Thousands of consumers in the UK face the prospect of a bleak Christmas and new year as the equity in their homes is eaten away by personal debts that are spiralling out of control, Opus Mortgages warns.
Alarming evidence collated from the mortgage and secured loan applications of 2,000 consumers in the UK reveals that a fifth of those that have requested a remortgage or secured loan in the past six months have a history of being serial debt consolidators.
Lockhart Bruce, Opus director of finance and marketing, says: “The number of people who are seemingly trapped into taking out new debt consolidation deals every six months because they are not addressing their long-term debt problems has to be a cause for concern. The fact that as many as two out of 10 people are not able to sort out their debt problems first time round suggests that they are not getting appropriate advice – or they are not being honest when it comes to addressing the true level of their indebtedness.”
Debt consolidation is one of the major reasons why, in 2003, the UK's remortgage and secured loan markets are experiencing record-breaking sales levels. Figures from the Council of Mortgage Lenders show that about a half of all activity in Britain's £270bn-a-year mortgage industry now relates to remortgaging.
Meanwhile, the value of the secured loans industry is expected to top £17bn this year, with the overwhelming majority of loans being arranged during the build up to Christmas and into the new year as consumers consolidate credit card and unsecured loan debts.