Monday 22nd October 2007
British families are feeling the pinch and are now less financially comfortable than they were last year, according to Alliance & Leicester's latest financial thermometer.
The thermometer calculates that most families are doing 'poorly' financially, compared to July last year, when it showed that the majority were 'fighting fit' when it came to money.
Families are having to reign in their borrowing and put off their saving too, in order to meet the expense of higher mortgage payments and other household bills, while those who rent are not cutting back but are also worrying far more about their borrowing.
Sean Murphy, director of strategic planning at Alliance & Leicester, said: "Families are cutting back on their borrowing and their saving to help ensure they can afford higher mortgage and other household bills.
"Even though average interest rates on unsecured borrowings have actually fallen over the last 12 months, that has not been enough to tempt mortgage borrowers to take on more unsecured debt.
"Their family budgets have been under pressure and they have cut their cloth accordingly."
However, with interest rates now looking set to stay put at 5.75 per cent, and borrowing slowing, household budgets will hopefully start to look less stretched, restoring some balance to families' finances.
Mr Murphy added: "The continued growth in mortgage borrowing masked a big change in the behaviour of mortgage borrowers in other areas of their personal finances as they felt the pressure of higher rates.
"With the next move in base rates now seen as more likely to be downwards, this could bring them some welcome comfort."
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