Cover Story
60 million bits of plastic occupying our wallets and purses. Clearly, the demand for credit exists and we can see from these numbers that a very large percentage of the population will continue to need credit for the foreseeable future.
TOUGH TIMES The recession has had a signifi cant impact on the credit profi les of many ordinary borrowers who would have been considered prime a few years ago but are now left in no-man’s land.
Consider the following: ● An estimated 4 million people missed at least one credit card payment in 2010.**
● 1,577 consumer CCJs were issued every day during Q1 2011.*
● Around 2.1 million people have had a CCJ issued against them in the last three years.*
● An estimated 1 million people have missed at least one mortgage payment over the last three years.**
Given the above, it is likely that a large percentage of the population will struggle to get a mortgage from a high street lender and in my view a very large percentage of those borrowers will believe that they have no hope of
getting a mortgage. Indeed, up until fairly recently they would have been correct.
THE PRECISE SOLUTION
Fortunately Precise Mortgages has a range of mortgage products available that are specifi cally designed for this type of borrower.
The fi rst thing to consider is why would any of these potential borrowers take out a new mortgage now when the average pay rate is less than 5%? My experience based on the applications we have received over recent months is that the need to capital raise is prevalent and this has been driven by many different scenarios.
The fi rst and the most obvious is debt consolidation, where expensive debt such as credit cards has been refi nanced to our signifi cantly less expensive mortgage rates and because we have products that have no early repayment charges this makes sense for some borrowers.
There was £61bn outstanding on credit cards at the end of 2010
paying an average interest rate of 18% and approximately 30% of those balances were on 0% deals so it is not unusual to see APRs of 25-30%.
Life events such as divorces and separations have also produced activity and again the need to capital
Data Source: * Credit Action July 2011 -
www.trustonline.org.uk **Based on research conducted by Precise Mortgages - Q1 2011.
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