Statistics published by the Council of Mortgage Lenders show that the number of mortgage possessions fell in the second quarter of the year, while cases of arrears levelled off.

The council found that the mix of a low rate environment coupled with forbearance towards borrowers means many have a better chance of getting back on track.

But the UK borrower is not out of the woods yet – the CML figures show show that there were 11,400 cases of possession, equivalent to one UK mortgage in 1,000, in the second three months of 2009, which is down 10% on the first three months, but 14% more than the same time last year. There was a modest deterioration in arrears during the last three months – 205,600 have arrears of around six months, compared with a total of 203,900 at the end of the first three months of 2009.

Jackie Bennett, head of policy for the CML says with the economy still in the doldrums, the outlook will remain challenging for the rest of this year and into 2010.

And Sue Edwards, head of consumer policy for the Citizens Advice Bureau says: “The really vital thing is that people should actively engage their problems early on because what might have been a hopeless situation a year ago could now be effectively addressed by showing more forbearance.

“Many lenders are offering more repayment solutions and through added protection such as the pre-action protocol for mortgage arrears which is designed to make sure that possession action really is a last resort.”

If you have debt problems, don’t hide behind them. Talk to a financial professional about getting some help and getting back on track. These figures show that there is some hope out there and people are turning their debts around.

SOURCE: CML, CAB, 14/08/09

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If you used your credit card today did you ask yourself if you could really afford what you bought? If the answer is no then you need to start thinking about a life without plastic.

For many years people have been ‘putting it off by putting it on the card’. They have been living for today, hoping to pay for it tomorrow. Well now, in this new post-credit crunch world, it is tomorrow and it’s time to begin paying back your unsecured debts.

Because there are no more chances for those who spend beyond their means. The world almost came to a standstill thanks in part to people spending more and more on their credit cards, on loans and on store cards. They remortgaged, took out secured debts and carried on. But house prices have bottomed out and lenders are now saying no to refinance. The party has ended and people have to begin to look at ways to pay off their debts, safely and with the long-term in mind.

This starts by getting some professional help. Promises of quick-fix credit and adverts promising that you do not have to pay off your debts are stupid at best, criminal at worst – the only way that debt can be reduced and cleared is careful saving and sensible use of secured equity.

So talk to a Financial Services Authority regulated adviser who, by law, will only give you the correct answers. If you cannot get more credit, then they will tell you so, but they will then help you explore the alternatives.

Because there are always alternatives – there are always ways in which you can begin to wean yourself off the plastic and begin moving into the black. It might take a long time and it might not be easy, but with some professional advice it is possible.

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

Many people are finding that their applications for loans and credit cards are being turned down more often – if you have continuously tried and failed to get credit over the last few months, it might be time to stop altogether.

Every time someone tries to get hold of credit – that might be a secured loan, a credit card, a personal loan or even a mobile phone contract – they are subject to a credit check. the lender will call up the credit reference agencies and they will look at your credit score. If your score – a history of all your past credit agreements – proves that you are a good borrower, then their computers will say yes.

Of course, since the credit crunch, those computers have been reprogrammed to be extra strict in their deliberations. Even the smallest imperfection on a credit score can now lead to your application being turned down as lenders look to limit the amount of money they lend out.

One of these imperfections could be a ‘footprint’. A footprint is a record of where you credit score has been checked – every time you agree for a lender to look at the score, it’s recorded. This isn’t necessarily a bad thing, but if you have 20 checks an only one agreement that tells the lender that you have tried, and failed, for credit many times before.

This sets alarm bells ringing – the lender suddenly becomes suspicious of a potential borrower who has been turned down so many times. It thinks there must be a valid reason for so many other lenders to say no, so it too is likely to also say no.

So the key to credit success is to not keep applying for credit. The less you apply, the less footprints you will make all over your credit score, and the cleaner it looks. This means you should only apply for credit that you are likely to get, and that means taking some professional advice. Talk to your mortgage broker today and see what sort of credit you are liable to able to secure.

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

The debt problems faced by millions of Brits are still growing – if you want to be rid of your unsecured debt and reduce your secured borrowings then the time to act is now.

Debt charity Credit Action has found that the total UK personal debt at the end of June 2009 stood at £1.45 trillion. And while this has slowed by 1.2% in the last 12 months, debt levels are still at unsustainable levels.

Total secured lending on dwellings at the end of June 2009 stood at £1.22 trillion, which means hundreds of billions of pounds are still owed on credit cards, store cards and personal loans – in fact consumer credit lending grew by £100m in June alone.

Without mortgages, the average British household debt is around £9,240, and this figure increases to £21,480 if the average is based on the number of households who actually have some form of unsecured loan.

This has to be reduced. If you think your debts are getting too much then you need to act now. Talk to a mortgage adviser about turning your unsafe unsecured debt into some form of secured debt. You may want to be debt free, but it takes time to pay off and by turning it into secured finance then you will have more time and space to begin paying off your debts.

The time to act is now – Credit Action says every 10 minutes someone is repossessed, and one person every 4.35 minutes is declared bankrupt or insolvent. This isn’t surprising when you see that £182m is paid in interest in UK daily. So act now before it’s too late and get off the debt pile. With some professional help you can begin creating a debt-free future for yourself.

SOURCE: Credit Action, 31/07/09

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With the recent news that equity in UK homes is finally growing again, now is the time to make sure that you are saving all you can, ready for the future.

Nationwide building society has revealed that house prices increased by 1.3% over the last month. Although this is great news, especially after it revealed that house prices increased by 1% last month, prices are still down 6.3% on last year’s figures.

This means that there is still less equity in UK properties, and there is less room for people to get hold of secured credit. Right now the secured loan market is in the doldrums, remortgages are down and equity release is also stalling.

So it is still time to save, rather than spend. By doing all your can to reinvest into your home and reduce your unsecured outgoings, you can be sure that when house prices begin to rise again, yours will be amongst the most profitable. All that you can do now to keep yourself in positive equity means that you will have more spending, borrowing and saving potential in the future.

Talk to a mortgage adviser about how your equity and your mortgage is faring. It’s good to know what your limitations are and what sort of potential your money and your investments have, now and in a few year’s time.

SOURCE: Nationwide, 30/07/09

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Two fifths of debtors have reduced their non-mortgage debt over the last year as people begin to work off the unsecured excess of the last few years.

Research conducted by moneysupermarket.com has found that whilst more people are paying off their unsecured debt than increasing it, more than half of the UK’s adult population is still carrying an average of £6,956 unsecured debt.

Worryingly, more than a quarter of people in the UK have taken on more debt, with 8% increasing debt ‘a lot’ over the past 12 months. Of those who are still carrying debt, 14% believe debt will always be a part of their life, and they expect to live life in the red.

The good news is that 40% of UK adults have reduced their outstanding borrowings, with 16% claiming to be ‘in a lot less debt now compared to one year ago’.

Tim Moss, head of loans and debt at moneysupermarket.com, said: “Overall, this is positive news. It is encouraging to see that a good number of us are taking active steps to reduce the amount we owe. We have, over a long period of time, become too reliant on too much debt and correcting this was never likely to be an easy process.

“For those who have seen significant increases in their indebtedness over the last year, I would strongly encourage them to go through their household budget ruthlessly, line by line, and identify where outgoings can be cut.”

Those that have begun to reduce their unsecured debts should be an example to those who think they will never be free of credit cards and loans. It can be done, but only if the borrower realises their problems, gets some professional advice and begins saving instead of spending.

Moss says: “Anyone starting to worry about their financial situation shouldn’t bury their head in the quick sand of debt – problems are easier to tackle when addressed early; those in their twenties and thirties should get into the habit of addressing their finances now to avoid financial difficulties later in life.”

SOURCE: Moneysupermarket.com, 28/07/09

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Two thirds of financial advisers failed to pass all of Which?’s benchmarks for equity release advice in a recent set of Which? mystery shops.

The consumer watchdog’s researchers visited 40 advisers and found that only a third of them met all its benchmarks for good advice.

Overall, five out of 12 equity release specialists passed the Which? test. It also found that eight of 28 financial advisers met the Which? benchmark also.

It says 23 advisers tested failed to carry a fact-find and seven didn’t even ask about the researcher’s income. Some advisers didn’t mention how quickly the debt would grow or discuss the effect of compound interest. One IFA said there was no chance of using up all the equity in the customer’s’ home “unless you live to 150”.

Which? editor Martyn Hocking says: “Which?’s investigation has uncovered some major flaws in the equity release advice process. We’d like to see a tightening up of the advice process.”

The equity release body, Safe Homes Income Plans warns that people have to remember what has been excluded from Which?’s as well as what has been included.

Director general Andrea Rozario says: “Although there are estimated to be over 7000 people who have taken the specialist equity release exams, the fact that Which? has found issues with the processes of some of the 40 advisers reviewed shows there is absolutely no room for complacency.”

If you are considering using your home’s equity as means to fund your retirement, make sure your adviser is fully qualified, has customer testimonies and can prove that they are asking all the right questions when it comes to good equity release advice.

SOURCE: Which?, SHIP, 23/07/09

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It’s no surprise that the downturn and falling house prices have led to a drop in the number of people taking out equity release products – but they are still a valuable and useful way for older people to unlock equity in their home.

While over the last three months figures show some signs of renewed optimism, the market volume of equity release schemes sold was down by 22% from the same time last year – 5328, down from 6864 in mid-2008.

The number of new equity release customers did rise by 5% from 5074 in March to 5328 at the end of June 2009 as more consumers turned to equity release to boost their pre and post retirement finances. The number of drawdown mortgages, loans where you can take equity out of your home as and when much like a current account, also increased by 14% over this period. However, while the number of sales increased, the value of products sold over this period fell to £232.9m from £245m.

Andrea Rozario, director general of equity release trade body Safe Homes Income Plans, says: “While the equity release market is still suffering along with the mainstream mortgage market, it is encouraging to see that the equity release market is starting to see evidence of some positive movement. The quarter on quarter increase in the number of plans shows that consumers are once more starting to believe in the UK housing market.

“There remains a clear need for equity release products – especially in the current economic environment. We remain realistic yet positive about the next quarter’s results, and expect to see exciting market and product innovations as companies adapt to meet the changing needs of their clients.”

Dominic Fraser-Smith, group product manager for UK Life, Aviva, says: “These figures are encouraging and we believe they could herald the first glimmers of a recovery for the UK equity release market.”

Fraser-Smith says the increase in drawdown mortgages was particularly encouraging: “The flexibility offered by this product is ideally suited to how many of today’s consumers want to access their housing wealth and we expect that its market share will continue to increase in the future.”

SOURCE: SHIP, Aviva, 17/07/09

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Last week the Government proposed a ban on unsolicited credit card cheques, hoping to put an end to reckless unsecured borrowing and lending.

Credit card cheques have wreaked havoc with the finances of unsuspecting credit card customers for years. One of the big problems has been that people who are under pressure have seen a credit card cheque as an easy way of boosting their bank balance and to buy themselves some breathing space, even if just for a couple of months. Many indebted people have also been using the cheques to make the minimum payment on another card as they continue to juggle an ever increasing pile of debt.

Andrew Hagger of Moneynet.co.uk says people have been unfortunately merely delaying the inevitable and eventually running out of credit, and are then faced with a far larger pile of debt.

He says: “Whilst a credit card cheque may offer a short term fix, it comes at a hefty price. A £500 cheque can easily spiral by an additional £150 in fees and interest in just 12 months. Sending these cheques to people with little financial discipline or will power is akin to posting candy through a school letterbox.

“These cheques are only part of a much larger indebtedness problem in the UK, we need to tackle the individual components, no matter how small, if we are to make a difference.”

Louise Bond, personal finance expert at uSwitch.com, says: “Sending out unsolicited credit card cheques has long since been an act of complete irresponsibility on the part of providers, and finally we have less talk and more action in bringing about an end to this practice.”

Bond says that last year alone, more than 14.1 million UK consumers were sent more than 280 million credit card cheques – 97% of which were unsolicited. She also says that 3.2 million of these cheques were used by consumers spending a staggering £3.6bn. In total, providers a pocketed £571m in handling fees and interest.

Bond adds: “Providers have been capitalising on the lack of understanding amongst consumers around hefty fees associated with this form of credit, which has resulted in the active encouragement of consumers to view them as ‘friendly-freebies’ or a quick fix solution to cash flow problems, and not, as they should be regarded, as a last resort.”

SOURCE: Moneynet.co.uk, uSwitch.com, 02/07/09

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As the recession rolls on rates continue to get worse – and none more so than unsecured loan rates. This is a worry because as they rise, more people could find themselves in more financial difficulty.

In just four weeks, seven unsecured personal loan providers have implemented rate hikes of 1% for new personal loan customers, increasing the average loan rate from 8.74% to 9.07%, according to uSwitch.com.

This may seem like quite a small ‘tweak’, but on a £10,000 loan over five years, the total amount of interest paid will increase from £2,283 to £2,371.

This is a real problem for borrowers that are struggling with several debts and are desperate to consolidate. Last year, 1.3 million consumers used an unsecured personal loan for debt consolidation. If this trend continues throughout 2009, consumers trying to do the right thing and keep all their debts in one place will end up paying almost £100 more in interest compared to this time last year.

Louise Bond, personal finance expert at uSwitch.com says: “Hiking loan rates in the current climate is just making an already difficult situation practically impossible for consumers. Much as we understand that the banks are struggling, these are big hikes for people to swallow. With all eyes on mortgages and savings, it seems unsecured loan providers are slipping under the radar slightly.”

It simply doesn’t pay to take out an unsecured loan. The rates are not competitive, the terms are stringent and the penalties severe. If you are looking to consolidate debt, talk to a financial adviser about taking out secured, sensible debt – it won’t drag you down and will help improve your long-term prospects.

SOURCE: uSwitch.com, 30/06/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.