Bank of England reports secured lending squeeze

The Bank of England has today reported a reduction on the availability of secured credit to households over the last three months, and expects the same to continue over the first quarter of 2008. What does this mean for consumers? In a nutshell: that secured lending is becoming harder to access due to more stringent lending criteria. Economists are predicting this will spur an interest rate cut early in the New Year in order to make both banks and borrowers more confident.

In a practical sense this means that at the moment the APRs advertised by lenders is becoming more difficult to obtain, particularly for potential borrowers with less than perfect credit ratings; only prime candidates with a very high credit score will be deemed eligible by banks to borrow at advertised APRs in order to protect their interests. For consumers looking for a solution to their Christmas spending hangover this will make secured consolidation loans a less accessible option with approval rates falling, meaning that unsecured lending such as credit cards may offer a more affordable alternative. Credit cards that offer interest-free balance transfers can allow you to cut the interest you will pay on your current debts by offering a period during which no interest will be charged on the balance. Not all the deals are as attractive as they may appear at first glance; use an independent comparison service for impartial advice and go for the card that offers the longest interest-free period and the lowest transfer fees.

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