`Not surprising` loans are becoming more expensive

9 October 2008

Given the fact that the credit crunch was precipitated by bad debt, it is not surprising that cheap credit is drying up, it has been suggested.

Writing in the Manchester Evening News, David Ottewell stated that many banks are now restricting their best borrowing rates to people who have "impeccable" credit histories, rather than those with bad credit ratings.

He said: "The flood of cheap credit that has washed over Britain in the last decade is finally drying up."

According to Mr Ottewell, consumers can expect to pay an average of around nine per cent interest on loans now, compared to less than six per cent a year and a half ago.

Meanwhile, credit card firms are also limiting their lending and are watching more carefully for signs that customers are struggling to make their repayments.

Figures produced earlier this month by the Bank of England suggested that lenders reduced the availability of secured credit to households in the three-month period ending in September by more than they had anticipated they would when questioned beforehand.
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