Collateral outlooks on most UK structured finance sectors have been lowered to negative by Moody’s, amid concerns about household borrowing.
Credit cards, buy-to-let mortgages, auto loans and non-conforming mortgages were downgraded from stable to negative.
Unsecured borrowing reached its highest point since 2008, while consumer credit rose £1.5 billion (€1.67 billion) in June.
The agency warned that some British borrowers would struggle with debt repayment as the economy weakens and inflation rises.
Greg Davies, a research analyst at Moody’s, said: “Household debt is high and still growing, leaving consumers vulnerable to an economic downturn, while higher inflation, weaker wage growth and levels of indebtedness leave those in lower-income brackets the most exposed.”
He added: “An additional challenge is that households’ capacity to draw on savings to maintain consumption and/or service their consumer debts has significantly diminished.”
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