Borrowers issued credit crunch warning

Borrowers across Britain have been warned that they could still be vulnerable to the implications of the so-called credit crunch that is affecting financial markets around the world.

Reflecting on a report from the Bank of England, the comparison firm Fool.co.uk suggests that people whose debts amount to over 55 per cent of their household income could be “in jeopardy”.

In addition, as millions of consumers aim to become debt free, Fool.co.uk warns that those with no savings and two-thirds of their home loan outstanding could be at risk of financial difficulties resulting from the credit crunch.

David Kuo, head of personal finance at Fool.co.uk, said: “Consumers should draw up a statement of affairs immediately to get a useful snapshot of their finances.

“The snapshot will tell, at a glance, whether you fall into one of the ‘at risk’ categories.”

Including mortgage arrears, the debt management burden faced by a typical British household is over £56,000, according to figures from Credit Action.