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Reports from a third of UK banks and seventy five percent of buildings societies indicate that 2007 will see an increase in the number of bad debts in the UK during the first three months. This is according to statements from PricewaterhouseCoopers (PWC). This will be the sixth consecutive financial quarters where bad debt levels increased.

PWC’s spokesman stated: “We know there has been a problem with bad loans rising in 2006 and… one third of banks are still saying they think it will keep rising because of the level of personal insolvencies.” He also added: “Traditionally the main reason for people defaulting on loans is divorce or unemployment but this time people are unable to pay their debts because they have simply borrowed too much.”

He added that that banks and financial institutions in the UK have major concerns over the levels of bad debt, and that the wrong type of consumer is being given an IVA arrangement defeating the purpose, and putting the consumer in a no-win situation.

Analysts estimate that thirty thousand UK consumers may become insolvent in the first quarter of 2007.

Consumers who should be looking toward a debt consolidation loan, or a bad credit loan from a bank, are being encouraged to take out an IVA, even though the company has reasonable doubt over their ability to make repayments.

Bad credit loans have higher interest rates based on the consumer’s credit rating. This makes it easier for IVA firms to convince consumers that bad credit loans are not a viable option for them, when, in fact, the bad credit loan is a more financially responsible choice.

More than a third of homeowners face the prospect of working into retirement just to pay their mortgage according to new research from current account mortgage provider The One Account.

• 36% of homeowners predict they’ll be at least 60 before they own their home
• 43% of homeowners believe their mortgage prevents them from saving

The research also shows that the size of the UK’s mortgage debt is preventing people from saving with 43% admitting that they are unable to put anything aside for a rainy day or more importantly for their retirement. For 25-29 year olds, 17% admitted that their mortgage repayments are preventing them from starting a family.

The research shows how many people see owning their home as a priority above all others; 20% of homeowners believe they won’t pay off their mortgage until they are in their 50s and as a result, many believe that they won’t be able to live the lifestyle that they would like to live in their retirement years.

“Paying off a mortgage should not mean that people have to put their life plans on hold,” says Debbie Milsom of The One Account. “It is worrying that homeowners perceive that it will take them until they are in their 60s before they pay it off when they should be spending this time preparing financially for their futures. A mortgage is perceived by many to be a huge burden but there are ways that people can manage these payments in a flexible way - giving them the opportunity to pay off their mortgage early.”

The One Account have created a combined current account and mortgage so that overpayments can be made at any time. Home owners interested in paying off their mortgage early can get an idea of term reductions by checking out The One Account’s Mortgage Shrinker at  www.oneaccount.com.

~ Interfinancial brings you hot financial news and bulletins we feel will be of interest to homeowners seeking secured loans. We seek out the best rates for our clients. Poor credit history need not be a bar to getting a secured or unsecured loan.

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