» Read the complete article

There is a lot of talk about 'green shoots' this month - but is the early optimism leading to over-confident Brits slipping back into their bad habits.

With news that we are near the end of the recession all around us, research from Unbiased.co.uk reveals that the so called ‘economic optimism' has led Brits straight back down the debt path. It says in the first three months of this year there was a dramatic shift in consumer behaviour and for the first time in six months - Brits took out more debt than they repaid. As a result, the first quarter of this year saw new debt rise to £2.7bn, while overall savings levels dropped to an all time low.

Unbiased.co.uk's research reveals the ratio of how much we are borrowing, excluding mortgage debt, contrasted with how much we are saving. Between January and March, savings levels hit £14bn - the lowest level since the research was first commissioned nine years ago.

So there is still too much spending and too little saving - as a nation we are now borrowing 19p for every pound saved. This is in stark comparison to the second half of 2008 which saw consumers fight the recessionary doom and gloom by concentrating on clearing their debts, with £1.76 of debt repaid for every pound saved.

David Elms, Chief Executive of Unbiased.co.uk says: "The financial turmoil of 2008 prompted a dramatic retreat from savings in favour of repaying personal debt. The first quarter of 2009, in contrast, has seen consumers going back to ‘the old ways' as they shift back into borrowing. The drop in savings could of course be an indication that consumer faith in savings returns and the low interest rates are still preventing people from utilising savings accounts. And the worry has to be that people may be keeping their cash where they can see it; in current accounts or in their wallet.

"After the relentless financial gloom of last year, the public mood seems to be changing with financial forecasters spouting optimism over Britain's economic prospects. However, though this is certainly a positive development, it is vital for consumers to continue nurturing their financial position. Anyone with financial concerns should seek professional advice from an independent financial adviser. Only an adviser will be able to help you strike the best balance between borrowing, saving and other financial aspects."

SOURCE: Unbiased.co.uk, 26/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the full story

Mortgage lenders are currently turning down almost one in four mortgage applications - so you have to be sure that yours is as good as it can be if you have any chance of getting accepted.

According to data from the Bank of England's June lending survey, of 67,000 mortgage applications, lenders turned away 15,778 potential borrowers. That's one in every four turned down for being too risky, many for including misinformation or for being overly-optimistic.

The Bank also says UK gross lending figures to be £10.3bn in June 2009, 2% lower than in April, and more than 50% down on last year's figures. The Bank says this is the weakest credit flow since December 2000 - so lending is restricted and the chances of securing credit are getting slimmer.

You may be starting to get sick of hearing 'no' from money lenders - credit cards, personal loans, remortgages, second mortgages - you may have tried everything to boost your finances during this difficult time.

But every application you make, every attempt to get hold of credit is recorded and ultimately goes against you - a failed application creates a 'footprint' on your credit score which shows other lenders that you have continually tried and failed to get hold of extra money. This doesn't look good, and sounds alarm bells in other lender's underwriting departments - essentially your applications prove you are not a good bet as a borrower.

So stop applying for credit and go straight to a financial adviser. They will go through your finances with a fine tooth comb and tell you exactly what you can and can't apply for. Then, if they are confident that you will be accepted for a loan, they will help you put together an application form that lenders will read and many will accept.

SOURCE: BoE, 19/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the complete article

As students across the country come to the end of their courses, analysis by online credit report provider Callcredit Check shows that the average student debt will take over 12 years to repay.

YouGov research commissioned by Callcredit has also shown that 44% of young people aged 18 – 24 are not saving any money at all, but at the same time 64% are more concerned about their financial situation today than in April 2008.

As the average student debt is £15,700 and the average student starting salary is £22,300, the monthly repayments for a graduate with this debt would start at £54.00 a month and would take up to 12 years to repay taking into account an annual average wage increase of 4.6%. Whilst of course inflation, interest rate, salary and bonus changes affect the size and rate of repayments, this demonstrates what a tough financial environment students are graduating into.

What is worrying is that the survey found that some 18 – 24 year olds are spending over 50% of their salary on unsecured debt. Those coming out of full-time education need to start saving straight away rather than amassing dangerous unsecured debt, which can pile up over the years, crippling people financially in the future. Debt today can lead to mortgage rejection, arrears and even repossession in the future.

Owen Roberts, head of credit report provider at CallCredit says: “Managing your finances as a student or a new graduate can be a tough. As a graduate in particular, trying to balance what may be a relatively low income with high debt levels, rent and other costs of living can prove very tricky.

"Crucially, it’s at this time of life you may start to see the impact of your credit history, as lenders will use it to decide whether to lend to you and at what rate. While each lender has different criteria, key to working up a good credit score is showing a consistent ability to service your debt levels, so paying phone bills, rent, credit cards, student loans etc on time is important if you’re looking to secure the most competitive deals.”

SOURCE: Callcredit, 17/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the full story

It's not just older homeowners who are struggling with debt - the under 25s are also finding it hard to get by right now, but it's never too early to seek out financial advice.

The Citizen's Advice Bureau is highlighting the issue by launching a new service to help young people, alongside a film project aimed at highlighting debt problems to those who may not even grasp what sort of trouble they are in.

It says over 50,000 under 25s visited a CAB in England or Wales in 2008/09 to get help on debt - recent research undertaken by Citizens Advice and young people's charity YouthNet showed a quarter of 16-24 year olds have suffered mental health issues because of their finances.

One young person told Citizen's Advice: "I was getting loads of letters telling me to pay the money, but I just ignored them and put them in my bottom drawer. I knew I needed to get help."

Another says: "Because of my debt, I got even more unhappy. Until recently I hadn't even told my parents about my situation. I felt trapped and alone and didn't know where to turn to get help. I didn't want anyone to find out but I really wanted to sort my life out. But I'd say to anyone in the same situation as me - ‘you're not alone'."

No one is alone when it comes to debt problems. There are so many people out there to help get you back on the straight and narrow where your finances are concerned. It just takes a professional to explain the situation and explain the solutions. They might not always be easy solutions, nor ones that will solve the debt quickly, but they will work for the long-term.

SOURCE: CAB, 12/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the complete article

The number of mortgages for people with less than 10% downpayment have dwindled to almost nothing as more and more first-time buyers are left out in the cold.

Since January 2007 the number of mortgage products available at 90% loan to value has fallen by 97%, figures from moneysupermarket.com show. The website says just 102 mortgage products are currently available at 90% LTV compared to 3,148 such products two and a half years ago.

Moneysupermarket.com says rates on 90% LTV deals have actually increased marginally over the same period, despite the base rate falling to just 0.5%. It also says that in January 2007, the average 90% LTV mortgage deal was just 1.2% above the Bank of England base rate, the average difference now is 5.73%.

Louise Cuming, head of mortgages at moneysupermarket.com, says: "The Government has failed to get mortgage lenders to open their books to first time buyers. A 10% deposit is all most first time buyers can hope to afford, so by pulling 90% LTV deals off the shelf, and increasing rates on the remaining deals, providers are keeping first-time buyers out of the market - which simply exacerbates market stagnation.

"Lenders remain for the most part entirely focused on how large a deposit potential borrowers can provide. However, if they were to take a more balanced view and place as much importance on affordability and credit profile, they could offer competitive deals with a higher LTV to those who clearly demonstrate they can and will make the required repayments."

There is no doubt that it is very hard to get a foot on the ladder, but with some help and some good advice it is possible. By talking to a mortgage adviser you may learn ways to help your money grow, so as to be able to afford your first mortgage. It might mean investing or taking out another financial product, but whatever you do, an adviser will steer you on the right path.

SOURCE: Moneysupermarket.com, 13/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the full story

The Citizen's Advice Bureaux has revealed that millions of people have visited them with two million new financial problems as more and more people find themselves in financial difficulty.

It says debt remained the biggest volume of enquiries for the service with 1.93 million new debt problems advised on by bureaux, an 11% increase on 2007's figures. There was a 114% increase relating to redundancy, a 49% increase relating to mortgage and secured loan arrears, with the bureau dealt with 95,342 enquiries. There were also 137,406 new enquiries about bankruptcy, up 24% on yearly figures.

A recent profile of CAB clients revealed that debt clients owe an average of £16,971, an amount it would take an average of 93 years to pay off at a rate they can afford. The most common reasons for debt were low income, over-commitment, illness or disability and job loss. But irresponsible lending, poor financial skills and increases in the cost of living had also played a significant part in people's debt problems.

David Harker, chief executive Citizens Advice says: "These new figures show the human impact of the recession as more people are coming to the Citizens Advice service for help. In particular we are seeing an enormous rise in the number of people turning to us for help because they have lost their job, or are struggling with debts or having problems keeping up with their mortgages.

"A recent funding boost has enabled us to see more clients, and train more advisers but we are expecting to see many more people struggling with severe debt and related problems as the recession continues to take its toll.

"It is therefore absolutely vital that all lenders and creditors treat people in arrears fairly and sympathetically, negotiate with borrowers in trouble and do everything they can to help ease their debt problems and avoid adding to them."

SOURCE: CAB, 10/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Click here for the original article

The average credit card purchase rate continues to increase, so if you have outstanding credit card debt it might be time to take action.

According to MoneyFacts, the average credit card rate now stands at 18.1%, up from 16.3% two years ago. This may not seem like a huge hike, but in this environment every penny counts. Also as the interest rate rises it makes it more dangerous to allow your credit card balance increase also.

Michelle Slade, analyst at Moneyfacts.co.uk commented: "The increase comes from a combination of card providers raising rates, withdrawing competitive deals and the launch of new cards onto the market with higher APRs than we previously may have seen."

Slade says in the last six months, twelve cards have increased rates - this is worrying, especially because many people simply do not keep up with any rate changes on their cards. Do you know how much you pay in interest each month? If it's just the minimum, you might be just treading water - the website says that customers who repay just the minimum will be hardest hit now with an additional £408 in interest now being payable on a balance of £2,000.

She says: "With only a handful of cards on the market linked to tracking base rate, very few have seen any benefit from the current all time low base rate.

"Rising unemployment means that the risk of customers defaulting on their card repayments has increased, which is being passed on through higher rates. If customers are struggling with repayments, unsecured lending is one of first casualties as customers fight to keep hold of their property."

If you have a large credit card balance there is little chance of a reprieve for you. Rates are rising so it will be harder to pay off your debt. Talk to a financial adviser about what can be done about debt in this credit crunch; you may be able to remortgage, you may be able to take out a new loan altogether or you may have to seek alternative ways to make your unsecured, risky debt a bit more secure.

SOURCE: Moneyfacts, 04/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the full story

Lenders could make an extra £20.1m per month from unsuspecting mortgage customers who are coming off their mortgages and moving onto standard variable rates.

MoneyExtra.com says that while banks and building societies have dramatically cut savings rates to an average rate of 0.58%, the average SVR on mortgages is 4.66% above base rate, compared to only 1.9% per cent in Spring 2008 – which is a 145% increase in income in just 12 months.

Richard Mason, managing director of Moneyextra.com says: “This is blatant profiteering by our lenders, they are shoring up their balance sheets by charging huge rates for existing borrowers, but offering tiny rates to savers. While a lot of deluded customers have recently taken advantage of a reduction in their monthly mortgage payments, what they fail to understand is that the full benefits of the rate cuts are not being passed to them."

Six out of ten mortgage holders have expressed concerned about what will happen to them and their finances once their fixed deal comes to an end. Many feel like they do not where to turn and many more are simply confused by what is going on around them and their mortgage.

Talk to a mortgage adviser about your deal. Maybe you are paying too much on your SVR, maybe you could find a lot better fixed or tracker mortgage out there. Even if you are on the best rate you are likely to secure right now, it is still good to talk to someone who understands mortgages and can help you understand your situation better. Ignorance will only lead to abuse, so get smart and get informed about your mortgage situation today.

SOURCE: MoneyExtra.com, 04/06/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the full story

Right now you may be met with a lot of people trying to offer you 'credit repair' schemes - be warned and be skeptical of these so called helpful financial products.

Credit repair means financial products that help improve your credit score rather than drag it down; regular, unsecured debt like credit cards are risky and do not improve your financial situation so they are bad for your credit score, but 'credit repair' cards and loans are supposed to actively improve your score.

This is unlikely. Credit repair works by offering the borrower a higher rate on a less flexible product. It is hard to be accepted for, and invariably it's the job of a financial adviser to offer them. Credit repair products are not easy to deal with, and they will not leave you with more money, but they are a long-term plan product.

If you have been offered an instant, no-problems credit repair credit card or credit repair loan it will probably not help your credit. The rate is surely high, but it's an unsecured debt that, in the eyes of the credit reference agencies, doesn't make you a better borrower.

It's very easy to get caught up in gimmicks and promises right now, but they are just that, gimmicks. They may help you in the short term by offering a quick cash fix, but they will only leave you further in debt. They do not consider your other debts and your long-term plans like an adviser would. So ignore the empty promises and talk to a professional about what you can feasibly do to repair your credit and get back on track.

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

» Read the full story

If you think you are beyond the help of a mortgage broker because you cannot get a mortgage, you're wrong - a broker can do much more than just mortgages.

You may have been told that your situation right now means it's impossible for you to get hold of home finance, and that may be correct - many people in the UK who were once 'sub prime' or 'self cert' have now got nowhere to turn and will have to wait out the recession before any lenders come into the market who will offer specialised, risky mortgages.

But that doesn't mean your situation cannot be helped with a visit to your mortgage broker. For a start, your broker can help you organise your finances and point you in the right direction when it comes to making the most of your money. They will be able to help you break down income, outgoings and will use their expertise to help you make the most of your money.

They will also be able to help you seek out insurance products. Just because you are unable to get hold of a mortgage doesn't mean you shouldn't have some protection. Life insurance, critical illness cover, home insurance, unemployment cover, mortgage insurance - these are all things every homeowner should have. If you are in debt then the last thing you want to do is to risk what you have by not being covered for every eventuality.

You might even find that a mortgage broker will be able to do their magic and find a mortgage for you. Since you last checked you might find that there are a few products out there that will work with your criteria. You might even find that your credit score has improved enough so as you can now get accepted for a new mortgage or remortgage.

Just call your broker now and tell them about your financial problems - you might be surprised with what they can offer you.

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.