The circumstances of borrowers are not the same as they were 10 years ago.
Today, most borrowers can comfortably afford their credit yet this doesn’t mean you won’t see clients with previous credit issues. In fact, there is more outstanding consumer credit today than at any time since the global crisis.
There is also an increase in the number of consumers receiving CCJs for smaller infringements. Data from Registry Trust shows that although over 1.1 million CCJs were registered against consumers in 2017 in England and Wales, the average value of consumer CCJs fell 13% - the lowest on record.
So we could expect to see an increase in the number of CCJs in the future as more creditors turn to the courts.
A borrower with a CCJ doesn't always mean they're in debt
The rise in CCJs doesn’t necessarily mean however, that there are more borrowers struggling with debt. There could be many reasons why CCJs are issued to borrowers. For example, a borrower may be unaware of an outstanding credit balance for reasons that bills and reminders are sent to an old address. As a result, missed payments could lead the borrower being issued a CCJ.
Then there are those who are, or have been struggling financially. Options are available to help rectify debt and they could organise a Debt Management Plan (DMP). This is a non-binding agreement between an individual and their creditors to repay debts. Learn more about DMPs in our article DMPs Explained.
With the current levels of outstanding consumer credit, increasing living costs and rate rises on the horizon, you could encounter more clients in a DMP.
At Pepper Money, we believe that borrowers who are willing and able to work towards rectifying their situation should be able to get a mortgage.