As consumers struggle to pay off their home loans, rising interest rates have made their motor loans more expensive as well. New car buyers are steering clear of motor loans right now, and many banks are refusing to cut rates. For those that need to get a new motor loan, the current climate is certainly against them. The housing market continues to affect many sectors and consumers are feeling the pinch everywhere, right down to the necessities of life.
Vicky Redwood, at Capital Economics, said: “An interest rate cut is desperately needed to support the rapidly deteriorating economy. But inflationary pressures continue to tie the monetary policy committee’s hands. The chances of an interest rate rise have receded significantly. But with a rate cut still some way off, the cost of keeping a lid on inflationary pressures now looks like a strong chance of a technical recession.”
Howard Archer, chief European economist at Global Insight, said: “The further significant tightening of credit conditions for both households and corporates in the second quarter of 2008, and the expected continuation of these trends in the third quarter, does not bode well for domestic demand.”
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