Lehman Brothers collapse will mean ‘more debt for mortgage payers’

The consequences of the US investment firm Lehman Brothers’ bankruptcy will lead to more debt in the UK, it has been claimed.

Michelle Slade, an industry analyst from Moneyfacts, has predicted that the company’s collapse will mean more misery for mortgage payers.

She stated that banks will become more wary of lending to each other and that the increase in expenses will be passed onto the consumer.

“The longer the banks face an increased cost of borrowing, the more likely it is that UK mortgage customers will be hit,” she remarked.

In order to ease pressure on the UK, the Bank of England announced it was injecting £5 billion into the market.

However, Ms Slade is unconvinced this will make a difference.

“It usually takes around two weeks for any increase to filter through,” she said, adding that only then will the full impact be revealed.

The Financial Services Authority is overseeing the closure of the failed firm’s operations in the UK.

By Jamie Price