When Will Credit Markets Return To Normal?
As more and more people are rejected for various credit card and mortgage applications many are now starting to ask when credit markets will return to normal and when finance will be readily available again. While it would be wrong to say that money markets are back to 'normal' there is a lot more finance available than there was just a few weeks ago. But that does not mean a return to normal for the person on the street.
The problem which many of the major financial companies are having now is the fact they can ill afford to take on new customers who could struggle as the economy slows and then fail to keep up to date with their repayments. The UK banking sector is full of loan agreements which are deemed very high risk with a significant chance of default occurring in the short to medium term.
While some would say that the banks in the UK are being over cautious there is a need to protect assets, reputation and the ever more important financial ratios on which they trade. The bad news is that commercial credit markets may not return to normal until the banks can consolidate their balance sheets, something which will occur AFTER the economy starts to recover.
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