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Fund Managers Wary Of Banks Claim That Debt Is Under Control

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Debt fears cast shadow over banks

Tue Aug 8, 2006 8:13 AM BST168

By Sonia Speedy
LONDON (Citywire) - Fund managers are keeping a watchful eye on their bank holdings following last week's surprise interest rate rise, which was accompanied by news of a
surge in home repossessions
and followed a wave of increases in lenders' bad debt provisions.
The interim results season saw a string of banks report sharp increases in their provisions to bad debts alongside otherwise good profits. Barclays' bad debts soared by 50 percent to 1.057 billion pounds in the first half of the year, while Lloyds TSB's bad debt 'impairment' charge jumped 20 percent to 800 million pounds, attributed to a deterioration in unsecured lending on personal loans and credit cards. HBOS increased its bad debt provisions to 864 million pounds from 753 million pounds.

On the one hand we are supposed to have soaring house prices and on the other we have an economy crashing because of debt overload. The two are not compatible.

The surging repossessions are expected to reach 100,000 by Autumn and that is just the beginning of the down cycle. Could we see repossessions in the millions as the housing market corrects with greater ferocity next year?

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  • 308 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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