Credit Card Debt Predicted To Rise In 2008
Accountancy firm Price Waterhouse Coopers has warned of a surge in credit card debt for the New Year 2008 as a result of ever increasing mortgage rates.
Despite figures issued by the government's Insolvency Service revealing a fall in the number of people becoming insolvent this past year, along with a decrease in credit card debt, PWC believes this is about to change as many homeowners struggle to adjust to higher mortgage and interest rates.
The latest figures produced at the beginning of November showed a significant fall in the number of personal insolvencies in both England and Wales during the third quarter of the year. These figures also showed that individual insolvencies were down 5% on last year with bankruptcies falling by 2.1% and Individual Voluntary Arrangements (IVAs) down by some 4.3%.
It is thought that in conjunction with higher mortgage rates and over-borrowing by consumers, personal insolvency figures for 2008 could be further boosted by a backlog of IVAs currently in process. The decline of IVAs in recent quarters has no doubt come as a result of the processing delay of IVAs due to unresolved discussions held between both banks and insolvency providers.
In addition, the accountancy firm PWC claims that with over a million current fixed-rate mortgage deals set to end throughout 2008, many homeowners will be faced with higher mortgage repayments thus increasing their monthly outgoing by an average of £150.
Although many homeowners will search for similar low interest rate deals when the time comes to remortgage, it is not certain they will be able to match their current fixed-rate mortgage repayments fees. This is thought to be one of the main contributing factors which will lead to an increase in credit card dependency and in turn renewed credit card debt.
2006 saw a downward slope in credit card debt figures which has in fact continued over the past year however these figures are sure to take an upward turn if the predictions for 2008 prove to be correct.
Published on November 27, 2007
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