Rising interest rates means more than 230,000 people in the UK are missing loan payments each month, it has been revealed.
June 28, 2007 (Press Release) --
According to financial comparison website MoneyExpert, three per cent of loan customers have missed a repayment in the last six months, compared with just two per cent in the equivalent period last year.
It seems that homeowners are choosing to default on their unsecured loans rather than their mortgages as the former are deemed "less important".
"This is yet another warning of real financial distress and a sign that finances are being stretched to the limit by recent interest rate rises," commented Sean Gardner, chief executive of MoneyExpert.
"The concern has to be that people are missing repayments on unsecured loans because they believe there's not as much at stake as missing a mortgage repayment.
"Missing repayments is not a way to manage your finances. People doing that are risking damage to their credit rating and, potentially, court action. Burying your head in the sand is not the way to deal with financial problems."
Property purchase expert Julian King says that the situation is likely to worsen should the Bank of England choose to up rates in the near future
"The effect of a further rate rise will be devastating for thousands more homeowners.
"Although homeowners believe that selling their home could be the last-stop solution to their problems, the lack of buyers, the certainty of a July rate rise, inflation, low salary augmentation and unnaturally high asking prices means selling on the open market does not guarantee a sale at all.
"We are finding more and more people seeking an alternative solution to selling their home."
Mr King is director of National Homebuyers, the UK's leading fast purchase property firm. It guarantees to make a cash offer to buy any property quickly from vendors needing a quick sale. The company also pay for legal fees and can arrange an equity release solution, sell and rent back, allowing the homeowner to release capital in their property without the need to move out.
It seems that homeowners are choosing to default on their unsecured loans rather than their mortgages as the former are deemed "less important".
"This is yet another warning of real financial distress and a sign that finances are being stretched to the limit by recent interest rate rises," commented Sean Gardner, chief executive of MoneyExpert.
"The concern has to be that people are missing repayments on unsecured loans because they believe there's not as much at stake as missing a mortgage repayment.
"Missing repayments is not a way to manage your finances. People doing that are risking damage to their credit rating and, potentially, court action. Burying your head in the sand is not the way to deal with financial problems."
Property purchase expert Julian King says that the situation is likely to worsen should the Bank of England choose to up rates in the near future
"The effect of a further rate rise will be devastating for thousands more homeowners.
"Although homeowners believe that selling their home could be the last-stop solution to their problems, the lack of buyers, the certainty of a July rate rise, inflation, low salary augmentation and unnaturally high asking prices means selling on the open market does not guarantee a sale at all.
"We are finding more and more people seeking an alternative solution to selling their home."
Mr King is director of National Homebuyers, the UK's leading fast purchase property firm. It guarantees to make a cash offer to buy any property quickly from vendors needing a quick sale. The company also pay for legal fees and can arrange an equity release solution, sell and rent back, allowing the homeowner to release capital in their property without the need to move out.
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