Borrowers facing more credit restrictions as Christmas approaches

By MoneyhighStreet Staff. Published on October 4, 2008 This post currently has no comments.

credit card
Worsening economic conditions will see UK banks and building societies cut consumers'' credit lines in the run-up to Christmas, lenders have admitted.

Financial institutions confirmed that further restriction on borrowing will be imposed over the next three months in the latest Credit Conditions Survey from the Bank of England.

It is expected that availability of mortgages, credit cards and personal and business loans will suffer as a result.

The report said: "Looking ahead, lenders expected a further reduction in overall unsecured credit availability, which would be associated with a further tightening in credit-scoring criteria and declines in approval rates."

Banks also announced that consumers were refused for loans and mortgages in greater numbers than the banking industry had anticipated over the third quarter.

News of the findings is set to heighten calls for a cut in the base rate of interest this month to alleviate the strain on the economy.