Lenders and consumers alike to blame

Siding with Shakespeare’s Polonius, who advised against both lending and borrowing, Datamonitor claims that the situation caused by irresponsible lending and borrowing could soon become critical.

Although the report’s author blamed borrowers’ lack of adequate debt management for much of their current problems, she also hit out at lenders.

“In previously pursuing aggressive marketing strategies, encouraging customers to take on additional credit and failing to ensure that borrowers can afford repayments, lenders are partly responsible for the current situation of high level of indebtedness,” commented Karina Purang.

The report comes as major banks such as HBOS, Lloyds TSB and HSBC all record massive increases in bad debt levels.

Although Ms Purang said that part of this was due to earlier aggressive loans campaigns, both banks and borrowers were facing the negative effects of such lending policies.

Although banks are now tightening their criteria for loans, Ms Purang warns that this will not help those saddled with debt and fears for their future as unemployment is rising.