| Japanese lenders deny loans to credit risks
TOKYO: Aiful, Japan's biggest consumer lender, and its two closest rivals rejected more than half of loan applicants in January as they seek to trim costs by weeding out borrowers who could default. Aiful cut approvals by half, granting unsecured personal loans to 36 percent of applicants in January, compared with 72 percent in February 2006, according to data on its Web site. Acom, the second-biggest lender, cut approvals by a third to 47 percent in the same period. Promise ratified 40 percent. Bad-loan costs have mounted in the $170 billion consumer finance industry since Japan's courts last year opened the door for borrowers to claim refunds of interest and regulators reined in collection tactics. The three biggest lenders forecast a combined $5 billion loss in the year to March 31 and may struggle to return to profit as a new law caps their charges at the same level as banks.
125 per cent mortgage welcomed by consumer website
A leading consumer website has welcomed Alliance & Leicester's decision to launch a 125 per cent mortgage, saying that it will help first-time buyers get on the property ladder.Recently, Alliance & Leicester said that it would offer people a 125 per cent PlusMortgage, which combines a mortgage with an unsecured personal loan.While Citizens Advice Bureau and the National Debtline have criticised the lender for offering people a deal that means that are reduced to negative equity from the start, moneysupermarket.com has welcomed the move."I believe A&L is acting with full responsibility in bringing this product to market," said Louise Cuming, the head of mortgages at the price comparison website."It's not surprising to see another lender join the 100 per cent plus market when first-time buyers continue to find it increasingly tough to get a foot on the housing ladder."Ms Cuming explained that the deal was not encouraging people to take on more debt that was appropriate, as it will "be sold via brokers and therefore borrowers can only access [the mortgage deal] after a stringent advice process."She added: "A&L is only targeting people with the propensity to take on this large amount of debt – and, in fact, lenders have historically seen lower percentage arrears in the 100 per cent plus market versus the 95 per cent sector."A recent report from Nationwide suggested that first-time buyers now have to spend £120 a month more to pay for their mortgage than they did a year ago.
PNB considering cut in exposure to personal loans
New Delhi, April 9 (PTI): Punjab National Bank, the country's second-biggest public sector lender, plans to cut exposure to personal loans, including home finance, to bridge the gap between higher credit offtake and lower deposits. "The bank is concerned over widening gap between resource mobilisation and credit expansion and will soon take decisions on curtailing credit exposure by reducing personal loans," PNB Chief General Manager U S Bhargava said. The bank's asset liability committee (ALCO) will meet later this week to decide on the issue, he added. PNB's credit exposure is growing at 28 per cent as against a growth of 20-22 per cent in resource mobilisation. The bank had earlier indicated it could increase the Prime Lending Rate (PLR) by 25 to 50 basis points and interest rates on all types of personal loans, including housing loans.
Loan rates on the up
One month after financial comparison site Moneyfacts warned of the imminent demise of the sub six per cent loan, there is only one such loan left on the market, says Moneyfacts analyst Michelle Slade. It seems that lenders are becoming more cautious, with growing numbers of individual voluntary arrangements, bad debts and defaults. The Moneyfacts analysis reveals differing trends for credit cards and loans, says Ms Slade: 'As the 0 per cent credit card market continues to flourish, with deals in excess of 12 months easily found (although lending criteria has been tightened), it is the more structured lending which seems to be bearing the brunt. Eight personal loan providers increased interest rates by around one to two full percentage points, and in one instance by seven per cent.' There are many reasons why this may be happening, speculates the analyst.
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