Previous “irresponsible lending” by the banks has lead to a great slump not only within the housing industry, but also amongst Brits in arrears.
As a result, banks are “regretting some of the lending decisions” made.
Banks “regretting lending decisions”
Chief executive, Eugene Sheey of Ireland’s largest lender, Allied Irish Bank (AIB) said last week that he “regretted” a number of lending decisions the firm had made.
He said: “Decisions made under our sole control, particularly in relation to our exposure to the property and construction sectors, negatively impacted on our business.
I regret some of the lending decisions we made."
However, it’s not only the banks that are in regret as borrowers too have landed themselves in great debt.
With more Brits borrowing more than they could afford within the past few years, along with the careless lending by banks, more people are now finding that they have landed themselves in severe loan and mortgage arrears with a majority of Brits spending over a half of their income paying it off.
According to recent statistics from the Citizens Advice Bureau (CAB), the level of personal debt for those in the UK has increased to almost £17,000 per person.
The figures found that regardless of receiving debt advice, just under a half of UK homeowners are suffering from outstanding secured loans or mortgage repayments.
Compared to less than a third of UK homeowners struggling with debt arrears only five years ago, the level of personal dent has risen considerably with 45 per cent of homeowners now admitting to be in personal debt.
According to the research, one in three Brits are also spending at least a half of their income on paying off their monthly loans.
Chief executive David Harker of CAB said the rise in personal debt is the fault of “irresponsible lending” by banks and other lenders as well as having had made “badly informed financial decisions.”
He said: "These findings make sobering reading, especially as they are based on data collected just before the worst of the credit crunch began to bite.
Since then we have seen an enormous rise in the number of people turning to us for help because they have lost their job, so we can expect to see many more people struggling with severe debt problems as the recession continues."
Rise in debt collectors
And with the number of redundancies increasing by the day, loans and mortgages are becoming even harder to pay off as more Brits find themselves buried in a deeper hole as they land themselves in more debt.
However, as a knock on effect, firms are expected to hire more debt collectors throughout 2009 as more Brits struggle to pay their instalments.
Lender Provident Financial has revealed that it may be hiring between 200 and 250 people this year. 80 of which will be knocking door-to-door to retrieve unpaid debts.
At least someone will benefit from the carelessness of the banks.
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