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.