BoE raises interest rates: Arrears and defaults are once again on the rise
In light of the Bank of England raising its base interest rate from 0.25% to 0.5% today, Paul Heywood, Chief Data & Analytics Officer at Equifax UK said: “Whilst savers will have rejoiced today over the first consecutive rate hike since 2004, the same cannot be said for those with personal loans. Equifax data shows that arrears and defaults for consumer credit and motor finance are once again starting to rise, suggesting that financial pressures amongst consumers are beginning to build up.
“When matched with the forecast* that inflation will soar past its current 5.4pc state in 2022, fuelled by energy and goods prices, there is no better time for lenders to conduct proper affordability assessments via Open Banking to protect consumers from later stage debt and extended periods of forbearance.”
* Equifax data: Conditional PD Forecasts – Personal Loans.