Loan charges set to rise - Only Finance.com

Loans - Loan charges set to rise - 23/09/2008

In the aftermath of the US financial meltdown, it has been reported that many UK banks are facing a severe funding shortfall.

According to financial experts, the lack of cash-flow will lead to higher interest rates for British borrowers, with banks looking to claw back funds from their customers.

Lloyds TSB, RBS and Barclays are amongst the institutions that will have to raise up to £10 billion each. Lloyds is currently in a perilous position after its multi-billion pound take-over of HBOS.

US investment bank JP Morgan made clear that “Significant increases in the cost of loans are on the way”.

With increasing numbers of US lenders teetering on the edge of bankruptcy, the knock on effect in the UK is likely to see a rising pressure put on to British lenders especially with more homeowners and businesses expected to default on their loans in the next few months.

The slowdown in demand (for loans) and lending are likely to put additional pressure on the economy and lead to more credit quality deterioration” added a spokesman for the bank.

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