By Jennifer Hill

LONDON (Reuters) - Consumers will take on less unsecured debt this year as lenders raise their rates and reject a higher proportion of applicants, a report shows.

Independent market analyst Datamonitor expects the UK consumer credit market to dip in 2007 as the global credit crunch hits home.

Personal loan rates have increased by up to 4 percent, according to recent data from price comparison service Moneyfacts.co.uk.

At the same time, lenders are tightening their criteria on both mortgage and other debt, as they respond to volatility in capital markets and higher perceived risk among borrowers.

The number of rejected mortgage applications has surged by almost 60 percent over the past six months, according to MoneyExpert.com, as five increases in the base rate since August last year start to bite and borrowers come up against tougher lending rules.

Such factors will ensure the continuation of a slowdown in consumer credit that began in 2005, says Datamonitor.

But it expects the market to pick up next year, growing from 207.4 billion pounds in gross advances in 2006 to 229.8 billion in 2011.

"Both lenders and consumers will find the consumer credit market tougher as a result of the global credit crunch, as well as the prevailing issue of bad debt," said analyst Maya Imberg.