» Click here for the original article

More people are looking to zero-interest store cards and catalogue offers to keep spending in the credit crunch, a strategy that will almost certainly see them fall further into debt.

According to the Finance and Leasing association, the amount borrowed through consumer schemes has rocketed by £231m, or 23%, in March 2009 from last year's figures.

It might seem like good financial sense - buy now, pay later. But this just pushes further into unsecured debt, which is never a good thing. On top of that, the rates on these deals may seem great to begin with, but after time you may be hit with huge repayment bills.

Geraldine Kilkelly, head of research and chief economist at the FLA, says: "Overall, consumer finance is still being hit by the downturn. With a depressed housing market many people are choosing to improve their homes and replace furnishings rather than move house. Retailers and lenders have been offering interest-free credit and deferred payment deals on store instalment credit.

"We have seen a similar trend in recent months in the motor market. The proportion of car sales represented by instalment-type credit available in the dealerships has grown from 48% to 54% over the last year. This is mainly a response to competitive pricing and reduced availability of other sources of credit."

Simply, if you do not have the money, don't spend it. Unsecured debt is the worst debt to have - it's expensive, it's hard to pay off and it can severely affect your chances of getting hold of credit in the future.

SOURCE: FLA, 26/05/09

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

New figures from Confused.com have found that people now owe more than they earn in a year - a worrying fact and one that must be changed as soon as possible.

Research from the comparison website has found that, on average, for every £1.00 earned in each year's salary, a person will owe £1.02 in debts.

The worst offenders are residents in Kingston-Upon-Thames, who owe 169% of their annual income, while people from Manchester owe 51% in debts of every pound earned in their annual salary.

Residents in Surrey's Camberley are the most happy in spending on the plastic with the average person owing more than £2,000 on their flexible friend. And as credit becomes less readily available, residents of Chester-le-street are left with debts from previous credit, owing a whopping £3,340 for hire purchases and loans.

Gemma Stanbury, head of savings, loans and debt at Confused.com says: "This study provides a significant insight into the lending responsibilities and borrowing commitments of people in the UK. As we face continued uncertainty and increased financial pressures, it is good advice for all to become more aware of what they are spending and on what. If debt problems are spiralling, debt management programmes are available which will allow consolidation of your debts, requiring a fixed monthly payment."

Every borrower should write down all their income, outgoings and debts - if debts outweigh everything else, it's time to change your behaviour. Talk to a financial adviser about taking steps to redress the balance and to get your cost of living under control.

Those who allow spending and debt to take over will be the ones who fall deeper and deeper into trouble until repossession and bankruptcy are not far away. So don't let your spending and your debts take over - take control and turn the tables on debt.

SOURCE: Confused.com, 27/05/09

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

» Read the full story

The average adult believes they need a 17% income rise to comfortably meet household bills as the cost of living continues to rise in the recession.

New research from MetLife shows that nearly six out of 10 adults are struggling to meet bills comfortably as the recession tightens the screws on household finances. The study also revealed that one in 12 believe they need a rise in income of 50% or more to get by in 2009.

Just a third of adults say they do not need to increase their income in order to comfortably pay household bills while 58% say they need substantial income increases.

Dominic Grinstead, strategic development and marketing director of MetLife UK, says: “The economic shocks of the past six months have had a profound effect across the country with people increasingly looking for safety.

“The need for safety is illustrated by the desire for average increases in income to rise. In the current climate nobody is going to get anything like that as a pay rise unfortunately but it is interesting as a gauge of how far away from safety some people feel."

We would all like a little more money in our pockets, but a recession means maybe another year of static wages. So talk to a financial adviser about planning your finances more prudently, rearranging your outgoings and maybe finding new loans and mortgages to make sure your outgoings are at a minimum.

SOURCE: Metlife, 11/05/09

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

» Read the full story

Repossessions have risen by 50% over the last year in the UK, highlighting how critical it is to seek out mortgage help before it's too late.

The Council of Mortgage Lenders found that there were 12,800 repossessions by mortgage lenders in the first quarter of this year, compared with 8,500 in the first quarter of 2008.

Although repossessions are still rising, the CML now thinks its 75,000 forecast looks pessimistic for the year as a whole, and expects to revise the figure downwards in its next housing market forecast update.

Michael Coogan , CML Director General says: "Lenders genuinely want to help borrowers where borrowers are committed to working with them. It is quite clear that the number of arrears cases is rising far more markedly than the number of repossessions."

Louise Cuming, head of mortgages at moneysupermarket.com, says: "Many people in dire financial straits may still hope that if they ignore the problem it will go away, but it won't. Taking swift action and seeking help early on is always the best policy, and lenders are very willing to help people who address a monetary problem before it becomes a crisis."

Coogan adds: "The key message continues to be: talk to your lender as soon as you identify difficulties emerging, and take advice from an independent adviser if you have other debt issues as well as your mortgage. Lenders do not want to repossess if a realistic alternative solution can be found."

SOURCE: CML, moneysupermarket.com, 15/05/09

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

» Read the complete article

Indebted customers repay nearly twice as much to creditors if they decide how much to pay themselves, according to Clarity Credit Management Solutions.

Customers who were in control of who they pay and how much they pay handed over 90% more to their creditors in April than customers being managed through the traditional letter and telephony process.

Of course you can only deal with your own finances if you get on top of them in time - too late and you will be at the mercy of bailiffs, judges and lenders. The sooner you can deal with your debt problems, the sooner you can get to grips with your own debts and work your way into the black.

Garry Stran, chief executive of Clarity says: “Customers who self-serve when setting up their debt repayment plan always pay more – they’re empowered by being given the responsibility to choose how much they can afford each month.

“They don’t think, ‘how little can I get away with’, they think, ‘how much can I afford?’ People consistently pay more on average on the site than they do when they set up a repayment plan in more traditional ways.”

If you want to know how much you can afford to pay back, safely, talk to a financial professional. Good debt management is all about finding a balance, working hard and continuing to make the most of your assets.

SOURCE: Clarity, 13/05/09

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

Home affordability for potential first-time buyers has improved substantially since mid 2007, according to the latest Halifax survey into first-time buyers in the UK.

The lender found that in the first quarter of 2009, the average price paid by a first-time buyer was affordable for someone on average earnings in 21% of local authorities; compared to just 6% in the Autumn of 2007.

The house price to earnings ratio - a key affordability measure - is lower now than it has been for more than six years, according to Halifax. Further, the house price to average earnings ratio has declined from a peak of 5.84 in July 2007 to an estimated 4.34 in March 2009; a fall of 26%.

Martin Ellis, housing economist at Halifax, says: "There has been a marked improvement in housing affordability for potential first-time buyers in many parts of the UK over the past 18 months. The significant reductions in house prices, relative to average earnings, has resulted largely from the decline in house prices since the autumn of 2007. As a result, housing is at its most affordable, on this key measure, for more than six years."

Halifax has found that mortgage payments, relative to earnings, are now below the long-term average of 37% recorded over the past 25 years and stand at 31%. The problem is that the number of first-time buyers is at a very low level despite the improvement in affordability - the significant tightening in lending criteria has much reduced availability in mortgages at high loan to value ratios, preventing many potential first-time buyers entering the market.

Ellis says: "Conditions in the housing market are likely to be tough during the remainder of 2009 despite the improvements in affordability. Increasing unemployment, low consumer confidence and the constraining effects of the continuing dislocation of the financial markets on the availability of mortgage finance are all likely to exert downward pressure on the market over the coming months."

SOURCE: Halifax, 02/05/09

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

Almost three quarters of Brits have steered clear of more borrowing since the recession hit, looking to save instead of spend during the downturn.

Fairinvestment.co.uk has found that Brits are steering clear of more borrowing. It found that the average debt on credit and store cards totalled more than £2,000, while the average loan not including mortgages, was in excess of £3,800 last August - but those figures have shrunk considerably.

But, as credit criteria and purse strings tighten, new research from Fairinvestment.co.uk has found that 74% of Brits have refrained from borrowing more money. This is good news - people are realising that 2009 is the year to save and batten down the hatches rather than keeping spending.

But of the remaining 26% of Brits who have borrowed more since the recession took hold, some have borrowed through more than one method. The research found that 7% of these have taken out an additional credit card while 6% have chosen to borrow money from friends and family. A further 5% have succumbed to another personal loan, while three per cent have turned to short term credit such as pay day loans.

Also, the website found that nearly one in ten people have got themselves into debt for the first time during this downturn, as 5% said they have had to get their first personal loan, while 4% have had to take out their first credit card.

Sharon Bratley, chartered financial planner at Fairinvestment.co.uk says: "The fact that the majority of people are steering clear of getting into further debt is encouraging, and a sign of the changing economic climate.

"Not long ago, people thought nothing of getting another loan or credit card, as credit was easier to secure, but as lenders tighten their criteria it seems people are taking note.It is also encouraging that more than a quarter of Brits would use any extra cash to pay off existing debts, as this should be a priority for those who can afford it and are not experiencing financial difficulties."

SOURCE: Fairinvestment.co.uk, 30/04/09

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

» Read the complete article

Britons are adopting a simpler lifestyle as the credit crunch rolls on by shunning flashy or complicated purchases in order to make their money go further.

According to Abbey, over half of Britons said they are more likely to buy simple ‘no frills' products now than they were a year ago, suggesting a trend towards cheaper and simpler shopping, either by necessity or by choice.

The research also found a year on year increase in people's preference for buying secondhand goods. The biggest change seen was among those prepared to buy secondhand ‘white goods' such as fridge-freezers or washing machines - now almost a third of people will consider second-hand electrical goods.

The survey also revealed two-fifths of people say value for money is the most important factor when they buy something.

Roger Lovering, managing director of Abbey Credit Cards, says: "It's no surprise to see Britons reassessing their spending habits at a time when every penny counts, and it's encouraging that so many of us are embracing the ‘no frills' lifestyle. In today's difficult economic climate, reviewing your monthly expenditure to find ways you can make your money go further is absolutely essential, which is why straightforward, good value products are the order of the day. Britons' current priorities are very much about good financial management and value for money."

People have to do all they can in this credit crunch to save, because saving is now the only way borrowers can improve their chances of securing credit. The more you save, the more you can pay off and then in turn the better your credit score becomes.

SOURCE: Abbey, 28/04/09

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

There has been a lot of press about the Government's continuing attempts to aid all those who are finding it hard to keep up with their mortgage repayments - but are you able to take advantage of this aid, and if so what do you have to do?

The Government, over the last six months, have released a raft of measures to aid the market - Income Support for Mortgage Interest, the Homeowner Mortgage Support Scheme, the Mortgage Rescue Scheme - and many more. Of course, in the spirit of bureaucracy, the names and the explanation for the schemes are confusing and impossible to decipher. That's why you need to seek some professional advice to get your head round the help.

Basically, there are several options open to people, depending on their situation and the level of debt they have found themselves in. It also depends on the mortgage lender they are signed up with, as different lenders are offering different measures. Help can range from payment breaks or a reassessment of the rate to two years of deferred mortgage payments.

The problem is the schemes have one million and one boxes that have to be ticked before any help can be sought, and that will take someone with an expert knowledge in mortgages.

A mortgage adviser will be able to look at your situation and give you all the advice you need in accessing mortgage aid. The banks and the building societies have all pledged to do all they can to keep their borrowers in their homes, because repossession helps no one, so there is a good chance you will be able to get help. The key is finding the right help at the right time.

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 Budget has offered those facing mortgage difficulties a helping hand through 2009 - and it couldn't have come sooner.

The Chancellor Alistair Darling revealed the Government would be extending the Stamp Duty holiday on properties under £175,000 until the end of the year. Surveyor eSurv says that means circa 55 per cent of residential property will be exempt from the tax.

There is also a further six-month extension of the Mortgage Interest Scheme, which covers mortgage interest payments for people who have lost their jobs, will assist in limiting the number of homes that go to repossession. The Government has also rolled out its Homeowner Mortgage Support Scheme, which allows many borrowers the chance to defer 70% of their mortgage repayments for two years.

The Budget also revealed the Government would be spending an extra £80m on the HomeBuy Direct scheme, which allows first-time buyers the chance to own a percentage of a new-build property, helping them onto the housing ladder.

So what does this mean for you?

Well, if you are facing difficulty paying your mortgage, you have options. Lenders up and down the country have pledged to offer people even more support in managing their mortgages. They will look at reducing rates, offering interest-only deals or even deferring your mortgage for up to two years.

There are also options for those in severe difficulties in the form of the Income Support for Mortgage Interest scheme and the Mortgage Rescue Scheme. All of these are designed to make sure that repossessions are as rare as possible and people are allowed time to get back on their feet and sort out their finances.

And, if you want to get onto the housing ladder, the Government will offer subsidies to help you own a home. But for all these measures, you need to get some professional advice - otherwise you will not be able to access the help. So talk to a mortgage professional about what the Budget will mean to you if you are trying to get onto the housing ladder or you are trying to stay on the ladder.

SOURCE: eSurv, 22/04/09

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