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Credit markets effectively closed, claims analyst
17 March 2008
Friday's near collapse of investment bank Bear Sterns in the US will have consequences for the UK loans industry, with one leading analyst saying that liquidity is now so dry that "credit markets have effectively closed", according to the Scotsman.
Most affected will be those who are due to come off generous fixed-rate mortgages and could struggle to find a competitive rate from banks.
Scotsman analyst, Teresa Hunter, said that there is likelihood that the credit crunch could bite a range of products.
"Your mortgage costs are set to rise by anything around £3,000, your cheap credit card will be cut up and your overdraft will sting, because credit markets have effectively closed," she said.
Ms Hunter also said that spiralling rates of personal debt and failure to save have contributed to the problem, with the time now coming for Briton's to pay a 'terrible price' for years of living beyond their means.
Problems with the mortgage industry began to emerge in mid-2007 when sub-prime mortgage holders in the US began to default and the problem spread throughout the world because of the interconnectivity of complex securities that back mortgages. 
