, with stats showing that credit consumption across the board, is down by 25%. Some experts believe that this is one of the other reasons as to why lenders have increased the cost of borrowing, as they are loosing out due to a reduction in the number of people who are actually applying with them.
Analysts believe that the physical effects of the credit squeeze and the current restrictions placed on all forms of credit will remain for at least a year, after which time the markets will begin to show some form of stability.
