Rising unemployment sparks debt fears

Increases in unemployment levels seen in the final quarter of last year have sparked concerns about rising repossessions and spiralling debt problems according to recent reports. Personal debt levels in the UK have been causing concern for the past few years, with the recession, global credit crisis, and difficult financial climate highlighting the debt problems that many people were experiencing.                                                                     

It has been revealed recently that the level of unemployment in the UK soared in the last three months of last year, with the figure increasing by 44,000 taking the total number of unemployed to nearly 2.5 million. Many of those affected by unemployment are younger people. Concerns have now increased with regards to how the rising level of unemployment will affect people that have debts that they are already struggling with and those that have a mortgage to pay.

In addition to this the strong possibility of interest rate rises this year will also impact upon the ability of consumers to pay both their mortgages or rent and their other debts such as credit cards, loans, and other forms of finance. It is thought that the base interest rate, which has been at an all time low of just 0.5 percent for the past twenty two months, will soon have to increase in order to curb spiralling inflation, which is at twice the target level set by the government.

The government has acknowledged that the level of unemployment soared in the latter part of 2010 but claims that it has now started to improve again. Chris Grayling, the Employment Minister, stated: “We’ve got a long way to go and I want to see these figures start to come down, but certainly the evidence is over the past month things have settled down and we are not seeing the increases we saw earlier in the last quarter.”

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Survey shows households in UK still overstretched

A recent study has shown that households in the UK are still overstretched financially, with the findings showing that more than 50 percent of them have been struggling to repay their debts. The study was carried out by the Bank of England and involved polling around two thousand people.

According to the results of the study more than half of households were struggling meet repayments on debts such as credit cards, loans, and other unsecured debts. The results also showed that around 22 percent of consumers had been put off spending money because it was becoming more difficult to borrow money – this reflected an increase from the 16 percent that said the same thing in a poll carried out last year.

In addition to looking at difficulties with debt repayments and spending the survey also looking into how people thought they would be affected by government cutbacks. The results showed that a massive 90 percent of consumers thought that they would be affected by the cutbacks and spending cuts that were being imposed by the coalition government.

However, despite the fact that so many believe that the cutbacks will affect them less than 50 percent had actually taken any steps or action to try and prepare themselves for the possibility of being affected, such as saving more money, looking for a new job, or working longer hours. Reliance on credit cards and loans has been growing according to the Bank of England report, and a quarter of households are struggling to meet payments on bills.

In its report the Bank of England noted: “The burden of unsecured debt has risen this year, most likely reflecting a combination of weak earnings growth and the interest rates on unsecured debt remaining high over the past two years.”

Tags: Household, report, United Kingdom, spending, fact, weak earnings growth, addition, debt consolidation

American Express encourages customers to spend more on cards

One major credit card provider has been encouraging its customers to spend more on their credit cards, according to a recent report. Despite the fact that there is a personal debt crisis in the UK card provider and financial giant American Express is said to be encouraging some of its platinum credit card holders to spend more than double their current spending by making changes to how they will qualify to claim cash back on their credit cards. Read more

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Saving money when shopping for food

The ongoing financial climate in the UK means that we are all looking for ways to save money on our monthly outgoings, and one of the ways in which this can be done is to review your shopping habits. Many of us have shopping habits that end up costing us far more money than we actually need to spend, and in addition to this we also end up wasting a huge amount of food every week, which is basically money down the drain. Read more

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Improvement in High Street sales seen in June

According to recently released figures June saw an improvement in High Street sales levels, partly fuelled by consumers heading out to buy new clothes following the short but significant heat wave seen during that period. Read more

Tags: High Street, consumer spending, high street sales, official, addition

Updated summary boxes could help credit card customers

For many people finding the right credit card can be difficult enough at the best of times, but when credit card providers use technical financial jargon on their marketing materials and application forms this can make the matter even more complicated. Read more

Tags: order, addition, summary box, application, credit card providers, credit card summary box

Consumers warned over belongings in care homes

Consumers have been warned to be careful about belongings that are in care homes, as they may not be automatically insured against theft, loss, and damage. Read more

Tags: care homes, expensive jewellery, damage, Insurance, addition, protection

Buying better than renting in some areas but not all

Over recent months first time buyers have experienced huge difficulties when it comes to getting a mortgage to purchase a property, with the global credit crunch resulting in far tighter credit conditions, and with lenders demanding higher deposits and increasing the interest rates on mortgage loans. With house prices falling, and expected to fall further, those that now commit to purchasing a home could end up facing negative equity in addition to the other problems. Read more

Tags: property, addition, savings thousands, loan, rent, homeowner

Stamp duty shows record increase

The total value of stamp duty generated by the sale of residential property rose by a record level during the year 2006 to 2007, a new report has said.

According to Halifax, HMRC figures reveal that stamp duty revenue rose by 40 per cent over the year to hit £6.4 billion.

The bank also claimed that the last five years have seen a 140 per cent increase in this revenue, up from £2.7 billion in 2001 to 2002.

It is the south of England that has contributed most to stamp duty revenue, the report said, accounting for 73 per cent of the total.

In addition, the higher bands for the tax – three per cent for properties over £250,000 and four per cent for those over £500,000 – contributed 79 per cent of revenue.

“The revenue generated from stamp duty on property purchases has soared as governments of both political parties have failed to link thresholds to house price inflation,” Martin Ellis, chief economist at Halifax, commented.

Addressing the Conservative Party conference in Blackpool the shadow chancellor George Osbourne pledged to increase the stamp duty threshold if they are elected, meaning only properties worth £250,000 or more would qualify.

Currently, homes with a value of between £125,000 and £250,000 are subject to a one per cent stamp duty levy.

Tags: government, price, Conservative, addition, cent, Blackpool, price inflation

Holidaying Britons need ‘comprehensive insurance packages’

Holidaymakers planning to take their car overseas this summer should make sure they are comprehensively covered, M&S Money claims.

The group believes that with the holiday season gearing up to get into full swing, motorists need to make sure their insurance packages cover them to drive in the EU.

M&S Money’s figures show that last year over two-fifths of Britons had no idea whether they were insured to drive in Europe.

The group claims that while a quarter of other policies in the market charge extra for the addition of cover in the EU, M&S insurance includes full policy cover in the EU as standard.

Its policies also include breakdown cover as standard for both the UK and Europe, with only one in ten packages from other insurers including this.

Steve Price, insurance manager for M&S, said: “It’s important to be aware of what’s required for driving in Europe as you may be caught out quite easily.”

He added: “Just as important is making sure you’re covered, which is why we designed M&S car insurance to enable people to carry on with their holiday or get home safely if there’s a problem with their car.”

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Uni sacrificed for mortgage

The difficulties associated with getting onto the property ladder are forcing many youngsters to abandon their education.

New research shows that ten per cent of 18-24 year olds are choosing not to go to university so that they can save some money towards their first home.

With house prices seemingly on an endless upward curve, it is now more difficult than ever to purchase a first home and the costs of university are an unwanted burden for many.

Lloyds TSB carried out the research which highlighted that many youngsters are making big sacrifices in order to get a mortgage.

One in five say that they have abandoned the dream of forging a career in their preferred sector, opting instead for a better paid job that they do not enjoy.

In addition, a further one in six say that they are doing two jobs to save some money, while 54 per cent are living at home indefinitely.

“The fact people are willing to forgo their education highlights the importance of homeownership to the younger generation,” said Alison Burns from Lloyds TSB. “However, these extreme measures may not always be necessary, as the research shows a number of misconceptions about the modern housing market.

“Almost 65 per cent of those we spoke to believe a ten per cent deposit is an essential requirement but this is not the case. Mortgage providers are becoming increasingly flexible to accommodate the changing circumstances of first time buyers.”

Tags: house, percentage, first time buyer, Alison Burns, year, deposit, addition, modern housing market."Almost

Homebuyers cutting corners

A large number of homebuyers in the UK are cutting corners financially as house prices rise and this could lead to big problems in the future.

Research by AA Legal Services highlights an alarming trend of buyers failing to ensure that their new home has been properly checked before signing up to buy it.

The average home in the UK currently costs around £185,000 and Brits owe a combined £340 billion in mortgage repayments.

It is this debt, says the AA, that is causing new homebuyers to run the risk of cutting corners.

“With home buyers stretching themselves to the financial limits to afford their home, many are cutting back on the relatively low costs of basic legal and social inspections,” said James Molloy from the firm.

“New home owners who do not carry out basic checks, face discovering too late that their dream home could actually be a financial time bomb.”

According to AA Legal Services, only 28 per cent of homeowners questioned had commissioned a structural survey on their property or looked at the flood risk.

In addition, only 14 per cent had tried to get an independent conveyancing service, while just 21 per cent looked for an insurance quote and 29 per cent considered council tax costs.

“I’m very worried that so few take steps to protect their investment and ensure that their interests are represented,” added Mr Molloy.

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February increases saving mood

We all begin February with a good financial attitude, a desire to carry out sensible banking and a mood to save.

That is according to Legal & General which has published its Money Mood Survey for 2007.

In it, the firm tries to gauge the mood of the nation when it comes to saving and 2007 has proved to be the third year of growth.

According to Legal & General, 64 per cent of British adults were in the mood to save at the end of February.

This signals a rise of eight per cent compared to the same period in 2005. In addition, the mood to spend has fallen.

The study claims that 2007 saw the lowest mood to spend in February figures ever, with just 24 per cent of adults wanting to splash the cash.

“These latest figures show the Money Mood of the nation is firmly in save mode as we enter the Isa market this year,” remarked Claire Stacey, director of Legal & General.

“Money Mood also found that the percentage of households who said they have money to spend after paying bills and debt payments has not changed over the three years.

“That’s good news as it shows that the majority of households (58 per cent) are in a position to save rather than struggling to make ends meet,” she added.

This year’s Isa deadline is April 5th so if you are considering saving your money in a high-interest account you had better hurry.

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Protect home ahead of severe weather

Homeowners are being warned that they should protect their home from the elements as the UK endures a period of severe weather.

Insurance firm Saga says residents must take precautions in order to avoid having to fork out for weather related damaged.

Particular emphasis is being put on encouraging people to check the outside of their homes ahead of any more storms that may hit the country.

Saga is urging homeowners to ensure snow is cleared as quickly as possible, to avoid leaks and damp, while loose putty in windows can cause problems with allowing water to get inside the house.

In addition, people are encouraged to keep a torch and batteries handy in case of a power cut, while doors should also be kept closed in order to retain heat.

Flooding is another major problem which can have a devastating effect on a home. In some parts of the UK it is advisable to take out insurance against flood damage.

It is possible to find out if you live in an area liable to be flooded by calling the Environment Agency’s Floodline.

Saga has produced a free guide, called Prepare Your Home for Bad Weather, aimed at helping homeowners during the winter months.

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Average house price £100k+

House prices have continued to grow, with new research showing that every county in the UK has an average house price above £100,000.

The data, collated by Halifax, signals the first time ever that this has been the case and demonstrates a massive growth in average prices.

In 2001 there were 63 out of 101 counties with an average price below £100,000. In addition, only Surrey had an average price of £200,000 back then.

The latest survey shows that 19 counties had an average house price of at least £200,000.

Scotland and Wales saw the biggest growth in house prices, with the top ten fastest growing counties being in these regions.

“Wales, Scotland and, to a lesser extent, Northern Ireland, have dominated the UK county league table for house price growth over the past five years,” said Martin Ellis, chief economist at Halifax.

“Southern England, by contrast, has lagged behind. Much of the out performance by these parts of the UK has been part of a catch-up process with the greater availability of more affordable property stimulating demand and therefore allowing prices to rise more quickly.”

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