Britons Take The Unsecured Route To Secure Their Future

An ever-increasing number of Britons are now feeling the pinch turn into a punch as the actual impact of prices rises in Gas, Fuel and Food starts draining their finances faster than before. With some more additions such as increased water tax and council tax all set to rise from the current month, the situation could turn even worse as many Britons have already taken loans and overdrafts from their banks and worn their credit cards thin by constantly swiping them.

Consumer borrowing via loans, overdrafts and credit cards has increased in February by 2 billion pounds, including a steep rise in credit card out standings by 350 million pounds, which is the fastest since the past 5 years. These figures are shocking and surprising as many analysts were of the opinion that looking at the current scenario, Britons would now be tightening their belts by controlling their spending. The increase in mortgage rates has also forced people to go in for such measures to take care of their daily expenses. Elderly people too were having a tough time as their retirement savings were slowly being diverted to meet rising expenses. The figures in the past few months itself tell a sorry story. Mortgage lenders have ensured that the days of low interest loans are to be forgotten even as Halifax, the UK's top lender was on the verge of increasing interest rates on most of its 150 mortgage deals. The approvals for mortgage deals too have decreased by 40% in the previous year and all lenders have scrapped their 100% plus mortgage loans. Add to that new taxes such as water, council and road tax, which have been activated from April along with a steep 15% hike in electricity and gas and a 18% hike in fuel prices and sharp increases in food bills and one has the perfect recipe for financial disaster for many Britons.

Even first time homebuyers are having a tough time as they now have to shell out a deposit in addition to paying higher interest rates for their dream home. The inter banking credit crunch has also ensured that lenders are now interested in servicing only the best financially secure loans and turning away the rest of the borrowers as they do not have enough money to finance all the loans. Even HSBC's First Direct has decided to take off its complete mortgage range for new borrowers after getting swamped with 5 times more applications as compared to the past few weeks. These unsecured high debt figures, which indicate that these borrowings are not secured by any property are almost double than what was calculated by analysts. The chief UK and European economist of Global Insight, Howard Archer commented that people are trying to borrow money while they still can, before stricter lending rules in the future make it difficult and these increased figures could be reflecting this fear. But many analysts are warning that this trend could be very difficult for people to sustain over a longer period since the interest rates especially on defaulting credit card payments is quite high and that could even result in an increase in bankruptcies. Investment banker David Owen of Dresdner Kleinwort's said that this trend indicated that distressed borrowing is on the rise. Cash strapped citizens have also cut their voluntary pension contributions by around 50% in the previous year and the current financial year could also see Isa sales at an all time low as people withdraw cash in an effort to meet their rising expenses.

With many experts predicting that Britain now seems to be going the US way and that things are slated to get worse before any turnaround can be expected, the pressure is on the Bank of England to reduce interest rates to provide some relief to millions of Britons who at present seem to be digging themselves into an impossible debt hole.

Read our latest make money reviews - Learn how to make money online.

Article written by: Craig Parker - Make Money Expert