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Credit crunch 'hangover' making lenders and borrowers cautious
Lenders and borrowers have adopted a more frugal attitude to credit since the economic downturn, according to an expert.
Adrian Coles, director-general of the Building Societies Association (BSA), spoke about the trend at last week's BSA conference.
Mr Coles said: "One of the speakers here at the conference referred to it as a hangover and that is absolutely right. When you have a hangover you say 'never again I don't want another drink' and that is where we are at the moment."
Bank of England figures show lending to individuals in March was lower than the February increase and below the previous six-month average, demonstrating the reluctance on both parties to lend.
Mr Coles said people are starting to ask pertinent questions before buying like: "What happens if I lose my job? Perhaps I should re-mortgage, or to look more carefully at my outgoings or to consider whether I can buy now with the savings I have."
Statistics from Credit Action estimate that 435 people a day will become bankrupt or enter into an Individual Voluntary Arrangement in 2009.