Recession 'shocked people into repaying debts'

Thu 28 Jan 2010 - Published in Loans

Borrowers have been prompted to repay their debts by the recession, according to an expert.

The recent Trends in Lending report from the Bank of England showed default rates on unsecured credit have fallen in the past quarter, despite predictions that they would rise.

Commenting on the findings, Pierre Williams, head of research at MoneyExpert.com, said: "In many ways the recession has shocked borrowers into action with job worries meaning borrowers have looked to pay down debts rapidly."

In addition, he pointed out that the economic downturn led to many lenders reducing the amount of credit they were willing to issue, which prevented the UK's debt problem from getting worse.

Mr Williams also noted government figures have shown that unemployment is falling in the UK, which eases a traditional source of bad debt.

However, the expert predicted that cheap credit is unlikely to return to the market in the near future, as lenders will remain cautious until further improvement is seen in the economy.

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