PwC forecasts rise in insolvencies

by Gill Montia

Story link: PwC forecasts rise in insolvencies

PricewaterhouseCoopers (PwC), the accountancy firm, is forecasting a rise in insolvencies during 2008.

The number of people declared insolvent has decreased in the past year, as has credit card debt.

The latter did increase in September, but this was the first monthly rise for a year.

However, PwC expects consumers to start using their credit cards more for everyday essentials because of increases in the cost of mortgages, food and fuel.

According to PwC 1.4 million homeowners will come off their current fixed-rate mortgage deals next year.

The average mortgage borrower in this group will face an increase of £140 a month, unless they can find a remortgage that offers a rate of interest close to their current arrangement.

In addition, a backlog of individual voluntary arrangements (IVAs) could increase insolvency figures in 2008.

The processing of some IVAs has been delayed due to ongoing fee discussions between banks and insolvency providers.

In the third-quarter of 2007, the number of personal insolvencies in England and Wales fell.

The number of individual insolvencies, stood at 26,072, down 5% on the same period of 2006. Bankruptcies fell by 2.1% to 15,833; IVAs by 4.3% to 10,239.

Nevertheless, the PwC report implies that this could be the lull before the storm.