| 125 per cent mortgage welcomed by consumer website
A leading consumer website has welcomed Alliance & Leicester's decision to launch a 125 per cent mortgage, saying that it will help first-time buyers get on the property ladder.Recently, Alliance & Leicester said that it would offer people a 125 per cent PlusMortgage, which combines a mortgage with an unsecured personal loan.While Citizens Advice Bureau and the National Debtline have criticised the lender for offering people a deal that means that are reduced to negative equity from the start, moneysupermarket.com has welcomed the move."I believe A&L is acting with full responsibility in bringing this product to market," said Louise Cuming, the head of mortgages at the price comparison website."It's not surprising to see another lender join the 100 per cent plus market when first-time buyers continue to find it increasingly tough to get a foot on the housing ladder."Ms Cuming explained that the deal was not encouraging people to take on more debt that was appropriate, as it will "be sold via brokers and therefore borrowers can only access [the mortgage deal] after a stringent advice process."She added: "A&L is only targeting people with the propensity to take on this large amount of debt – and, in fact, lenders have historically seen lower percentage arrears in the 100 per cent plus market versus the 95 per cent sector."A recent report from Nationwide suggested that first-time buyers now have to spend £120 a month more to pay for their mortgage than they did a year ago.
6 Million Brits Consolidating Their Loans
The preferred method of debt consolidation in the UK is where unsecured personal loans are combined into one loan with a lower monthly payment. While this is a positive move in the short term, it can be fiscally devastating over the long-term if done in the wrong way. Unsecured personal loans are the preferred method of consolidating loans. The interest rate is normally lower than interest being charged on credit cards and store cards. Research from uSwitch.com revealed that a number of Brits who consolidate their loans continue to use their credit cards and store cards to create further debt. The number of UK consumers who apply for personal loans that are higher than the amount they need to consolidate their loans are using the extra money, not for wealth generating, but to maintain a higher lifestyle.
Japanese lenders deny loans to credit risks
TOKYO: Aiful, Japan's biggest consumer lender, and its two closest rivals rejected more than half of loan applicants in January as they seek to trim costs by weeding out borrowers who could default. Aiful cut approvals by half, granting unsecured personal loans to 36 percent of applicants in January, compared with 72 percent in February 2006, according to data on its Web site. Acom, the second-biggest lender, cut approvals by a third to 47 percent in the same period. Promise ratified 40 percent. Bad-loan costs have mounted in the $170 billion consumer finance industry since Japan's courts last year opened the door for borrowers to claim refunds of interest and regulators reined in collection tactics. The three biggest lenders forecast a combined $5 billion loss in the year to March 31 and may struggle to return to profit as a new law caps their charges at the same level as banks.
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