Moody’s warns on soaring UK debt

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Moody’s has lowered its outlook for UK asset-backed securities amid rising household indebtedness.

The ratings agency has reduced its outlook from stable to negative on auto loans, credit cards, buy-to-let mortgages and so-called non-conforming mortgages, the Financial Times reports.

Its decision was based on higher inflation, weaker wage growth and levels of indebtedness that leave those in the lower-income brackets most exposed.

The Bank of England has already expressed concern about the UK’s rising indebtedness, which is growing at a faster pace than household income.

Unsecured borrowing now stands at £199bn, its highest level since 2008.

Consumer credit rose £1.5bn in June, representing an annual increase of 10 per cent. However, borrowing to fund a house purchase is on a downwards trend.

This week the FCA announced its review into high cost credit.

Moody’s also warned that macroeconomic disruption from Brexit negotiations could be significant and that there was a “substantial probability” that negotiations will fail and no agreement will be reached.