Vicious Cycle Starts In The UK
The credit cycle is unwinding in England. TimesOnline, "The housing slowdown, reflected in a 35% rise in home repossession orders in the first quarter, is also having a big impact."
"Households, sitting on a debt mountain approaching £1,100 billion, appear to have been clearly affected by the hike in base rates. That effect is compounded by the fact that many mortgage deals negotiated when rates were at a 50-year low are now coming up for renewal. Consumers’ disposable income 'has been chipped away' by tax increases and higher mortgage payments."
"The housing slowdown has cut the amount of so-called mortgage-equity withdrawal. It dropped to £6.9 billion in the final quarter of last year, from £16.8 billion a year earlier. "'You don’t need to have a full-scale collapse in the housing market to produce a slowdown in consumer spending,' said Jonathan Loynes, UK economist."
"Dave Taylor says, 'I think that interest rates will have hit 6% by this time next year. I already pay £900 a month on my mortgage. The choice is to cut back or get deeper into debt by borrowing money and that means credit cards.'"