Banks likely to ‘tighten lending criteria’

Tim Moss, head of loans and debt at price comparison service Moneysupermarket, also suggested that rates of interest on personal loans being offered by the country’s major banks will increase over the coming months.

Mr Moss’ comments came in the wake of Moneysupermarket’s own research which showed that a full 8.5 million people have now turned to consolidate debt loans in an effort to climb out of their financial woes.

“Taking a personal loan to consolidate debts can be a useful way for people to get their finances under control but a loan for these purposes should be considered carefully and only regarded as a measure for becoming debt-free,” Mr Moss remarked.

Earlier this month, Steve Treharne, head of personal insolvency at accountancy firm KPMG pointed out: “You could more than fill the new Wembley Stadium with those who have formally become insolvent in 2006.”