Debts making people risk their homes

London-July 10, 2007

The recent rise in interest rates as well as large credit card liabilities is forcing people to take loans that put their homes at risk, according to experts.

Insolvency experts predict that five interest rates hike over the last 11 months will leave hordes of people not able to meet monthly instalments on credit cards, personal loans and car finance deals. Many experts opine that the current debt crisis is forcing people to seek the services of highly dubious debt consolidation companies.

Second-charge mortgages have witnessed a tremendous rush which could, experts again warn, lead to house repossessions for a number of years. Steve Treharne, chief of personal insolvency at KPMG, the financial services group said: “There is increasing use of loans secured on their homes to repay unsecured debt."

He further added: "At first, people think it's good, because they pay a lower interest rate and their monthly repayments fall. But by doing so they are putting their house at risk and it often marks the moment when they are getting themselves into serious trouble."

Mr Treharne revealed that 10 percent of all bankruptcy and insolvency involved debt consolidation loans.

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