Households saving in lieu of seeking unsecured loans

Posted 2007-11-30

According to Alliance & Leicester an increasing number of Britons are saving during this uncertain financial atmosphere and are less willing to take on unsecured loans.

The recent base rate increases have many households reining in their expenditures, observed the financial service provider.

“Families are cutting back on their borrowing and they’re saving to help ensure they can afford higher mortgage and other household bills,” stated Director of Strategic Planning, Sean Murphy.

However, consumers may gain in confidence since Alliance & Leicester has predicted that interest rates are unlikely to hit 6%. For those individuals still unwilling to take on unsecured debt, they may consider secured loans as a more viable alternative.

The research also suggested the homeowners with mortgage repayments still outstanding are 50% more likely to address their unsecured debts in the coming year. 

Mr. Murphy also offered, “With the next move in base rates now seen as more likely to be downwards, this could bring them some welcome comfort.”

The Office of Fair Trading reported that about four-fifths of lending has been unsecured; sending a clear signal to borrowers that now may be the best time to seek secured loans when cash is needed.

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