Almost 600,000 people will be unable to refinance their debts this year after finding their usual lines of credit cut off, forcing them to go bust or sign expensive "bankruptcy-lite" agreements, The Times reports.
About one million Britons are struggling with £25bn of unsecured borrowings that they cannot repay – “problem debt” averaging £25,000 each - according to a report by TDX Group, which provides detailed debt-collection information to banks.
TDX said that last year 400,000 people remortgaged or applied for new credit cards or personal loans to pay off old loans. A further 300,000 people took more dramatic options to escape their debts, such as bankruptcy, debt management plans or individual voluntary agreements (IVAs).
IVAs are called bankruptcy-lite because they involve the creditor, usually a bank, accepting a reduced sum to be paid off over a set period. Debt management plans are a higher-risk, unregulated form of IVA.
GORDON BROWN WILL TODAY meet banks on Wall Street a day after he welcomed proposals made by UK banks to help ease the credit crunch and confirmed that the Government remains in contact with the Bank of England to find a way through the crisis, The Telegraph reports.
Mr Brown, who has seen his rating in opinion polls tumble as the credit crisis spreads to the wider economy in the UK, will also meet Federal Reserve chairman Ben Bernanke as part of his visit.
About 25 executives from Britain's high street lenders, investment banks, hedge funds and insurance companies yesterday attended a meeting with Mr Brown to offer suggestions on how to reopen the money markets. Their principle request was that the Bank widen the collateral it will accept to include lesser quality mortgages and to make more longer-term funding available.
THE HEADLINE RATE OF INFLATION remained stable at 2.5% in March, the Office for National Statistics said yesterday, providing the Bank of England with welcome room for manoeuvre as it considers further interest rate cuts in the face of the credit crisis and the slowing global economy, The Independent reports.
The ONS said small rises in prices in the furniture, household equipment and recreation sectors compared with last March had countered larger increases in the cost of transport and housing. As a result, the consumer price index (CPI) inflation, which the Bank targets, was unchanged compared with February.
Inflation as measured by the retail prices index fell to 3.8% in March, from 4.1% a month earlier, as mortgage borrowers' interest costs fell following the Bank of England base rate cut in February.
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