ONE in four people is now struggling with unmanageable debts, and up to one in three mortgage-holders could face serious financial difficulties as a result of the recent credit crunch, two reports said yesterday.

About 23 per cent of people say that their current level of borrowing either borders on being unmanageable or is no longer manageable, according to the comparison website uSwitch.com.

It said 12 per cent of people admitted they have missed payments on debts or bills during the past six months and 10 per cent have had a payment bounced by their bank.

One in ten people claims they are now trapped in a vicious cycle of debt where they may need to get further into debt just to meet their existing financial obligations, and 13 per cent may have to turn to credit to meet their living costs.

Meanwhile, market analyst Mintel said up to one in three mortgage holders could face serious financial difficulties as a result of the credit crunch.

It said lenders had become increasingly cautious following the problems in the credit markets, and as a result many homeowners would be offered less favourable terms when they came to remortgage.

It estimates that around 9 per cent of the UK's 16.5 million mortgage holders will now be considered sub-prime by lenders as a result of falling behind on debt repayments.

But it said a further 24 per cent could also be considered a high risk by lenders because of their personal circumstances, such as being self-employed or not having a regular income, or because they had moved frequently or fallen behind with household bills.

Toby Clark of Mintel said:

"Those coming off fixed-rate deals taken out before the recent interest rate rises will be particularly hard-hit."

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