Tuesday, December 11, 2007

Credit Crunch to hit consumers this Christmas

The Times reports today a severe tightening of consumer credit which will hit this Christmas, though a lot of consumers will not notice until after they have spent their money.

According to moneyexpert.com 5 million families have not paid off last Christmases debt either.

People who swap credit cards to keep charges down are likely to be in for a bot of a shock as they get turned down for new credit.

None of this makes good reading.

However what the article does not go into is the number of mortgages which were taken out on fixed rates for 3 years which are coming to the end of the fixed rate period. Those people are going to face real difficulties with a possible 50% sudden increase in mortgage repayments and few lenders keen on taking them on.

This is the demon of cheap credit coming home to roost. Many have accused people like me of being a doom monger when we expressed concern that the last 10 years of economic growth was built on borrowing. We now have to start paying that money back, and that will mean far less free money in the economy.

1 comment:

Bretwalda Edwin-Higham said...

Still too early for the big crash though. It has to tie in with the EU takeover of Britain in 2010.