Credit card write-offs increase

One of the more interesting indicators in the economy at present is that there is no overwhelming problem with debt.

Or, to put it another way, we still live in an environment of low interest rates, and because of this, debt remains relatively affordable.

However, one area where debt remains a more acute problem is credit cards, not least because interest rates on cards, rather than falling with interest rates, have actually been going up.

It is therefore hardly surprising that defaults on credit cards are rising, while defaults on mortgages with low rates remains low.

However, the real danger that few are currently reporting on in the media is that interest rates must necessarily rise at some point. When this happens, as it inevitably will, then mortgage and loan payments will be subject to higher default rates.

In an economy subject to major cuts in public spending and difficult conditions in the private sector, the only assurance with rising interest rates is that money problems are going to become far worse for everyone.

While the government is keen to make property repossession a matter of last resort for lenders, the overwhelming economic pressures building up suggest the property market is due for a fall, as mortgages become less and less manageable, with the ugly feedback loop of negative equity coming into play as values do fall.