People with adverse credit taking on more debt – Pepper

The Pepper Money Adverse Credit Study found a £100 increase in monthly bills would impact 81 per cent of people with adverse credit.

The study found that 32 per cent of people with adverse credit have increased their level of debt in the last 12 months, of that 11 per cent said they had increased their debts by ‘a lot’.

Pepper Money said this represented a “significant increase” compared to research the lender carried out in Spring 2021.

The 37 page report also found that 1.3m people with adverse credit were planning to buy a property in the next 12 months, up from 880,000 last spring; of those 54 per cent of those expected to go through a broker, compared to 44 per cent six months ago.

Paul Adams, sales director at Pepper Money, urged intermediaries to read the full report – available on the lender’s website.

He said the study, which is carried out every six months, would help give intermediaries an understanding of the circumstances and concerns of their customers.

Adams added that the findings had provided Pepper Money with crucial data to adapt to trends in the market and produce product ranges which were more accessible to a broader group of borrowers who were facing limitations due to experiencing adverse credit.

He said: “The impact of inflation and rising fuel and food prices has been widely publicised, and the cost of living is increasing faster than earnings. So, there’s a strong chance that monthly household bills will increase by £100 or more for many families – and this is a big concern for more than eight in 10 people with adverse credit. Furthermore, the recent increases in the base rate by the BOE could increase repayments for customers on a tracker rate mortgage.

“Mortgage advisers can play an important role in providing their customers with peace of mind by discussing the options available to them. For example, an adviser may be able to cut monthly mortgage costs by sourcing a cheaper deal when a customer’s current deal comes to an end, or they may be able to lower the cost of servicing other debts by raising capital through a debt consolidation mortgage. When £100 a month can make such a difference to someone’s finances, every little helps – and mortgage advisers are in an excellent position to make a positive difference to customers with adverse credit.”