4 January 2008
Personal loans and credit cards are set to become harder to obtain as the year progresses, the Bank of England warned yesterday.
The quarterly credit conditions report from the bank said that lending would tighten over the first three months of the year as a knock-on effect of the credit crunch.
Global markets have been in turmoil since the middle of last year, when the collapse of the US sub-prime mortgage sector exposed many banks to bad debts.
This led to banks becoming more reluctant to lend to each other - a drying-up of credit which will now be felt at high street level, according to the bank.
Analysts at Capital Economics, quoted in the Times, commented: "The Bank of England's survey....confirms that the supply of credit has been tightened significantly for both households and firms.
"The credit crunch is having an impact on bank lending, and it's feeding through to corporate and homeowners' ability to borrow,'' Sarah Hewin, an economist at American Express Bank, told Bloomberg.
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