Your Money Haven

Banks 'still have an appetite to lend'

15 April 2008

Banks are still lending money but have tightened up on the criteria of who can borrow funds, one expert has said.

Although some say banks have stopped wanting to lend, Neil Munroe of Equifax said that they still have "and appetite to lend" and that they "have to lend money to make money".

"There is always a risk, in these economic climates, that people who would initially have gone the banks to borrow - what we call the prime lenders - have been rejected and will have to go down into the next tier of lenders where its obviously more costly," Mr Munroe said.

"It may just be that it persuades people not to borrow and people therefore take responsibility themselves, but obviously it depends on the individual and the circumstances at the time."

Figures released earlier this year from finance charity Credit Action show that total UK personal debt at the end of February 2008 had hit £1,421 billion.

Much of this was household debt, with the average amount owed by families standing at £9,100 – excluding mortgages.