The BBC investigation Real story: home or loan revealed Britons owe the equivalent of £17,000 of debt for every man, woman and child on credit cards, loans and mortgages. This has led to a rapid rise in the unregulated second charge mortgage market.
The report also highlighted that many consumers were tempted to take out second charge loans to sort out their debts on the basis that a celebrity had endorsed the product.
Michael Brill, director at Baronworth Investment Services Ltd, said borrowers were increasingly turning to the unregulated second charge loans, without looking at the other options available to them. He said: “Borrowers looking at second charge mortgages is an increasing problem as more and more consumers in some form of debt are able to get off-the-page, or off the screen products, which make the situation seem ‘cosy.’ Borrowers should look at the other options available to them before they consider a second charge loan. Borrowers shouldn’t just jump in after seeing an advert.”
Responding to Real story: home or loan, a GE spokesperson, said: “As outlined on the programme, we take our responsibility as a lender very seriously. We make every effort to ensure that the customer understands exactly what commitment they are entering into and if they do have any questions, they are fully encouraged to discuss them during the sales process.”
A spokesperson at the FSA said it would only look at the second charge market if it was given government guidance to do so, but would continue to look at the wider mortgage market as part of its annual risk analysis research.
