Effects of credit crunch 'a waiting game'
12 November 2007
It is too early to tell whether the credit crunch will cause the number of insolvencies in the UK to rise, however households on cheap fixed-rate mortgages are more likely to suffer, the Consumer Credit Counselling Service (CCCS) has admitted.
Debt levels take an extended period of time to accumulate, CCCS explained, meaning that the true effect of the ongoing credit crunch may not actually be felt by consumers for some time.
"There is a risk that people on cheap fixed-rate mortgages will in the future be forced onto more expensive products, so they will have to address their spending as a consequence of that," James Ketchell, spokesperson for CCCS, said.
"In general it is hard to tell how the credit crunch is going to affect people in this way but it is going to be more difficult for people in the future."
Mr Ketchell added that the retail and leisure industries were more likely to feel the effect of the credit crunch as people started to reign in their spending.
"Mortgages and rental payments are the most important in someone's spending, so they will adjust their spending according to circumstances," he said.
Recent government statistics published earlier this year show that insolvency figures topped 100,000 in 2006.
