Low base rate may not help homeowners struggling to pay mortgage increases says Payplan.

Payplan, a leading provider of free debt advice, has today welcomed the Bank of England’s decision to leave the base rate at 0.5% – but say it may not help homeowners already struggling to pay mortgage increases.

Jason Eaves, a Director at Payplan, said:

“Whilst the base rate has remained unchanged we have already seen a number of mortgage lenders increase their SVR (standard variable rate), and the Euro crisis could push the cost of mortgage borrowing even higher.

“Many households have faced a sustained squeezing of their incomes in the last few years while prices have continued to rise. Now an increase in their mortgage payment could be the straw that breaks the camel’s back.”

The group who will feel the economic pinch the most are the 800,000 mortgage customers who have struggled to meet their mortgage commitments and already been provided with some level of mortgage forbearance by their lenders.

He added:

“Prior to the credit crunch, financial deregulation, low interest rates and supreme confidence in the economy, led to a significant expansion of credit.  For many low and middle income earners spending exceeded earnings for the ten years leading up to 2007 and this was fuelled by increased borrowing.

“Whilst there is evidence that some consumers have been using the windfall of super low mortgage rates to repay personal debt, there are many who continue to have significant unsecured debt outstanding.

“At Payplan we have almost 20 years’ experience of helping people with debt problems.  We know some consumers take out new debt just to make payments on existing loans. This may provide some breathing space but is not sustainable.

“Our advice to anyone who is worried about falling into debt is to seek help as soon as possible. Further information is available here on our website or we can be contacted free on 0800 294 5205.”

For further information, or to arrange an interview, please contact Jane Jenkins, PR Manager on 01476 581 279.

Written by Gemma on June 7th, 2012

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Posted in: homeowners,increases,mortgage,Payplan,struggling

Living cost increases results in more debt for Brits

According to a recent report a rising number of Brits are falling into increased debt as a result of trying to keep up with the soaring cost of living on wages that have been stagnant for several years in some cases. Many households are struggling to keep up with the soaring cost of living, and some have been left with no other choice but to borrow money on credit cards, loans and overdrafts to fund the rising cost of living.

The report claims that Brits have now taken on the highest levels of debt since May 2009, which was the peak of the recession in the UK. Brits now have around £208.6 billion in outstanding debts on credit cards, loans, overdrafts, etc. which equates to around £9070 of debt for every household in the country. Petrol, food and energy costs are amongst the essentials that have increased in price, putting severe strain on household finances.

Excluding mortgage debt, the level of household debt in the past year has gone up by around £5 billion in total, which is the biggest increase since the recession according to the Bank of England. In the past month alone the level of debt has increased by £629 million in total, with economists stating that people have become reliant on credit simply to keep up with their rising bills.

One leading economist stated: “The rise in unsecured consumer credit suggests increased ‘stressed borrowing’ is occurring, with more people having to borrow to help finance their spending. This is a consequence of the extended squeeze on their purchasing power coming from elevated inflation, low wage growth and tighter fiscal policy. In addition, job losses are rising.”

Tags: unsecured consumer credit, cost of living, debt, Many households, outstanding debts, household debt

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Posted in: Brits,increases,living,results

Debt reduction hampered by rent increases

Tuesday 1st February 2011

A study by Paragon Mortgages has revealed that more than half of the landlords they recently interviewed said they were planning to increase the amount of rent they charge by at least four per cent in the coming year.

The website http://www.money.co.uk/ has consequently calculated that this will lead to the average UK rent increasing by £550 per annum, meaning many Britons will be put under further financial strain at a time when money worries are already at the forefront of many people’s minds.This increase is due to the problematic state of the housing market, with many people finding it increasingly difficult to get onto the property ladder. Speaking to moneyworries.co.uk, Hannah Maundrell – head of content at money.co.uk – explained: “The mortgage market has still not really opened up so many people who want to buy have no option but to keep renting. Unfortunately for them, simple supply-and-demand economics means that this pushes up the cost.”This increase in the price of being a tenant is just one of the costs of living set to go up in the near future – along with, among others, fuel and food prices – which will only add to the obstacles barring Britons from paying off their debts. Personal debt in the UK has reached nearly £1.5 trillion, and during the second quarter of 2010 banks wrote off £3.5 billion of consumer borrowing, up from £2 billion during the first three months of the year. Personal insolvency rates have also risen to record levels, and the situation is compounded by the lack of access to credit that the average Briton is currently experiencing.
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Posted in: hampered,increases,reduction