As more and more individuals take out these bad credit unsecured personal loans, it becomes clear that this type of irresponsible fiscal policy can cause all manner of problems well into the future. Considering the probability that the loan will not be paid back, it is easy to see why banks are holding off on bad credit unsecured personal loans and making it almost impossible for individuals to get the loans that they need under the circumstances.

With so much attention being paid to bad credit unsecured personal loans and the banking institutions that have gotten themselves into so much trouble with this type of lenient lending practice, it is easy to see that there is no easy fix for the problem.

Phil Cliff, Director of Abbey Mortgages, comments: “A large proportion of mortgages offer borrowers flexibility and the research shows that many people are planning to take advantage of these benefits. It’s great to see that people are quite rightly prioritising their mortgage payments ahead of other financial commitments - having a smaller mortgage can mean you get a better deal when you remortgage and of course reduces future monthly outgoings.”

“It has always been the case that consumers borrowing small amounts of money tend to get stung with high APRs. Over the past 13 months, rates on these tiers have seen the biggest hikes. Overall, we wouldn’t encourage consumers to take out a loan for a small amount such as £1000. There are other forms of credit available such as the 0% Virgin credit card which will allow consumers to borrow £1,000 at 0% APR for a full 15 months,” stated Simeon Linstead of uSwitch.com

Louise Cuming, head of mortgages at moneysupermarket.com, said: “Sadly these figures come as no surprise. The rising cost of borrowing and tightening of lender criteria was always going to hit the most vulnerable borrowers hardest and fastest.

“We are experiencing a market correction, and ultimately we will have a stronger mortgage market when we come out of the other side, but in the short term I expect to see further increases in repossessions.

Sue Edwards, the Citizens Advice Head of Consumer Policy stated, “we are urging the Government to strengthen safety nets for homeowners at risk. Bringing in a ‘pre-action protocol’ for mortgage arrears without delay would ensure that court action is only taken as a last resort, where all other options have failed and no agreement can be reached. Efforts also need to be made to boost existing provision for home owners on low incomes. Overhauling the Government support available to low income home owners, such as Income Support for Mortgage Interest (ISMI) would be a helpful start.

“Anyone who is falling behind with payments on a mortgage or secured loan should speak to their lender straight away. Lenders should negotiate with borrowers, but if you are having problems, make sure you seek free, confidential, independent advice without delay.

The agency released the following statement, “Specifically, we are examining what policies are in place and how firms ensure compliance with them, whether and how rumours are verified, whether traders are permitted to pass on or trade on rumours and how firms ensure staff do not initiate or spread false rumours.

“This exercise is covering a range of investment banks, securities firms and hedge fund managers. We will communicate our findings to the market in the early autumn.”

Tom Girling, Yorkshire’s product manager for mortgages said: “In the present climate with soaring petrol, utility and food costs, a number of borrowers are looking for the lowest possible monthly mortgage payments to help them survive financially. The new 4.99% two year fixed rate deal is the lowest rate currently available and, whilst the fee is inevitably high, this can be added to the loan which keeps the pay rate down. The mortgage also offers an overpayment option should borrowers find themselves able to increase their monthly payments and therefore repay the fee in a shorter time than the full remaining mortgage term.

“We understand that this mortgage will not suit all borrowers, but it is offered as an option for those who may be finding that their monthly income is stretched to the limit. For borrowers who can afford a little more each month, we have mortgage options with lower fees and no fee products.”

Ray Boulger of John Charcol stated, “With the consumer price index now expected to hit 4% in the second half of this year, it is difficult for the MPC to cut Bank Rate, but the rapidly declining economic situation means a rise would cause more problems than it solves. With economists increasingly speculating on the possibility of a recession next year, a Government under pressure on nearly every front and the deadline for an election less than 2 years away, there will be no pressure from The Government for a rate increase to combat inflation.”

Michael Coogan of the CML stated, ‘Neither the cost nor the availability of wholesale funds has improved for lenders. This means that cost and availability to customers has not improved either. And this in turn means that consumers are now beginning to give up and demand is falling, with confidence in the housing market falling with it.’

Chancellor Alistair Darling commented, ‘But I believe that we are better placed, although we can’t be complacent about inflation. The last figure of 3.3 per cent is higher than we wanted, but if you compare it with the figure of eight per cent at the beginning of the 1990s, we are better placed. Interest rates are a lot lower than they have been in this country in the past and of course we enter this period with high levels of employment. All these things, I think, will stand us in good stead.’

Managing director of Your Move estate agents, David Newnes, said: “Mortgage finance is hard to come by these days, the rental market is definitely picking up the slack. And we’ve seen a considerable number of would-be buyers put house purchase on hold because of the squeeze on their finances. They’re turning to the rented sector while money is tight.”

He added, “Buy-to-let will grow this year. Opportunities to invest are ripe for professional landlords able to secure financing. With rising tenant demand comes rising rents, buy-to-let yields will consequently improve. House prices are under pressure at the moment, and there’s scope for buy-to-let investors with collateral to get good deals to expand their portfolios.”

Cath Hearnden from the mortgage brokers My Mortgage Direct said: “The double whammy of interest rate rises and the end of low fixed-rate deals has seen mortgage repayments shoot up overnight for many homeowners. We are seeing increasing numbers of borrowers using an interest-only remortgage as a form of defence against the onslaught of rising repayments.”

Melanie Bien from Savills Private Finance said: “Most lenders will let you switch from a repayment to an interest-only loan for a small charge, and the advantage is that it will significantly reduce your mortgage payments. The downside is that you are not paying off any of the capital. If you continue with an interest-only deal, you will have to pay back all the capital at the end of this.”