UK card defaults rise for longest period in 17 years: BOE
Households appear to be taking on more debt just to get by
For the first time since the financial crisis, the number of Britons defaulting on their credit card debt has risen for six consecutive quarters, signaling that households are facing severe pressure due to the ongoing Middle East conflict. A Bank of England survey revealed that lenders reporting a rise in credit card default rates outnumbered those experiencing a decline by 26 percentage points in the three months to September.
Lenders anticipate a further increase in the final quarter, extending the period of expanding credit card defaults to 18 months, the longest since 2008-2009. The survey suggests that the surge in borrowing costs since the Iran war began at the end of February has made it difficult for households to manage their finances. Mortgage and credit card rates have soared this year, putting strain on family budgets.
Although inflation is currently at 3.1%, it is expected to surpass 4% early next year. The latest credit conditions survey, conducted between August 17 and September 4, does not fully account for the impact of the Iran war, as it ended before the recent escalation that pushed oil prices back above $100 a barrel.
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