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Welsh Homeowners 'Could Be Tipped Over Financial Edge'

Oct 24, 2007
More homeowners in Wales are on track to find themselves in an untenable position to manage their money, a new investigation has uncovered.

According to a new report by BBC Wales, the levels of property repossessions in the principality stand at their highest for eight years and are due to continue to rise. Over the course of the first six months of 2007, around 3,000 orders for the repossession of property were granted in Welsh courts, as surging costs have seen more households fail to meet mortgage expenses, as well as other monetary demands such as utility bills, loans and overdrafts.

As part of the broadcaster's Week In Week Out programme, the investigation revealed that property prices in Wales have trebled over the course of the last ten years. However, as the true impact of the five interest rate rises carried out by the Bank of England's monetary policy committee begins to take effect, consumers could well find themselves developing greater monetary hardship when it comes to servicing demands on their finances, for example personal loans and tax, as mortgage costs get set to rise even further.

Mick McAteer, a former policy adviser for Which? and now the head of a thinktank focusing on financial inclusion, claimed that repossession levels are on track to be driven by a "perfect storm" of high property prices and rising mortgage costs.

He said: "There are a large number of people who are actually quite vulnerable to any change in their financial circumstances. The amount of money they owe means that they are at their absolute limit and if they do have a change in their financial circumstances I am afraid they will be tipped over the edge."

Meanwhile, Week In Week Out also pointed to research conducted by Citizens Advice which revealed that the number of debt cases dealt with in Wales rose by some 20 per cent during 2005 and 2006. Overall, some 76 million pounds was owed through mortgages, loans and other forms of borrowing, with the majority of it going towards sub-prime lenders.

Although Bernard Clarke, a spokesperson for the Council of Mortgage Lenders, indicated that more people could be coming under financial strain such an increase may be relatively small. He said: "We would expect there to be a rise in arrears and possessions, but it will be, we hope, a relatively modest rise in arrears and possessions. We don't think we are going back to the circumstances that we saw for instance in the early 1990s."

In research conducted by the Royal Institution of Chartered Surveyors, the level of residential homes up for auction during the second quarter of this year was shown to have increased by some 32 per cent, with this increase driven by rising repossession levels. However, homeowners looking to avoid losing their property could be advised to apply for a low-rate loan to help them pay off numerous debts and demands on their spending quickly. Those consumers who have a history of struggling to manage their money in the past, but are confident that they now will be able to make repayments on any future borrowing, may wish to consider taking out a bad credit loan.
About the Author
Steve Smith writes for 1 Stop Finance Shop, a one stop, Personal Loans Shop, with information on bad credit loans and debt consolidation loans available on site.
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