People having ‘multiple loans’ with the ‘same lender is a worrying trend’

Brokers have noted a worrying trend where more and more borrowers are approaching them with multiple loans and credit facilities from the same lender and have urged the FCA to look more closely at the practice.

One broker said, “This double standard in underwriting creates a debt paradox. Households can be awash with high-interest credit card debts and loans but unable to secure a mortgage.

“This highlights a deeply flawed financial system in serious need of reform to promote responsible lending practices.

“The FCA should take note.”

Harps Garcha, director at Brooklyns Financial said, “The discrepancy in how lenders assess affordability for mortgages versus personal loans and credit cards is one of the biggest mysteries in financial services.

“Mortgage lenders require extensive financial details, whereas affordability checks for personal debt seem minimal.

“I recently encountered a client with over £100,000 in consumer debt on a £50,000 annual salary, who is about to retire within the next five years. How does this make sense? As for car finance, ‘affordability check’ is not even in the vocabulary.”

Ranald Mitchell, director at Charwin Private Clients said, “The rampant availability of unsecured credit to UK households without proper affordability checks is a scandalous practice that preys on the most vulnerable.

“Credit card companies and lenders extend exorbitant credit limits to lower-income households with little regard for their financial stability or repayment capacity.

“This reckless lending traps households in a vicious cycle of debt, and financial institutions’ blatant disregard for long-term consequences reveals a systemic failure to protect consumers.

“Mortgage lenders enforce stringent checks, meticulously assessing borrowers’ financial health, yet the same scrutiny is glaringly absent in the issuance of unsecured credit.

“This double standard in underwriting creates a debt paradox. Households can be awash with high-interest credit card debts and loans but unable to secure a mortgage. This highlights a deeply flawed financial system in serious need of reform to promote responsible lending practices. The FCA should take note.”