New peak for debt mountain

No one will be too surprised at such pessimism in the midst of Brexit negotiations, but until we know what direction the UK’s departure from the European Union will take, many of us are wondering how business levels can be sustained until then.

This provides an opportunity for you to contact your clients to help them get in the best possible financial shape as we enter a new chapter in the housing market, and new research published by the TUC suggests that your clients may need this help more than ever.

The analysis found that unsecured debt rose to £15,385 per household in 2018 – which is up £886 on 2017. Even more worryingly, total unsecured debt rose to £428bn – a record high, and well above the £286bn peak in 2008 ahead of the financial crisis.

When credit balances were at the £286bn mark back in 2008, the Bank of England Base Rate stood at 5.00% with interest rates beginning a downward trend, but with the current base rate at 0.75%, and likely to rise, the unprecedented mountain of debt is likely to mean that many borrowers could struggle to make payments on their current credit commitments.

Helping your clients to address the cost of servicing their unsecured debts by consolidating them with a remortgage might not be right for everyone but could prove a good option for some.

If your clients’ current monthly expenditure is above what they can comfortably afford, a debt consolidation remortgage could help ease their cashflow strain. For most, this will mean paying a lower rate of interest but as they will be converting unsecured debts to secured ones, this may extend the term over which they repay the balances, which may not suit everyone.

So, take advantage of a lull in the property market to be proactive with your clients and guide them on the best path to getting their finances in shape.