Loan shop opens in Birmingham
A new ‘loan shop’ to support people on low incomes has opened its first UK outlet in in Martineau Place, Birmingham. My Home Finance, part of a National Housing Federation scheme, provides low-cost loans for borrowers who are forced to seek expensive credit elsewhere.
As part of the pilot, ten branches are being opened across the West Midlands and, if successful, will be rolled out to the rest of the UK from April this year.
David Orr, chief executive of the National Housing Federation, officially opened the branch in the city centre.
My Home Finance is described as “a realistic option for those who are unable to access loans from high street banks or have poor credit ratings”. It also offers debt advice, help to open a bank account and access to home contents insurance.
Orr said: "People resort to doorstep lenders because they are usually excluded from the mainstream banking system and cannot access credit any other way.
"This ambitious not-for-profit sustainable scheme shows the determination of the housing association sector, the government and RBS, to help financially excluded consumers join the financial mainstream by saving and borrowing in a fair and responsible manner.”
Orr's message comes in the wake of a 'Stop Loan Sharks' warning campaign from the Office of Fair Trading (OFT). According to Stop Loan Sharks campaigners, as many as 165,000 households use illegal lenders. Half of these households are in the most deprived areas of the country, and the West Midalnds is one of the worst affected areas, according to OFT research.
The My Home Finance branches provide loans of a typical APR of 29.9 per cent, compared to the rates charged by illegal and doorstep lenders, which can range from 200 per cent to 2,000 per cent.
