Some areas are at risk of negative equity, claims expert

There are concerns that certain areas of the country may be prone to negative equity over the next two years, according to the UK property market information provider Mouseprice.

A survey published this month found that 23 per cent of 24 to 34-year-olds are worried about having negative equity and 13 per cent of respondents said they had decided to delay their plans to move until the situation in the housing market situation improves.

Jonathan Upton, business development director at Mouseprice, said: “The conditions that are required for negative equity are present in some areas,” adding that the situation will depend on the level of deposit that people took out, when they bought their house and the profile of the housing market where they live.

However, Mr Upton also commented that it is difficult to tell whether first-time buyers will be particularly hard hit.

In their favour, people who are not yet on the housing ladder may benefit from falling house prices, giving them a stronger hand in negotiations.

Tags: house, business, favour, survey, business development, equity, Business and Economy, provider mouseprice.a survey

IVA not always best solutions, says expert

An individual voluntary arrangement (IVA) is not always the best solution for people facing crippling debt, according to a financial expert.

IVAs are seen as an alternative to bankruptcy, allowing people to settle their debts without damaging their credit rating to the same extent, however there are also drawbacks.

With an IVA, people are tied into paying their creditors for a period of 60 months, or five years. If they fail to make a payment, the arrangement can be withdrawn.

“Many people who take out an IVA initially go in with the intention of paying off their debts, but because it is so onerous they eventually fail anyway,” says David Kuo, head of personal finance at Fool.co.uk.

Record numbers of people are seeking help with debt concerns, with more than 215,000 new debt problems being reported in the first two months of this year, according to a new survey by Citizens Advice.

Mr Kuo noted that around 120 people are having their homes repossessed each day and that these were the most likely to be vulnerable and considering an IVA.

However, he said that in some cases it is best to declare bankruptcy from the outset.

Tags: new survey, Mr Kuo, year, IVAs, best solutions, debt concerns, credit, Citizens Advice.Mr Kuo

Bradford & Bingley: Arrears on the up

UK lender Bradford & Bingley has said that mortgage arrears are continuing to rise as more borrowers are facing difficulties in repaying their loans.

Britain’s ninth-biggest listed bank said that it expect increased payment strain and falling house prices to result in higher impairment provisions, according to Reuters.

Hours after meeting with Alistair Darling, the mortgage lender, which makes over 50 per cent of its home loans to buy-to-let landlords, said its margins were under pressure and it is starting to pass the higher costs on to customers.

Yet the bank also said that the buy-to-let area of its business is performing well, suggesting that it is homeowners who are being hit hardest by the credit crunch.

Those faced with arrears will be pleased with Abbey National’s announcement earlier this week that it will cut rates on its two-year tracker and flexible mortgages by 0.1 per cent.

“We will continue to review the cost of funding and will look to reflect further changes in our mortgage range going forward,” said a spokesman for the bank, adding that it hopes other lenders will follow suit and take action to stimulate the mortgage market.

Tags: Alistair Darling, credit crunch, house, announcement, crunch, loan, range, funding

People using same Pin are risking money

Around ten million people in the UK are putting their money at risk by using the same Pin number for their different credit and debit cards, according to new research.

The study conducted by Opinium Research found that almost a quarter of the 41 million adult cardholders in the UK choose one Pin number for their cards.

However, of those who had been more cautious, 11 million now only use one card because they cannot remember their different Pins.

Steve Willey, head of credit cards at price comparison site moneysupermarket.com, advised cardholders to be more careful, saying: “A little vigilance can go a long way. It certainly beats the trauma and trouble that can be caused by being far too lax with your cards.”

He also warned that people should be careful to keep sight of their cards when making a purchase, since criminals make billions of pounds each year from card cloning and skimming.

Younger cardholders in particular seem unaware of this, with 23 per cent of those aged 40 or under allowing their card to be taken where they cannot see it, compared to 13 per cent of older people.

Tags: younger, billions, business, United Kingdom, Automated teller machine, trouble, research

Saving is sexy again, says expert

More people are putting aside money as saving is “becoming sexy again,” according to an expert.

Emma Byrne, a savings advisor, said that people aged between 18 to 34-years-old are increasingly seeing saving as a financial priority and are more concerned about it than 55-year-olds.

A study conducted by Opinium Research earlier this month revealed that men feel they need an average of £101,999 to be financially secure, compared to a figure of £82,193 for women, making the overall average £92,507.

Furthermore, one in 50 people said they would leave their partner if they were financially secure enough to do so.

Although Ms Byrne noted that a third of people regularly move any spare money they have left at the end of the moth into a savings account, she also voiced concerns about the remaining two-thirds of the population who do not have this habit.

Ms Byrne said: “We’d really encourage people, once they’ve sorted out their monthly incoming and outgoings, to go and put that money into a savings account.”

Tags: Ms Byrne, home, average, Opinium, population, GBP, habit, expert

Postgrads could be hit by credit crunch

Postgraduate students and those taking their second undergraduate degree may face financial problems due to the credit crunch as a number of lenders are withdrawing from the professional studies loan market, the National Union of Students (NUS) has warned.

There is very little state funding for postgraduate students and some of them take out loans to fund their studies, according to Directgov.

Speaking on students’ financial situations, the NUS said US bank Sallie Mae has already stopped providing new professional study loans and other banks may do the same.

Banks offering the equivalent of professional study loans in the UK may discontinue them if they want to reduce their exposure to risk.

Commenting on professional study loans, David Malcolm, head of social policy at NUS, said: “They are much bigger amounts of money and there is more opportunity to default on that. The types of students we are talking about are postgraduates and second undergraduate degree students.”

However, Mr Malcolm offered hope, saying that career development loans are likely to be protected as they are government backed and will not be as exposed to the global credit crunch.

Tags: Financial aid, financial problems, undergraduate, crunch, loan, professional studies, government, National Union

British turning to overpriced “payday loans,” says expert

British consumers are increasingly turning to “payday loan” providers, which offer loans at annual percentage rates (APRs) of up to 1,355.

The loans, which are popular in the US, pay customers up to £750 into their bank account with an agreement to repay the loan at the end of the month when their paycheque arrives, according to a financial expert at fool.co.uk.

However, they typically charge £25 for every £100 borrowed, rising to £31.25 if the customer fails to pay it back on payday and can reach £1,400 if a borrower does not make any payments for a year, claims the website.

“These truly ugly loans are overpriced, overused and over here. Brits are falling victim to this form of borrowing when they should be fleeing from it,” Laura Starkey, a financial expert at price comparison site fool.co.uk, told the Independent.

To survive the credit crunch icWales.co.uk advises people to cut down on car journeys to save petrol, switch their utilities supplier and change credit cards to get the most competitive rates.

Tags: Payday, Credit Cards, Credit card, price, utilities supplier, credit, To survive, comparison

Debtors should not “hide the problems”

People facing serious financial difficulties should not try to “hide the problems” or assume that they can solve them themselves by using their credit cards even more, says an expert.

A recent report has found that 400,000 people took out new solutions for unsecured debt in 2007, with over half (58 per cent) deciding to refinance or remortgage.

David Kuo, head of personal finance at Fool.co.uk, has advised people to ask their lenders for help to try to solve the initial problem of having borrowed too much money, which they cannot repay in the time period stipulated by the lender.

A possible solution is to extend the length of a mortgage which will lower monthly repayments making it more affordable in the short-term and giving the borrower “breathing space,” although the total amount to be repaid will be higher.

However Mr Kuo advises against taking out secured and unsecured loans, since they may compound the problem.

“Sometimes people are a little misguided about how they solve their problems and they try and throw money at them,” Mr Kuo concluded.

As debt problems increase for many people and lenders tighten their criteria, a survey has found that 18,000 applications for credit cards are being rejected each day, according to MoneyExpert.com.

Tags: possible solution, expert, David Kuo, half, time

Expats should have “a realistic financial plan,” says expert

Expatriates should ideally have a “realistic financial plan in place” and take into consideration the cost of the move before relocating, says expatriate and international lifestyle magazine Shelter Offshore.

Director Rhiannon Davies warns that the biggest reason that people “fail to make a go of a new life abroad” is due to financial problems.

A recent survey by NatWest found that the average wage for expatriates working abroad is currently £67,000 compared to the UK average of £47,000, with the United Arab Emirates ranking as the top location in terms of expat earnings.

“Getting financial advice before you go is a good idea,” commented Ms Davies, adding that people who are relocating abroad should seek financial advice since “certain expats can take good advantage of the wealth of offshore savings and investment schemes that there are available”.

Tags: Website, expert, director, united arab emirates, expatriate, good idea, ms davies, GBP

Shoppers choosing cash rather than credit

Consumers are cutting back on their credit card spending and increasingly using cash to pay for their purchases, it has been claimed.

A survey of 17,000 shops conducted by the British Retail Consortium (BRC) revealed that cash was used for 60 per cent of transactions last year, up from 54 per cent in 2006.

The BRC said this shows people are concerned about spending money they do not have and want to keep tight control of their finances.

Another issue raised by the BRC is the cost that credit card companies charge retailers, which is four times the amount of a cash transaction.

Consumers are forced to pay for the extra charges as retailers pass them on through increased prices.

“There should be a lower fixed fee per transaction which actually reflects the cost of processing, so new technology brings balanced benefits to retailers, consumers and banks,” said BRC director general Stephen Robertson.

Savings expert at Scottish Widows, Anne Young, recently said that young people get into trouble due to the “proliferation of credit” that is now available to them, adding that more should be done to educate people on managing their credit.

Tags: scottish widows, young people, Business Finance, Payment systems, online shopping, amount, Financial services, credit

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