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Debt defaults lower than expected

25/01/2010

A recent report from the Bank of England has shown that lenders overestimated the number of borrowers who would default on unsecured debts such as credit cards and loans, the BBC reports.

It has been reported by lenders that despite their prediction of an increase (because they thought that unemployment would prove to be worse than it has been), default rates on unsecured debt dropped in the final quarter of 2009.

However, according to the Bank`s `Trends in Lending` report, during the same period, the actual amount lost through debt defaults increased - which led to an increase in the cost of credit card borrowing.

Meanwhile, borrowers have, on the whole, been determined to reduce their unsecured debts, and lenders have told the Bank of England that they `expected this trend to continue`.

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