Even during a extended period of the lowest base rate ever it seems as though lenders are unhappy to offer borrowers unsecured personal loans without a high premium.

One year ago this month the Bank of England ended six months of dramatic rate cuts to try and stave off the effects of the recession, leaving base rate at a record low of 0.5% but that hasn't stopped personal loan rates rocketing.

According to Moneysupermarket.com, the best £3,000 loan over five years has risen by a massive 1.25% on average, to 14.92% over the last year, which is more than double the average rate of 2007. The best £5,000 loan over the same period has also risen on average to 9.08% from 8.88%.

Tim Moss, head of loans at moneysupermarket.com, says: "There was a time that a personal loan was the perfect solution for anyone looking to borrow to buy a car or consolidate existing debts. But the personal loan market has changed beyond all recognition with rates shooting up and borrowing for relatively small amounts becoming uneconomical. The last twelve months has not been kind to borrowers looking for a personal loan and there is little sign of this changing in the near future."

In the past it was personal loans people turned to when looking to consolidate debt or find some extra money. Now people have to consider secured loans instead – lenders are a lot happier to lend on properties that are rising in value than to people without security. Talk to a mortgage lender about using your home to raise the cash that you need.

SOURCE: Moneysupermarket.com, 04/03/10

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Secured debt lenders think that there are going to be more repossessions in 2010 as more people fall behind with their payments for mortgages, loans and other debts.

According to Moore Blatch, 67% of mortgage lenders and foreclosure experts are predicting an increase in the number of repossessions in 2010. They think that more people will simply be unable to keep up with paying their bills and the lenders will have no other choice but to take the property.

Of those who are predicting an increase in repossessions, 50% believe repossessions will rise by as much as 5%, while 17% believe a rise of as much as 15% and a further 6% foresee a rise in repossessions of over 15%. They think that growing debts will be the main reason for repossession, but unemployment and the possibility of rising interest rates may play their parts too.

But there are not all as pessimistic – more than a quarter of lenders thought there would be no change in repossessions in 2010, while 6% believe there will be a decrease.

Paul Walshe, head of lender services, Moore Blatch says: “The Council of Mortgage Lenders revised, and subsequently lowered their 2009 predictions for repossessions to 48,000 in 2010. However, much of this fall was due to the the Government's initiative to provide consistency in lenders’ approach to repossessions. This created a bottleneck which will start to clear in 2010.

"Sadly, the underlying cause of repossession, being excessive borrowing, is still causing people to default on their mortgages."
 
If you are struggling to pay your secured debts, you must talk to an expert right away. The lenders might be right and more people might not be able to handle rising rates, fees, penalties and short-term debt pressures. Do what you can now before you find there is no way back.
 
SOURCE: Moore Blatch, 10/02/10

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Thanks to the continuing tough economic climate, the focus in all lending activity is risk and as a result unsecured personal loans have seen some of the sharpest increases of recent times.
 
In fact, personal loan rates stand at a nine year high, according to Moneyfacts. Lenders are unhappy to offer money to people with no security. On the other hand, lenders are still offering money to people who are able to afford to secure debt against their home, safely.

Michelle Slade, analyst for Moneyfacts says: “Unlike on a mortgage, there is no security that a personal loan debt will be repaid. In such a risk adverse market, lenders are only offering loans to the most creditworthy applicants and then at a premium."
 
The website says there is now a £1,055 difference between the cheapest and most expensive £5,000 personal loan – for those people who are unable to secure the cheapest deal, that's expensive money indeed.
 
Andrew Hagger of Moneynet.co.uk says: "With banks and building societies still adopting a far more cautious stance even when it comes to mortgage lending, even with your property as collateral, it’s no surprise that the appetite for unsecured lending has pretty much dried up."
 
If you want affordable loans, you need security in 2010, and that is only possible with a secured loan or a mortgage. Talk to a secured finance specialist about your ability to use your home as a means of getting hold of cheaper credit.

SOURCE: Moneyfacts, Moneynet, 01/02/10

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The Government has released detailed plans to control the sale and rent back market, good news for secured borrowers who are suffering with their debts.

The Financial Services Authority has released full regulation of Sale and Rent Back – particularly the much stricter conditions on promoting these schemes and making sure that people in debt trouble are not abused.

Sale and Rent Back is targeted at those who are in financial difficulties who may be vulnerable to selling techniques which obscure the downsides. The last thing those who are struggling need to hear is a cowboy pouring honey into their ear, telling them that they should sell their home to pay off their secured and unsecured debts.

As a result, the FSA says it will be banning cold-calling, leaflet dropping and the use of emotive phrases in promotional material will be crucial, along with tighter monitoring of the activities of these firms.

Adam Phillips, chairman of the Financial Services Consumer Panel says: "Sale and Rent Back can provide rich pickings for firms seeking to make money from people who are desperate.  Firms have been able to lure vulnerable people into deals which they later regret when the rent rises or they lose their home: people see the promise of being able to stay in their own home and get cash up front quickly, without necessarily being warned of the longer-term consequences.

"However, we still have worries that firms will try to exploit consumers both within the rules, and by trying to operate outside the rules. The fact that only around 80 firms have applied for FSA authorisation, when the OFT had judged that there were over 1000 firms undertaking sale and rent back, means the FSA must watch the authorisation boundary carefully."

If you are at your wits end, only ever consider selling your home and renting it back after your have spoken to financial advisers, your lenders, debt charities and your family. It can be a sensible option, but only to a small minority – for the other struggling secured borrowers there are always less severe options.

SOURCE: FSA, FSCS, 29/01/10

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You have probably spent the last year doing all you can to help solve your secured loan problems – but if you want to be successful you need to make another New Year's resolution to once again work hard at saving and clearing debt.

But too many people think their problems will just go away now they have spent a year being financially sensible – Gocompare.com says that while money matters topped 60% of peoples' resolution lists last year, only 37% will resolve to sort out their finances and pay off debts in 2010. 

Lee Griffin, business development director at Gocompare.com says: "The credit crunch ensured that everyone was thinking about money this time last year. It gave people a jolt and got us thinking about how we could save money. I doubt very much that everybody has got their finances in order, so resolving to cut outgoings and shop around more are still likely to be good resolutions this year too."        

So people who have debt problems need to persevere and make some more promises to themselves for the next 12 months. New resolutions could include saving money on outgoings, getting out of debt or reducing loan and credit card costs, putting more into a savings account or even shopping around for the best financial products like insurance and mortgages.

The key to getting out of debt is perseverance. But we all know reducing debt is tough, so get some help in making your resolutions stick. Talk to a professional financial adviser about putting together a new 2010 plan of action – a good plan alongside some professional advice can go a long way in making sure your 2010 financial resolutions work.

SOURCE: Gocompare.com, 30/12/09

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Property ladder-obsessed homeowners could become a thing of the past as a new study reveals almost three quarters of the nation are happy to remain in their current home as a result of the economic downturn.

The research by Aviva shows that 68% of homeowners see their home as an emotional investment, where they seek relaxation and calm, rather than a commodity to make money for the future.

This is a good thing – people are happy to stick where they are and save, rather than using their home to fund lifestyles beyond their means. This also helps people increase their stake in their home, giving them more financial options in the future.

The study reveals a surprising re-assessment of how the nation views its homes in recession-hit Britain 2009: it found that 80% of people considered themselves to be home 'hoppers' before the recession while only 26% say the same today.

Dr Paul Keedwell, expert in environmental psychology at Cardiff University says: "A surprisingly large number of people across the UK report having a new-found emotional attachment to their homes. This is probably because of, rather than in spite of, the economic downturn, which has made many of us change from being house hoppers to house stoppers."

Simon Warsop, director of home at Aviva says: "In a country that has been driven by a property-ladder culture for so many years it is interesting to see that perhaps we are seeing the evolution of a new social trend – one where the home really is where the heart is rather than a commodity to do up and sell on.

"Clearly when the housing market picks up we may see our appetite for house hopping re emerge, but at the moment it seems we are clearly stopping in the place that makes us feel the most safe and secure."

SOURCE: Aviva, 05/11/09

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People up and down the country are celebrating after Nationwide revealed that house prices have returned to 2008 levels – equity is rising and there is more hope for the home owning nation.

According to the building society's latest House Price Index, house prices were up 0.9% in September, down from the August rise of 1.4%, but still enough to add another thousand pounds to people's equity – the average price is up to £161,816, up from £160,224 in August.

But the most important statistics for homeowners is that the annual change, which is the difference between last year's prices and this year's, is at 0.0% – prices have returned to 2008 levels. This is great news, and unexpected news.

Martin Gahbauer, Nationwide's chief economist, says: "The further increase in house prices is very much consistent with improvements in a broad range of economic and financial indicators over the last few months, all of which suggest that the most intense phase of the recession and financial crisis has probably passed.

"However, given that the housing market still faces considerable headwinds in the form of high unemployment, restrictive credit conditions and an impending withdrawal of the stamp duty holiday, it would be surprising to see house prices continuing to increase at the very strong rate seen in recent months."

We are not out of the woods yet. Although equity has risen, it is still tough for many to use that equity, be it in the form of a secured loan or a new mortgage or remortgage. That means many people may have to sit tight for the next few months. So talk to your mortgage adviser by all means and see what you can do to make your financial life easier over the medium-term, but don't expect miracles straight away.

Gahbauer says: "Lead indicators, such as mortgage approvals for house purchase, suggest that turnover should continue edging higher over the next few months, but at the current rate of increase it would take another 18 months for it to reach pre-downturn levels."

SOURCE: Nationwide, 02/10/09

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The Government has set out plans so sale and rent back firms cannot use pressure tactics to try and ensnare people into losing their homes.

The Financial Services Authority, the Government's watchdog, says exploitative advertising and high-pressure sales techniques by sale and rent back firms will be banned by 2010.

Sale and rent back is the scheme whereby people who simply cannot afford to keep their mortgage sell their property, pay their debts and then rent it back from the firm. The practice has been regulated by the FSA, but it is now making sure no vultures use pressure to get people to sell up.

The new proposals will include giving people a cooling-off period to give consumers more time to make decisions,
banning firms cold calling and prohibiting firms from dropping promotional leaflets through letter boxes.

The FSA will also be prohibiting the use of emotive terms like ‘fast sale’, ‘mortgage rescue’ and ‘cash quickly’ in promotional literature – it wants to make sure people have considered every other avenue before they make such a desperate decision.

Ed Harley, FSA head of mortgage policy, says: "Sale and rent back can be the right solution for some consumers, but many of the people typically targeted are financially vulnerable and have been badly hit by the experience. The FSA’s proposed new rules will help to protect consumers.

"We want to prevent high-pressure and inappropriate sales, and help consumers understand sale and rent back products, so they only enter into sale and rent back where it is an appropriate and sustainable solution for them."

SOURCE: FSA, 28/09/09

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If you have the right amount of secured equity in your home then you will find it easy to find a great mortgage right now – proving the importance of doing all you can to increase the owning share of your home.

The number of residential mortgages available is slowly increasing, but still the market is dominated by deals for customers with more than a 25% deposit, according to Moneyfacts. It says that in April 2009 the number of mortgages available hit rock bottom at just 1,209, a 90% drop from the peak of 11,951 products available in July 2007. Today there are 1,392 products available – if you have the equity.

Lenders are very much adverse to risk right now – that means if you want a mortgage you have to prove to them that you are not a risk. Today that means having plenty of equity in your home – the smaller the mortgage they have to offer, the less they could lose and the better bet you become.

Moneyfacts says: "Lenders are slowly taking small steps back into the market, albeit with a very cautious approach. The market remains dominated by deals for those borrowers with at least a 25% deposit as lenders look to cherry pick the best customers. Borrowers with just a 10% deposit are finally seeing increased options, but they are still paying a very heavy price for their lack of equity."

The website says the best deal on offer for a borrower with just a 10% deposit is 2% higher than that available to those with a 40% deposit, adding £170 per month to the cost of a £150,000 mortgage.

So if you want a mortgage, you need to start investing in your home. Talk to a mortgage adviser about overpaying on your mortgage – by paying to much you decrease the size of your loan and immediately make yourself a better bet for another loan.

SOURCE: Moneyfacts, 14/09/09

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With the average house price having increased over the last ten years, homeowners can use the new-found equity in their homes to pay off debts, fund home improvements, or even finance unexpected long-term expenses. This can be done through an equity home loan UK, which is a form of secured loan. If you are interested in using the value of your home to improve your lifestyle or your finances it may be worth considering an equity home loan UK. As well as helping you build a new extension, swimming pool or patio an equity home loan UK can be used to buy a car, go on holiday, pay for a child’s education, renovate a home or even buy a boat. If you are interested in an equity home loan UK it's a good idea to shop around as well as work out how much you should borrow, so read on to find out more.

Learn more about the Equity Home Loan UK