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Mapatasy

Banks Tighten Credit as Default Rates Rise

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54 minutes ago, Mapatasy said:

Nice find.

' Britain’s consumer borrowing boom may be about to hit a wall.

Major banks are now more wary about extending unsecured credit than any time since 2008, shortly after the collapse of Lehman Brothers.

According to a Bank of England survey published Thursday, lenders are starting to see an increase in defaults and have tightened the criteria they set for borrowers. The change comes in the wake of multiple warnings from regulators that the pace of borrowing, with credit growth still running close to 10 percent a year, poses a risk to financial stability.

The BOE said its gauge of the availability of unsecured credit stayed below zero in the three months through September. The measure -- already at the lowest since 2009 -- is expected to fall further this quarter. 

Lenders in the BOE survey -- including Barclays, Lloyds Banking Group and Royal Bank of Scotland -- said the tougher stance was due to the economic outlook as well as a changing appetite for risk.

Banks have also started to rein in one major lure for borrowers by shortening the interest-free period when a balance is transferred to a new credit card. The head of the Financial Conduct Authority, Andrew Bailey, issued a warning this month, saying that about 5 million credit-card borrowers are experiencing difficulties paying off their balance.'

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1 hour ago, sikejsudjek said:

I can see it getting rapidly a lot worse as universal credit is rolled out. Plenty of evidence homelessness is on the rise as a result. The flip side is landlords in arrears.

Taking out a 90% mortgage, to rent to someone on benefits is a very risky thing.

IO BTL loans should be priced as bridging loans. i.e. so expensive noone would even consider using them

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Yep good find Mapatasy.

Not much detail in the article apart from

Quote

In its latest survey, it said default rates on credit-card lending increased “slightly,” while those on other unsecured lending rose “significantly.”

It seems DM got this one just about right with their reporting, although other news agencies may have run with it at the time.

If it happens.   And life is so easy at the moment, a few months a lady told us she had been quoted £80,000 for new double glazing.

She doesn't want to pay much over £40,000.   Big house all to themselves, and son not on good terms with father.  Won't speak to him.  

If there was any pressure about 'at my age' / 'not getting ahead in life' then I could sort of understand the son's position - but that's a guess.

 

On 14/04/2017 at 11:32 PM, Venger said:

Daily Mail (yesterday) had big headline about a coming squeeze in lending for credit cards and personal loans, but it may just be bluster.  

(BELOW)

Although there was a post the other day about a HPCer having letter reducing his CC limit.

It's also new car galore around here.  Driveway upon driveway with 2014-2016 German SUVs.   So many standard 40s-60s semis that have been given a facelift GD windows and door to the frontage.    Although I have 2014 mid-size car and easy access to a really nice German marque car.  I will defend those who want to buy new cars.  It's their choice.  No one is stopping them looking in Autotrader, taking a smaller loan, rather than go to buy brand new at dealership.)

____________

Banks finally plan credit crackdown: Lenders set for biggest squeeze since the financial crisis over fears of a dangerous debt bubble


High Street banks intend to reduce the number of credit cards they will offer
The banks have suggested that they will impose stricter affordability checks
It will be the biggest squeeze on lending since the financial crisis happened

By James Salmon, Business Correspondent For The Daily Mail
PUBLISHED: 23:06, 13 April 2017 | UPDATED: 23:07, 13 April 2017

Lenders are planning the biggest squeeze on credit cards and personal loans since the financial crisis amid growing fears of a dangerous debt bubble.

High Street banks have told the Bank of England they intend to reduce the number of credit cards and personal loans they offer to customers over the next three months.

They have indicated they will impose stricter affordability checks, making it harder to get a credit card or a loan.

According to the Bank of England's latest Credit Conditions Survey, 18.8 per cent more lenders expect the availability of unsecured credit such as personal loans, overdrafts, credit card and finance to reduce than to increase.

...
http://www.dailymail.co.uk/news/article-4410514/Lenders-set-biggest-squeeze-financial-crisis.html

 

Edited by Venger

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Boom/bust is baked into the system. When defaults rise, interest rates rise due to the increased risk... Which makes defaults rise, which makes.... 

It will all end in years and nobody will have seen it coming a mile off....

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Concern is the banks will cut back on unsecure lending and push more out in 'secured' lending....we need  more mortgage arrears and repos...little sign of that due to high employment.

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On 12/10/2017 at 1:05 PM, longgone said:

Toner must be low 

Haha good one!

that or they've phoned IT "have you tried rebooting? Ok have you tried turning it off and on again? Unplugged at the socket? Ok sounds like you need a new printer,  I'll raise you a ticket it'll be with you on Monday"

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18 hours ago, Democorruptcy said:

Time for peer to peer lenders to shift uneasily in their chairs?

Funny you say that I invest with Zopa a bit.

  • They advertised the ISA and everyone got excited 
  • They said when it launched you could move your money fee free (usually 1% to sell loans) to the ISA.......that as yet has not happened months after so I just did it an took the hit.
  • They then sent out a default warning that conditions where getting worse.
  • The website is now getting shonkier and shonkier with delays on statements (up 2 two months apparently) which...
  • Show significant defaults on some of the products
  • They want to be a bank....maybe to latch on Carney's teat?

It may be nothing but to me, it feels like money is heading out the window and not wanting to be the fat kid in camp when the bear attacks I have removed 50% as of today.

I will only leave some in the ISA as a risky investment. 

 

 

Edited by Fromage Frais

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50 minutes ago, Fromage Frais said:

Funny you say that I invest with Zopa a bit.

  • They advertised the ISA and everyone got excited 
  • They said when it launched you could move your money feel free to the ISA.......that as yet has not happened months after so I just did it an took the hit.
  • They then sent out a default warning that conditions where getting worse.
  • The website is now getting shonkier and shonkier with delays on statements (up 2 two months apparently) which...
  • Show significant defaults on some of the products
  • They want to be a bank....maybe to latch on Carney's teat?

It may be nothing but to me, it feels like money is heading out the window and not wanting to be the fat kid in camp when the bear attacks I have removed 50% as of today.

I will only leave some in the ISA as a risky investment. 

 

Always trust that voice in your head!

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2 hours ago, Fromage Frais said:

Funny you say that I invest with Zopa a bit.

  • They advertised the ISA and everyone got excited 
  • They said when it launched you could move your money feel free to the ISA.......that as yet has not happened months after so I just did it an took the hit.
  • They then sent out a default warning that conditions where getting worse.
  • The website is now getting shonkier and shonkier with delays on statements (up 2 two months apparently) which...
  • Show significant defaults on some of the products
  • They want to be a bank....maybe to latch on Carney's teat?

It may be nothing but to me, it feels like money is heading out the window and not wanting to be the fat kid in camp when the bear attacks I have removed 50% as of today.

I will only leave some in the ISA as a risky investment.

I'm probably talking nonsense, as I never looked into the likes of Zopa, but I assumed they were not using a fractional reserve system? In that case it seems to me that there are a few consequences:

(1) Their lending does not increase the money supply, which makes me feel warmly towards them and their ilk.

(2) Any borrowers who use them are not using the conventional banks, so starving the latter both of business, and the ability to increase the money supply.

(3) They should be much less profitable than conventional banks, so should either need to charge higher rates, or perhaps not do the extensive and time-consuming credit checks and due diligence which are such an important value-add and risk mitigation function of the traditional banking sector.

Is any of the above true?

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7 hours ago, thewig said:

Haha good one!

that or they've phoned IT "have you tried rebooting? Ok have you tried turning it off and on again? Unplugged at the socket? Ok sounds like you need a new printer,  I'll raise you a ticket it'll be with you on Monday"

i would sack the whole IT dept and scrap the equipment :lol:

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May be just a coincidence. 

Maybe something I have done, or haven't done (there's a linked savings account and has over £1K in it)... maybe bashing my credit-card in recent times.  I don't know.  

One of my current accounts.    

I'm not overdrawn.  It could be difficult for some people if they were overdrawn and bank notifies of an upcoming reduction in overdraft limit, but doubt the fees could be so bad (within £500 overdrawn)- and they can change limits as they assess risks, or just on individuals.

DCTaeOH.jpg
 

Quote

 

If your limit has changed and you didn't ask for this

If you haven't asked for your overdraft to change then we've made this change after a routine review.  This could be because of the amount of regular credits you've been making or the way you've managed this account, your other or any accounts you have with other lenders.

The information we use to find out how you're managing your account with other lenders is provided to us by two credit reference agencies.....

 

 

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4 hours ago, Venger said:

May be just a coincidence. 

Maybe something I have done, or haven't done (there's a linked savings account and has over £1K in it)... maybe bashing my credit-card in recent times.  I don't know.  

One of my current accounts.    

I'm not overdrawn.  It could be difficult for some people if they were overdrawn and bank notifies of an upcoming reduction in overdraft limit, but doubt the fees could be so bad (within £500 overdrawn)- and they can change limits as they assess risks, or just on individuals.

DCTaeOH.jpg
 

 

Same happened to me recently.  I had a 2k overdraft for over 10 years and it was reduced to £400 a couple of months ago.

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  • 292 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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