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Few loans will be as important in a person’s life as a mortgage. Yet consumer interest group Which? has found that very few mortgage advisors are giving acceptable levels of advice to potential homeowners.

By going undercover, Which?’s investigators found that a staggering 41 of 50 mortgage advisors neglected to give potential mortgage holders key information regarding the nature of the loan.

Perhaps most worryingly, 35 of the 50 advisors approached did not even properly establish whether the would-be buyers could even afford their homeowner loan.

Martin Hocking, Which? Money’s editor, commented on the homeowner loan scandal. “Listening to people’s needs and giving tailored advice should be the bread and butter of a mortgage adviser’s job, but too many of the advisers that we visited took a 'one size fits all' approach or seemed as concerned with selling an insurance policy on the side,” he said.

Hocking added, “With mortgage costs soaring and the spectre of negative equity returning to the property market, it’s important that people get help to find the right deal.

”There are still more than 3,000 mortgage deals out there, and the difference in cost can be thousands of pounds a year, so it’s vital people do their homework and choose their adviser with care.”

Financial solution company thinkmoney.com has moved to reassure homeowners that, despite falls in the housing market, secured loans can still represent a sensible option for raising much-needed funds.

A spokesperson from the company commented, “As a second charge on a home, a secured loan involves a certain risk from a lender’s perspective, so secured lenders are keeping a very close eye on issues in the housing market. A recent Bank of England survey revealed that default rates on secured lending rose by more than expected in Quarter 2, and lenders expect these rates to rise further in the months ahead.

“Today’s falling prices are reducing the number of homeowners with enough equity to make a secured loan a viable solution – and deterring many who are keen to retain their ‘safety margin’ against negative equity.

“Having said that, it’s important to see recent falls in house prices in their correct context: as relatively small drops following a decade of rapid growth. According to Nationwide’s House Price Index, for example, the average house in Quarter 2 2008 was still worth almost £10,000 more than it was in Quarter 2 2006. In just ten years, Nationwide reports, the average house price rose from £60,754 to £184,131.

“Homeowners may be worried about falling prices, but many are still likely to own significant levels of equity. For them, a secured loan can be an excellent debt solution; a realistic way to consolidate their unsecured debts into one manageable, lower interest debt which they can arrange to repay at an affordable rate.”

However, the spokesperson did add that, for some homeowners, there may be better ways of raising money or consolidating debts and that all potential options should be both investigated and considered.

A Sheffield-based secured loans company has announced that it has gone into voluntary liquidation, citing the pressures of the credit crunch as the reason for its collapse.

The liquidation of Loan Assured, which was only recently formed, will be overseen by the insolvency company Wilson Field. Its sister companies, Loan Assured Mortgages, Assured Marketing and The Underwriting Department will also be going into voluntary liquidation.

News of the liquidation comes at an unwelcome time for Sheffield. Claire Foster, who works for Wilson Field, comments on the insolvency of the secured loans company, “Alarmingly, I have seven meetings to place Sheffield-based companies into liquidation in July.”

Fortunately, the secured loans company’s customers will not suffer as a result of the insolvency, as it only operated as a broker, rather than providing the actual loans.

A secured loans company from Peterborough has announced that it is opening new franchises in Taunton and Milton Keynes.

News of the two new offices is a welcome development for the secured loans sector following the recent closure of significant players in the industry such as FirstPlus.

Matthew Arena, director of the company concerned, commented that he is excited about the Taunton and Milton Keynes ventures.

“Local businesses have always had the edge over large national concerns, he said.

Adding, “We identified many months ago that demand for a locally based operation, offering a personalised service to brokers, backed up by Brilliant Loans organisation and lender access was the key to successful expansion.”

“We have had great interest from potential franchisees and we are very excited by the potential for growth.”

There are reports that secured loans company have plans to establish further franchises in 2008.

British servicemen returning to civilian life are to be given much-needed assistance in getting a foot on the property ladder. The help will take the form of an interest-free loan of up to half the value of a new property.

The shared equity loans will only have to be repaid once former servicemen have sold their homes. They have been made available to all airmen, sailors and soldiers within year of them quitting the armed forces.

Housing minister Caroline Flint commented, “We are committed to helping our service people, both during and after they’ve left the military.”

She added that the loans helped show respect for the “huge sacrifices” made by UK servicemen.

The UK is not the only nation to reward its troops with housing access schemes. Just this year, the US announced a major initiative to offer homeowner loans to its troops.

Alliance & Leicester, the bank that some say pre-empted the credit crunch when it stopped providing homeowner loans in July 2007, is set to be taken over by Spanish banking group Santander.

It is understood that once the terms and technicalities of the takeover have been completed Alliance & Leicester will merge with Abbey, already an important player in Santander’s investment porfolio.

It is not known whether the merger will result in any changes to Abbey’s provision of homeowner loans.

Emilio Botin, chairman of Santander, commented, “The transaction meets Santander's return on investment target as well as being accretive for Santander Shareholders. We are very pleased to be working with the management and employees of A&L as we seek to build with Abbey one of the leading franchises in the UK banking sector.”

It is likely that the acquisition will be welcomed by the Financial Services Authority, especially in the wake of last week’s news concerning Barclays’ decision to stop offering homeowner loans through its loans arm First Plus.

The increasing number of providers withdrawing from the secured loans market has led to some consumers fearing that they will no longer have this personal finance option.

Just last week, First Plus’ announcement that it would stop taking on new customers added it to a list of companies already including Alliance & Leicester, Capital One Bank, Picture Financial, Loan One Intermediaries, SPPL, Breeze Loans and Money Partners.

However, financial analyst with moneyfacts.co.uk, Michelle Slade, believes that consumers will have to wait to see whether the remaining providers continue to offer their services. She said, "Unfortunately, many lenders are no longer finding secured loans a viable business option.

“They face the same funding issues as mortgage lenders and with house prices continuing to fall, lenders can no longer be sure that, if a consumer defaults on their loan, they will have enough equity in their home to repay the debt.

“If the credit crunch can cause one of the biggest lenders in secured loans to throw in the towel, it will be interesting to see if the other providers can weather the storm.”

In a move that has been received ambiguously by the secured loans industry, Nemo Personal Finance has announced that it is making significant changes to the range of services it offers.

The most welcome aspect of the changes is that, in a decreasing market, Nemo will not be abandoning its secured loans product services altogether. It will, however, no longer be offering such loans to self-employed people, even in cases where they have strong and multiple accounts.

Nemo also said that it will no longer be offering secured loans to consumers with bad credit ratings, including those who only have one unit of adverse.

The director of one major loans industry player commented, “In light of last week's announcement from Firstplus, it's good to see Nemo still have an appetite for lending and making the changes it feels are necessary to ensure it is still lending in 12 months.”

The student loans system is in for some changes after it emerged that many graduates are overpaying on their loans because of a hitch in the repayment system.

Currently, graduates pay 9% of all money they earn each year over a £15,000 threshold. Once they have paid back all many owed, they should, in principle, not have to make any further repayments.

However, because of the way the system works, with HM Revenue and Customs passing on outstanding money to the Student Loans Company (SLC), unless SLC notify the tax office that a debt has been repaid, graduates often find that they are paying hundreds or, sometimes, thousands of pounds more than is necessary.

Although graduates are able to claim back overpayments from the SLC, this often a long and tedious process.

Once former student comments on just how frustrating it can be. He says, “I was overpaying for the whole of last year and they owed me more than £1,000. I went through the hassle of sending them all my payslips and lots of other details. And I waited. And waited. I ended up chasing them.

“I got my money, but then this month I saw another £187 had been taken. I am so frustrated and now have to go through the process again.”

An SLC spokesperson comments, “We are aware that when people come to the end of their loans, there is often a very confusing period.

“We appreciate that trying to reclaim overpayments can be very frustrating and this is why we are endeavouring to make changes to make it easier.”

Now, it seems, the SLC is finally responding to the concerns of graduates by introducing a direct debit system of repayment for those who are approaching the end of their debt.

Evidence is emerging that one formerly taboo form of “secured loan” is becoming increasingly popular in the UK.

Pawning, which is a type of secured loan where money is borrowed against the value of a personal possession, is actually becoming more common just at a time when consumer reliance on credit cards is beginning to drop off.

The National Pawnbrokers Association (NPA) report that the number of new pawnshops opening in the UK is growing at a rate of 10% a year, with 800 outlets in total now operating in the UK.

There is also evidence that this form of secured loan is now a realistic choice for a much broader demographic than it used to be, with a spokesperson from financial education charity Credit Action commenting that it is now “a popular option for the middle classes”.

The spokesperson adds, “Pawning can be a good option if you're after a short-term emergency fund.”

He warns, however, “You're merely shifting the problem around and not tackling it."

The Finance Industry Standards Association (FISA), the self-regulatory body of the secured loans sector, has said that it is in favour of Competition Commission proposals to standardise information available to point-of-sale payment protection insurance (PPI) customers.

The FISA has also issued statements saying it supports proposals that would enable consumers taking out secured loans to more easily make comparisons of PPI policies offered by different providers.

However, one area where FISA is not in agreement with the Competition Commission is the issue of single premium policies. The commission believes that each year consumers should be given the option of choosing whether they want to opt-in on these policies, while FISA believes this could cause potentially damaging numbers of lapsed policies.

John Parker, chief executive of FISA, commented, “There is much in the provisional findings from the commission that FISA is supportive of, however, we believe that a number of the remedies outlined will have a negative impact on product choice, policy cover and borrower protection in the secured loan sector."

First Plus, up until now the most popular choice for UK consumers seeking a secured loan, has announced that it will stop taking on new customers from August.

The secured loans company, which is owned by Barclays Bank, will also axe 300 jobs as a result of the move.

Other businesses have felt the impact of the decision. Moneysupermarket saw its share price drop in the wake of the announcement, while Bolton-based company Loanmakers saw its shares fall to a record low price.

Loanmakers released a statement following the share price drop. It said: “First Plus is the leading provider of secured loans to Loanmakers, and its withdrawal from the market will adversely affect the company's business.

”The board will be undertaking an immediate review of the business to see how it can alleviate the impact of the announcement. This will encompass sourcing additional capacity from other providers, as well as a review of the current cost structure.”

TV star Carol Vorderman, who has been the public face of First Plus for some time now, has so far not commented on the development.

A poll by moneysupermarket.com has found that around 1.8 million people in the UK are taking out loans to meet the costs of rent and mortgage payments.

Earlier polls and studies have already found that many mortgage holders are taking out loans to meet the cost of payments, however, the revelation that tenants are also being forced to take out loans in order to keep up with rent has some economic analysts worried.

Head of loans and debt at moneysupermarket.com, Tim Moss, commented that he believed the plight of these tenants highlighted a “very serious situation”.

He added, “Having a roof over your head has to be your top priority but to be funding that with a loan you might default on or with a credit card that will eventually charge you interest of over 15 percent isn't the solution in the long term.”

The poll reflects the same trends reported by the Bank of England, which recently announced there had been a 65 percent fall in secured loans for the three months beginning 2008.

Swindon-based company Intrinsic Financial Services has announced a partnership with Loanoptions. It is believed that they have done so that they can tap into its new partner’s wealth of knowledge regarding secured loans and placement services.

Intrinsic is one of the largest companies of its kind in the UK, employing around 1,200 staff across its offices in the UK, and offers a range of mortgage and financial services.

Andy Moody, managing director of Loanoptions, commented on what he believes the new partnership means, "Secured loans are now more than ever a critically compliant, viable and customer friendly alternative to remortgaging. Intrinsic has recognised that Loanoptions can offer a bespoke service based on its whole of market lender panel that will enable all their advisers to extend their services and maintain their commitment to treating customers fairly."

Intrinsic was founded by former CEO of Zurich Financial Services, Lord Leitch, and its expertise extends beyond the secured loans sector.

The Finance Standards Industry Association (FISA), the self-regulation body of the secured loans industry, has commented on the Competition Commissions findings over controversies related to the Payment Protection Insurance (PPI) market.

John Parker, FISA's chief executive, commented, "There is much in the provisional findings from the Commission that FISA is supportive of, however, we believe that a number of the remedies outlined will have a negative impact on product choice, policy cover and borrower protection in the secured loan sector."

One Competition Commission recomendation FISA  disagreed with was the idea that PPI should not be sold at the point of sale. Parker said that point of sale PPI made sense for consumers taking out secured loans because it allows them to make "an integrated decision".

He added, "Separating the point at which advice could be given about the loan and the PPI would appear to run counter to the FISA's Treating Customers Fairly initiative which ensures the consumer's specific circumstances are taken into account when they are receiving advice. In FISA's view the CCA provisions specific to secured loans, which provide for two consecutive, seven-day consideration periods, and those under ICOB, which allow for a 30-day period during which the policy can be cancelled, provide sufficient safeguards for the borrower."

Figures released by the Bank of England help explain why there has been a downturn in high street spending in the UK. The bank says that the amount of money taken out on homeowner loans during January, February and March of this year is down 65 percent on the same period last year.

During these months in 2008 the total value of homeowner loans taken out by consumers was worth only £5 billion, down from £14 billion in 2007.

This £5 billion figure is the lowest since 2001 and sheds light on the reasons why fewer people this year are reportedly less ready to carry out home improvements, purchase new cars and go on shopping splurges.

Howard Archer, who is high-ranking economist with Global Insight, a firm often considered to be the world’s leading economic trend forecaster commented, "This reinforces the belief that we are in for an extended period of consumer retrenchment."