Abacus Daily Debt News

Homeowners ‘taking out less second mortgages’

The amount of borrowers taking out a second mortgage has been impacted by the onset of the credit crunch, it has been stated.

Figures from the Finance and Leasing Association have revealed that new business in this sector was down 84 per cent in January, compared to a year previously.

In addition, the organisation reported that the amount of direct unsecured personal loans provided to consumers by its members dropped by 28 per cent during this period, while credit card lending fell by 12 per cent.

Spokesperson Fiona Hoyle described the decline as "marked", adding that the provision of second mortgages has been reduced "significantly".

The body noted that these loans are typically used by people to fund home improvements and that the drop in finance has come at a time when many owners are looking to renovate their properties.

Meanwhile, Norwich Union has warned homeowners that they may face "huge costs" in the future if they fail to insure their houses adequately.

By Jamie Price