Sunday, 31 December 2006

Dood Chair Warns of Debt 'Tipping Point'

Damon Gibbons, Chair of Debt on our Doorstep, has warned that 2007 could be the year in which thousands of consumers are tipped into over-indebtedness. In an interview for the BBC, Gibbons stressed the fact that the growth in secured lending has outstripped the growth in house prices in 2006, and that only small interest rate increases in the coming year would result in the ratio of borrowers' interest repayments to their income exceeding the levels seen during the early 1990's, when housing repossessions reached their peak.

The UK's sensitivity to interest rate rises was confirmed by Howard Archer, UK economist at Global Insight, who stated:

""It is true...that due to over-indebtedness more people will feel the effects if rates just rise a little bit than would have been the case in the past."

Debt on our Doorstep is warning that those most at risk will be mortgage payers unable to afford the fees to move to fixed rate or discounted mortgages and who are coming to the end of initial two or three year discounted mortgages which partly fuelled the demand for housing, and house price increases.

The interview comes in advance of the release of Debt on our Doorstep's New Year Manifesto for Fair Lending, due to be released on Monday 15th, January 2007.

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