U.K. Banks Tighten Consumer Credit as Defaults Rise

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Britain’s consumer borrowing boom may be about to hit a wall. Major banks are now more wary about extending unsecured credit than any time since 2008, shortly after the collapse of Lehman Brothers. According to a Bank of England survey published Thursday, lenders are starting to see an increase in defaults and have tightened the criteria they set for borrowers, Bloomberg News reported. The change comes in the wake of multiple warnings from regulators that the pace of borrowing, with credit growth still running close to 10 percent a year, poses a risk to financial stability. The BOE said its gauge of the availability of unsecured credit stayed below zero in the three months through September. The measure -- already at the lowest since 2009 -- is expected to fall further this quarter. Lenders in the BOE survey -- including Barclays, Lloyds Banking Group and Royal Bank of Scotland -- said the tougher stance was due to the economic outlook as well as a changing appetite for risk. Read more.