Credit card debt to 'push up IVAs'
Published On 27 November 2007
Increasing credit card debt as a result of a tightening of other household costs could drive up the number of people seeking individual voluntary agreements (IVAs).That's according to research from PricewaterhouseCoopers (PwC), which found that the average adult in the UK now owes £33,000.
This is up from an average of £17,000 in 2000 and the report suggests this could mean an increase in credit card spending as pressure is put on mortgage costs and other household outgoings.
Homeowners could find themselves facing increases to monthly mortgage payments of £140 as fixed-rate deals come to an end and transfer onto a standard variable rate.
A recent study from Nationwide revealed that 250,000 mortgage-holders will need to reassess their loans as fixed-rates come to an end up to December 2007.
"Banks are continuing to take action in response to the rise in consumer debt by tightening their credit acceptance policies," said Richard Thompson from PwC. "Many consumers will find it increasingly difficult to obtain credit in the run-up to Christmas."
The report suggested that the number of people opting for IVAs is likely to increase. The study said the recent decline in numbers is down to "a hold-up in the processing of IVAs due to ongoing fee discussions between banks and insolvency providers, as well as fairly flat levels of unsecured debt in the past two years".
