UK Banks Write Off Record £6.8 Billion in Household Debt

March 2nd, 2008

Via: Telegraph:

Britain’s banks have been forced to write off a record chunk of household debt in the past year in the latest sign that families are struggling to keep up their repayments.

Lenders from around the country wrote off some £6.8bn in individual debts last year, statistics from the Bank of England reveal. It is the biggest annual total since records began in 1993, more than doubling in the past five years.

The news coincides with figures from Nationwide showing house prices are now suffering their worst streak since 2000, after falling for a fourth month in February.

With the credit crunch making it harder than ever for banks to seek funding in the City’s money markets, they are clamping down on borrowers both by raising their mortgage rates and increasing the pressure on borrowers to pay back their debts.

Alan Clarke, UK economist at BNP Paribas, said: “This is certainly a sign that households are already struggling. The debt burden is high, and you would expect write offs to rise as a result.

“But it’s still early days and there’s more bad news in the pipeline. We haven’t yet seen arrears starting to bite, and if these numbers look bad now, they’ll look even worse in a year’s time. There are plenty more dead bodies out there.”

Posted in Economy | Top Of Page

One Response to “UK Banks Write Off Record £6.8 Billion in Household Debt”

  1. il says:
    March 9, 2008 at 1:04 am

    I wonder how long until that happens in Australia? Most people here still think everything’s rosy and unaffected by what’s happening around the world… still worried about what colour their next new car will be, or how big the extension will be on the house (once the loan’s approved, IF it gets approved…) But I guess that’s not surprising.

    “Billions lent to Aussie sub-prime buyers”

    http://www.theaustralian.news.com.au/story/0,25197,23338906-601,00.html

    ‘AUSTRALIA’S financial institutions have lent billions of dollars to home buyers who were not subject to basic credit checks and had a history of defaults, putting them in the “sub-prime” category that continues to terrorise world financial markets.

    The revelation, contained in research conducted by Dun & Bradstreet exclusively for The Weekend Australian, will add to investor fears about Australian banks’ exposure to the global turmoil caused by the collapse of the sub-prime mortgage market in the US. ‘

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