View more on these topics

IVAs could boost sub-prime

Cobalt Capital says a boom in personal insolvencies in 2007 could increase competition in the sub-prime market and blur the margin between prime and sub-prime rates.

The prediction comes as the personal insolvency practice of accountants Grant Thornton predicts that there will be a whopping 30,000 personal insolvencies in the first three months of this year.

Of this figure, Grant Thornton says 10,000 will be due to excessive Christmas spending.

Last year a record 1.4bn was written off as a result of individual voluntary arrangements, research by KPMG has revealed, with an average consumer entering an IVA owing 52,000.

But this year Grant Thornton predicts things could be even worse due to interest rate rises, sky high utility bills and increasing unemployment.

Citizens Advice Bureau says that this month it expects to exceed the 140,000 debt problems that it dealt with in January 2006 as a result of the nation’s Christmas debt hangover.

Andrew Montlake, partner at Cobalt Capital, says the obvious effect of growth in personal insolvencies will mean an expansion of the sub-prime sector.

But he adds: “The question is that as competition for these customers increases, how far will rates and criteria improve? We could soon see little difference between prime and sub-prime rates.”

Last week also saw the launch of IVA.com, a website designed by accountants and lawyers with the aim of informally regulating the IVA industry. The website makes industry-wide customer feedback publicly available in a bid to reduce mis-selling, raise awareness and encourage competition for consumer benefit.

Recommended

Diamond Lifestyle achieves its AIM

Diamond Lifestyle has successfully completed its move to become quoted on the Alternative Investment Market with the reverse takeover of an existing AIM company called Enterprise North

PMS generates 1bn for MEX

Mortgage Express has revealed that Premier Mortgage Service generated 1bn of applications across its product range in 2006.Louisa Sedgwick, senior key account manager at Mortgage Express, says:This milestone reflects the competitiveness and innovation of our productsin each of our chosen markets and the ongoing strength of our relationshipwith intermediaries. “We value the relationship we have […]

Diamond completes AIM listing

Diamond Lifestyle has become a quoted company on the stockmarket through the Alternative Investment Market.The specialist in the Right To Buy market is planning to expand its service in 2007 by offering intermediaries a Right To Buy fulfilment service. Mortgage brokers will be able to refer Right To Buy clients directly to Diamond, who will […]