Borrowers are finding the rising costs of mortgages and unsecured personal loans too expensive, causing a decline in the number of deals agreed, uSwitch has said.
The comparison site found unsecured and mortgage lending has declined by nearly £11 billion from the second quarter of last year to the second quarter of this.
In this period, 157,000 fewer unsecured personal loans were agreed, a decrease of £1.1 billion.
However, this has been partially counteracted by credit cards. Plastic spending increased by an average of £179 million each quarter. In total, this equates to an increase of £717 million when the second quarters of 2007 and 2008 are compared.
Head of personal finance expert at the website Simeon Linstead said: “Whilst it’s good news that people can still access extra money if they need it, this is not a sustainable solution for the problem.”
He added that it has caused “a huge knock-on effect” on the UK housing market.
Additionally, the rise in plastic use could result in increased credit card debt. For those who wish to clear debt, a consolidation loan may be one option to consider.
By Morwenna Kearns