Borrowers using pawn brokers to pay off debts and mortgage

The Society of Professional for Mortgage Arrears Counsellors says people in arrears are increasingly turning to pawn brokers to pay off debts.

In its latest newsletter, it says: “The growth of pawn brokers is causing concern, as some borrowers are clearly using various types of personal and portable assets to cover this increasing source of debt.

“The money is often being used for normal expenditure and when used for mortgage payments this way of covering shortfalls can only last until such items are all sold. If as expected any recovery is delayed there will  be a new sector of arrears problems.

The Society suggests lenders should note any evidence of this in reports as it helps to explain gaps between borrowers’ income and expenditure.