Secured loans offer a secure future

This month\'s prize for stating the obvious must go to a member of the Bank of England\'s Monetary Policy Committee who called for consumers to show more restraint in their spending to help curb inflation.

MPC member Dr Andrew Sentance, who sees control of personal spending as a key weapon in fighting inflation, seems to have a talent for recognising a situation whereby closing the stable door after the horse has bolted is a positive.

Debt levels, depending on who you listen to, are running at 1.2trillion and rising with personal spending through credit cards, loans and mortgages at record levels. So the idea that voluntary restraint is going to be exercised by the public seems optimistic at best.

In this instance, the horse that bolted had a long and happy life outside the stable and closing the door now is more a matter of stopping it banging than preventing the animal from leaving the premises.

Perhaps this is just a forlorn attempt to halt a juggernaut and the only weapon left in the Treasury’s armoury is to raise interest rates and hope that the payment shock will succeed where calls for personal restraint will not.

Is this the only plan in its locker? What seems to have been forgotten is that there has probably never been a better time to borrow. In recent times we have enjoyed the lowest aggregate interest rates this country has experienced in living memory. Even with the recent succession of base rate increases we are nowhere near the levels of yesteryear.

The secured loans industry provides a vital service for thousands of clients who are using property equity to purchase goods and services in a cost-effective and simple way.

This is going to become even more important as interest rate increases start to bite and consolidation applications increase. Rate rises are a blunt instrument and the UK will pay the price if, along with rate rises, the general health of the economy starts to suffer.

Having lived though a decade when conspicuous consumer consumption has been encouraged, it is hardly surprising that the British public has a taste for spending and borrowing.

It’s a little late in the day to lecture on consumption, but using rate increases as the only brake on spending might be the catalyst that moves the population from being healthy consumers to debtors.