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Increased cost of borrowing 'damaging confidence'

By Sarah Engle, Thu 17 Jun 2010 - Published in Loans

Consumer confidence has been damaged by the increased cost of borrowing, an expert has pointed out.

A study published by uSwitch.com found that 45 per cent of people are concerned about their current financial health, while 49 per cent say they feel less wealthy than they have previously.

Darren Cook, spokesperson for Moneyfacts.co.uk, said consumer confidence in their financial affairs and the state of the entire economy has been damaged by the 0.5 per cent base rate not being reflected in the cost of borrowing.

"Especially in unsecured loan lending, we haven't seen those rates passed on to the consumer, so borrowing has effectively got more expensive," he explained.

Mr Cook added that borrowing on a credit card still remains an expensive option, while the country's unemployment situation has worsened, adding to the lack of confidence.

The uSwitch.com research also found that 18 per cent of people are using debt to pay for their living expenses and 14 per cent are finding it hard to make their repayments.