The fallout from the ongoing credit crunch has really hit Peoples Choice hard, pushing them to file for Chapter 11 in the US.
Peoples Choice are one of the many subprime lenders who have been riding the wave of second tier lending, that is to those who are a greater risk than normal, only to find the waves crashing over their heads as defaults and lack of extra funding leave them unable to continue.
The company has filed for Chapter 11 so they can take some time out to reorganise themselves and regain stability. During this time their creditors are kept at bay, thus freeing the organisation up to get their house in order and ideally come out better than before.
One of the biggest problems with subprime lending, and one that Peoples Choice will certainly have seen, is that a lack of affordability leads to lenders offering more and more money as an incentive to use them, with 120 percent mortgages not uncommon. The borrower relishes the extra money but often finds it has gone very quickly, the repayments are higher than they would normally have been and the value of their property does not cover the amount borrowed. A recipe for disaster as soon as house values stop growing at a high rate, which is what has happened in the USA recently.
The latest offer in the mortgage market comes from Lloyds TSB which has introduced a new Airmiles mortgage.
The Lloyds TSB mortgage is not as novel as it sounds, the Airmiles being provided for taking out the mortgage, customers are not able to pay it off using them. The three tear fixed rate offer gives customers 50 Airmiles when signing up plus a further 6,000 when it is completed. The interest rate on the mortgage begins at 5.89 percent depending on applicant circumstances.
As a spokeswoman from Lloyds TSB said, this new mortgage combines a good rate of interest, a decent length fixed term and also a practical and useful reward that customers can use.
The current state of the housing market means that most home improvements are not adding any more to the asking price than they cost said the Abbey National.
A home extension can leave someone selling the property around GBP20,000 out of pocket if they were to sell straight after getting the work done, while a new conservatory or kitchen can easily leave them down by GBP14,000. The only home improvements the Abbey National feel are worth doing for those selling a property are the cosmetic ones such as decorating.
The key to home improvements then is to undertake them only if the plan is to stay in the property. This way they become a real benefit to the homeowner said an Abbey National spokesperson. It is understood that well over 8 million people will be improving their homes in the coming year which may prove a revealing statistic in what is a dormant market.
