Past Articles for the Creditor Behaviour Category

Banking groups across the UK expect to see the credit squeeze continue for the next three months at least, according to a recent survey.

A poll of money lenders by the Bank of England has established that financial service firms are reluctant to offer borrowing deals to consumers and each other in the current economic climate.

Millions of people are struggling to become debt free but the bank’s survey suggests that lenders are looking to increase their interest rates and offer fewer deals.

In addition, the recent research found that more and more homeowners are defaulting on their mortgage repayment demands.

“Along with news that service sector activity contracted in June, tighter credit conditions heap pressure on the Bank of England to hold off from raising interest rates despite current elevated inflation levels and risks,” said Howard Archer from the analyst firm Global Insight.

The Bank of England opted to reduce the base rate of interest on two occasions earlier this year, which came as welcome news for borrowers with debt management problems.

By Giles Stevenson

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July could be a painful month for thousands of homeowners around the country as their fixed-rate mortgage deal comes to an end, it has been claimed.

According to Moneysupermarket.com, mortgage deals worth close to £30 billion will expire over the course of the month and the resulting debt management problems will put a serious strain on household finances.

A slight majority of people whose fixed-rate mortgage deal is coming to an end have been looking into their borrowing options but almost one in five will struggle to find an arrangement they can afford.

“Banks are cherry picking customers, leaving many people unable to find affordable deals to service mortgages taken out in better times, when they were plentiful and easy to get hold of,” said Louise Cuming, head of mortgages at Moneysupermarket.com.

A report from LV= last week suggested that an increasing number of British homeowners are aiming to avoid debt management problems by renovating their property rather than relocating.

By Dan Mather

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The government’s announcements that it intends to help the credit union sector in the UK have been welcomed by the price comparison company Moneysupermarket.com.

According to the web-based business, families will have a better chance of dealing with their debt management problems if they can access credit through unions rather than regular company lenders.

“Cheap debt is a thing of the past, with many Brits finding it increasingly difficult to be accepted for any form of credit,” a statement from Moneysupermaket.com read.

“Therefore, the government’s suggestion that it may make it easier for families to access credit via credit unions from next year is a step in the right direction.”

However, the price comparison firm did note that credit unions have a history of “financial instability” that has resulted in losses for individuals and families involved.

Howard Archer from the Global Insight research firm recently predicted that levels of distressed borrowing would increase as the year goes on and more people struggle to deal with their debt management problems.

By Giles Stevenson

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The government has announced the introduction of measures it says have been designed to bolster the efforts of credit unions.

Economic secretary to the Treasury Kitty Ussher has suggested that the struggles facing British families in becoming debt free mean that they need access to affordable credit more than ever.

With this in mind, Ms Ussher has proposed the introduction of a legislative reform order that would aim to do away with “outdated and unnecessary restrictions that are limiting mutuals from growing and competing”.

The changes would mean that groups could join a credit union and that membership criteria can undergo “liberalising” procedures more generally.

“We want to make it easier for families to access the affordable credit on their doorstep that is offered by credit unions, rather than having to turn to more expensive schemes, or at the extreme end, illegal loan sharks,” said Ms Ussher.

Chancellor Alistair Darling recently called for mortgage lenders in the UK to treat their customers fairly when it comes to the issue of relevant fees.

By Frank Charlton

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There have been calls for the leading high street banks in the UK to treat their mortgage customers fairly.

According to Fool.co.uk, the current economic climate means that banks can and in some cases are offering mortgage deals that are relatively unfavourable to borrowers.

Many people could find themselves with a debt management headache as a result and the price comparison firm has reminded banks that their customers will remember the kind of service they received when they have a wider choice of products and providers.

“If they [banks] exploit their privileged position now, then they need to be ready to duck for cover when the pendulum swings back the other way,” said David Kuo, head of personal finance at Fool.co.uk.

David Dooks from the British Bankers’ Association said last week that despite the money problems being faced by families across the country the remortgaging market has been “holding up”.

By Giles Stevenson

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Using a credit card to gain a cash advance should be an “absolute no no”, it has been suggested.

According to Moneynet.co.uk the cost of taking out extra cash via a credit card has risen by around 5.5 per cent over the course of the past two years and should be avoided.

By using a cash advance facility, consumers are running the risk of adding significantly to the scale of their credit card debt and finding themselves in an unmanageable financial situation.

“It’s not surprising to see lenders increasing rates in this area as taking cash on your credit card is a sign that you’re potentially facing financial difficulties,” said Andrew Hagger from Moneynet.co.uk

“Unfortunately some people will be getting to the stage where they can’t make ends meet and will pay whatever interest and charges it takes.”

According to Credit Action, consumers in the UK pay a total of almost £258 million every day to service the interest on their collective debt management burden.

By Giles Stevenson

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There is no end in sight for the ongoing downturn in the UK’s housing sector, according to the majority of people quizzed by YouGov recently.

Close to three-quarters of the British consumers questioned said that they expect to see the average price of property in the UK decrease over the course of the next 12 months.

Falling property prices could be bad news for anyone with a mortgage-related debt management burden but the prospects for the housing sector look unfavourable as far as homeowners are concerned.

“It is clear the positive outlook that has characterised the property market for the last few years is now a thing of the past, and people expect prices to fall over the next year,” said Adrian Coles, director general of the Building Societies Association.

Howard Archer from Global Insight recently suggested that the property market in the UK is “being throttled” by a lack of affordability and tightening lending criteria.

By Frank Charlton

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Chancellor Alistair Darling has called for an end to what he has described as “rip-off” fees being charged by mortgage providers in the UK.

Speaking to the Liverpool Daily Post recently, Mr Darling expressed concern that homeowners who are already facing debt management difficulties are being obliged to pay fees they cannot afford.

He went on to suggest that in some cases mortgage lenders were effectively taking advantage of their customers who are looking to secure a fair deal when they come to remortgage.

The chancellor said: “We have met with the Council of Mortgage Lenders to try to reach an agreement to ensure that people are treated fairly, but if that isn’t happening, I will ask the Financial Services Authority to pursue the matter.”

A report recently from Equifax on behalf of ITV claimed that an increasing number of Britons using credit card debt to meet their mortgage repayment demands.

By Giles Stevenson

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The scale of credit card borrowing across the UK continued to increase last month, according to figures from the British Bankers’ Association (BBA).

Members of the association reported that their customers took on around £7.5 billion worth of added credit card debt over the course of May, which was higher than the average for the past half-year.

Furthermore, the data demonstrated that credit card debt funded more than 100 million purchases last month and more spending was done on plastic during the period than the same month of last year.

Statistics director at the BBA David Dooks said: “People spent more on credit cards, but repayment levels were lower than expected in May and after April’s busy month with people putting money into Isas, personal deposits were not as strong.”

In related news, the Conservative party recently called for the government to clamp down on store card credit lenders who it claims are luring people into levels of debt they cannot manage.

By Dan Mather

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Taking money out of an ATM while on holiday can prove to be an expensive way to access your own cash, it has been claimed.

According to a report from MoneyExpert, cash withdrawals made outside the UK will cost Britons a collective total of close to £284 million, which for many will mean adding to their debt management burden.

Generally, anyone using their debit or credit card to withdraw money out abroad can expect to pay a few pounds for the privilege but the costs vary depending on the financial service provider.

“Many people are likely to be unaware of the charges they can incur for withdrawing cash abroad,” said Sean Gardner from MoneyExpert.

“If money is tight this year we highly recommend that travellers do some research and find the best deal available.”

While many people are struggling to become debt free, almost two-thirds are likely to overspend on holiday this year, according to a recent study by National Savings & Investments.

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