| 125 per cent mortgage welcomed by consumer website
A leading consumer website has welcomed Alliance & Leicester's decision to launch a 125 per cent mortgage, saying that it will help first-time buyers get on the property ladder.Recently, Alliance & Leicester said that it would offer people a 125 per cent PlusMortgage, which combines a mortgage with an unsecured personal loan.While Citizens Advice Bureau and the National Debtline have criticised the lender for offering people a deal that means that are reduced to negative equity from the start, moneysupermarket.com has welcomed the move."I believe A&L is acting with full responsibility in bringing this product to market," said Louise Cuming, the head of mortgages at the price comparison website."It's not surprising to see another lender join the 100 per cent plus market when first-time buyers continue to find it increasingly tough to get a foot on the housing ladder."Ms Cuming explained that the deal was not encouraging people to take on more debt that was appropriate, as it will "be sold via brokers and therefore borrowers can only access [the mortgage deal] after a stringent advice process."She added: "A&L is only targeting people with the propensity to take on this large amount of debt – and, in fact, lenders have historically seen lower percentage arrears in the 100 per cent plus market versus the 95 per cent sector."A recent report from Nationwide suggested that first-time buyers now have to spend £120 a month more to pay for their mortgage than they did a year ago.
6 Million Brits Consolidating Their Loans
The preferred method of debt consolidation in the UK is where unsecured personal loans are combined into one loan with a lower monthly payment. While this is a positive move in the short term, it can be fiscally devastating over the long-term if done in the wrong way. Unsecured personal loans are the preferred method of consolidating loans. The interest rate is normally lower than interest being charged on credit cards and store cards. Research from uSwitch.com revealed that a number of Brits who consolidate their loans continue to use their credit cards and store cards to create further debt. The number of UK consumers who apply for personal loans that are higher than the amount they need to consolidate their loans are using the extra money, not for wealth generating, but to maintain a higher lifestyle.
MORTGAGE DEMAND MAY BE SLOWING - BBA
Total sterling lending to the UK private sector showed a net underlying increase of 9.5bn (+0.7%) to 1,297bn. This compares with an underlying rise of 20.7bn in January and an average of 12.6bn over the previous six months. Net mortgage lending rose by an underlying 5.2bn. This was lower than both the increase of 5.4bn last month and the monthly average of 5.7bn over the previous six months. Unsecured personal lending fell by 0.2bn in February, compared with a fall of 0.3bn in January. Loans & overdrafts accounted for all of the fall, with credit card borrowing unchanged. There was a strong lending increase to real estate companies (+1.9bn) and lending to construction rose by 0.3bn, although there were decreases in lending to cold water supply companies (-0.3bn), wholesale & retail trade (-0.3bn) and agriculture & fishing (-0.2bn).
How to guarantee misery
IT is one of the saddest emails I've received in a long time: A retired couple wrote last week with a tale of financial woe that started with them going guarantor for their son to buy his first home. In a domino effect, his small business, which has loans secured against his home, is in financial trouble. The house's value has fallen, the business is in trouble, the bank is recalling its loans, the son doesn't have the money and his retired parents face losing their own home and having a pretty lean retirement. Helping first-home buyers to achieve the great Australian dream is a terrific objective and recently many banks have made it easier for friends and family members to go guarantor for the loan. Call me old-fashioned, but I always believe if you can't afford something then you save a bit longer rather than overstretching and, in this instance, running the risk of breaking families apart.
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