High street banks warn of rise in UK customers defaulting on loans

theguardian.com:

Britain’s biggest banks are warning they expect a rise in the number of consumers struggling to repay credit cards and other loans amid growing concern over soaring living costs.

Figures from the Bank of England show that high street lenders expect an increase in the number of defaults on unsecured lending and business loans over the three months to the end of June.

The details from its quarterly “credit conditions” survey of the country’s biggest banks and credit card providers showed expectations for an increase in demand for consumer borrowing over the months ahead. However, it also suggested lenders were not concerned about losses despite the anticipated rise in default rates.

Paul Heywood, the chief data and analytics officer at Equifax UK, the consumer credit agency, said the figures reflected a worsening situation that had been developing for several months.

“Significant portions of the UK population are falling into financial difficulty, with families at the lower end of the income scale being hardest hit. The pressures of the cost of living crisis are pushing up demand for credit, especially in the unsecured lending and credit card spaces, while the same inflationary pressures, along with rising interest rates, are quelling demand for discretionary borrowing,” he said.

Official figures showed UK inflation soared to 7% in March, the highest rate since 1992, while economists have warned the measure for the annual jump in the cost of living is on track to breach 9% this month, the highest since 1982, during Margaret Thatcher’s first government.

The Bank of England is widely expected to raise interest rates when its monetary policy committee meets early next month, with the inflation rate now more than three times its