Loan hikes have made millions for UK banks

According to a recent report banks in the UK have managed to make millions of pounds as a result of sneaky hikes on loans and other forms of borrowing. The claims have been made following an investigation by a finance group, which shows that since they started making huge losses during the credit crunch the banks have been merciless on their attack on consumers in order to try and shore up their own finances.

It is claimed that banks have been making up the losses on their books by slyly increasing the rates of interest charged on borrowing whilst at the same time reducing the rate of interest on savings accounts to the point where some savers are earning practically nothing on the money that they put into their savings.

Officials claim that banks are getting away with this because of the rock bottom base interest rate, which still stands at just 0.5 percent, which is the lowest it has ever been in the history of the Bank of England, and it has been at this level for well over a year now.

The low base interest rate has fooled many people into thinking that borrowing is cheap at the moment. However, what has in fact happened is that the gap between the base rate and the rates that lenders are charging has expanded resulting in what has been described as an eye watering margin. The fact that the base rate is so low, coupled with the fact that many of these banks have been bailed out by the taxpayer, appears to have provided no benefit to borrowers.

An official from the consumer campaign group Which? said: ‘We paid for the banks’ failures once when we bailed them out and now they are getting a double hit by taking more of our cash.’

Tags: Economic history, credit crunch, investigation, interest rate, banks, Loans, finance

Is the recession finally over?

To many people it may feel as though the UK has been stuck in recession forever, and the recent recession has resulted in many businesses and consumers suffering hugely as a result of job losses, plummeting sales and profits, and financial and economic chaos. Read more

Tags: Macroeconomics, recessions, Economy of the United Kingdom, Late-2000s recession, Economic history, economics

Branson not happy about bailouts for other firms

Successful and world renowned businessman Sir Richard Branson has recently expressed his views on the topic of the government using taxpayer’s money to bail out other businesses in addition to the financial industry. Read more

Tags: Bailout, Politics, richard branson, government bailout, British people, Economic history, money, recession

How safe is your job?

Many of us thought that 2008 was a rocky year, but there is a lot of evidence pointing to the fact that this year could be even more turbulent, not least because of the number of jobs losses that are expected. Read more

Tags: global credit crunch, year, unemployment, property sales, Economic history, job losses, number, official

House prices plummet at a faster pace than in the 1990s

Many people that are in their thirties and over will still clearly remember the dark days of the 1990s recession and house prices crash, where many people were left in negative equity after property prices plunged. Many are seeing the same patterns for again now, with the global credit crunch leading to plunging property prices and the year finishing with a recession where many businesses are going into administration. Read more

Tags: Economic history, faster pace, house price fall, finance, IHS, economics, Lloyds Banking Group, Real estate economics

Brits focusing on repaying their mortgages

Recently released figures have indicated that many Brits are now focusing on trying to repay their mortgage debts rather than accruing even more debt. In the third quarter of this year more money was ploughed into the housing market than every before, as Brits tried desperately to pay off as much as they could on their mortgages and tried to avoid getting deeper into debt. The figures were released by the Bank of England and related to mortgage repayments between July and September of this year. Read more

Tags: England figures, Mortgages, mortgage debts, scared stiff, housing market, United States, independent mortgage broker, Economic history

Banks could make billions from increasing profit margins

According to a recent report many of the UK’s major banks could end up making billions of pounds in extra profits by increasing the margins on loans and mortgages. It is thought that the banks could end up making around £3.6 billion as a result of these increases, so although the Bank of England base rate has fallen from 5.75% to just 3% over the past year the banks are still set to make huge profits. Read more

Tags: industry official, Economic history, Mortgages, money products, bank profits, Loans

Britain facing recession by end of year

Over recent weeks a number of industry professionals and groups have said that Britain will slide into recession by the end of the year. The latest warning comes from the European Union, which has warned that a number of countries face recession by the end of this year. There was also a stark warning from the Organisation for Economic Co-operation and Development, which said that Britain has the worst outlook of any major economy when it comes to growth. Read more

Tags: Economic disasters, outlook, Co-operation, Economic history, european, European Union, key financial markets

Average family pays £42 per day in bills

The average family in the UK is spending up to £42 per day on bills, a figure which is expected to rise further according to new figures.

Findings from Data show that the cost of primary bills has risen to £3,426 a year for the typical UK household, which is expected to increase more when the council tax and water bill increases arrive.

Added to the average mortgage costs, which equate to £12,000 per year, the average household bill works out at over £15,000 per year – or £42 per day.

Moira Haynes, a spokeswoman for Citizens Advice, said: “Our debt inquiry figures suggest that growing numbers of people are not only finding themselves over-committed on credit cards, loans and overdrafts, but are also struggling to meet day-to-day living expenses.”

Despite being the lowest increases for 14 years, a survey from the Times showed that the average council tax rise will be 3.9 per cent, which equates to an additional £52 per month on a band d property.

Tags: cost, Economic history, bill increases, month, living

British property market is in “danger”

The British property market is in danger zone which is set to continue beyond 2008 and into subsequent years, claims the Daily Telegraph.

Findings from the Daily Telegraph and Lombard Street Research Housing Affordability Index has revealed that house prices can no longer be classed as affordable, due to the combination of inflation and increasing debt costs.

Speaking to the Daily Telegraph, Diana Choyleva, the director at Lombard Street Research, said: “I would say that around about now house prices are in unaffordable territory – this is the danger zone for the market.

“It is still too early to say yet whether what happens next will be as bad, or perhaps even worse, than the early 1990s crisis,” she continued.

The index suggests that house prices are currently at their most overvalued since 1991 when many homes were repossessed.

Meanwhile, new research from Your Mortgage magazine has revealed that house price growth in inner London should hit 4.6 per cent with Greater London seeing 4.3 per cent growth.

Tags: cent, Housing Affordability Index, Economic history, growth, Affordability

2008 set to be ‘a tough year financially’

2008 is “going to be a bit of a shock” and a “tough year financially” for consumers, according to a financial expert.

The end of fixed rate mortgages and the rising price of gas and electric bills both contribute to the more pessimistic financial outlook for next year, says AWD Chase de Vere.

Susan Hannums, savings manager for AWD Chase de Vere, said: “I think it is going to be harder to save, but the thing we need to drum in more than anything else is that we’ve got to start paying off and get away from using credit all the time.”

She added that borrowing “is really what got us here in the first place”.

Consumers need to think of other methods of saving to “turn things around”, concluded Ms Hannums.

Research from Credit Action earlier in the year revealed that total personal debt in the UK has reached £1.25 trillion.

Tags: anything, concluded ms hannums, Economic history, year, Vere, Business Finance

House prices fell by 0.5 per cent in October

More evidence that the housing market is slowing down was published yesterday.

Halifax’s monthly housing market report, published on Thursday, found that average prices fell by 0.5 per cent in October.

Although this contradicts figures published by Nationwide late last month, it is the second consecutive month in which Halifax – the country’s biggest mortgage lender – has recorded a drop.

Halifax reported that house prices fell by 0.6 per cent in September.

Nevertheless, the lender was confident about the long-term strength of the housing market and the economy.

Chief economist Martin Ellis said: “The UK economy is in a strong position. High levels of employment and a shortage in the number of properties available for sale will continue to support house prices.”

A recent study of the market by PriceWaterhouseCoopers claimed that houses in the UK are 10 per cent overpriced compared to average salaries.

Halifax’s study comes as the Bank of England held interest rates at 5.75 per cent for the fourth month in a row.

Tags: interest rates, Economic history, halifax, second consecutive month, martin ellis, uk

Negative equity from 110 per cent mortgages

So-called ‘110 per cent’ mortgages, which do not require an initial deposit from holders, are becoming an increasingly popular option among home buyers, with house prices in the UK growing fast.

First-time buyers in particular, who tend to be younger and have little or no savings, find them particularly appealing.

However, industry experts, including those at Baronworth Investment Services, counsel against seeing taking out such a mortgage as a risk-free endeavour.

Michael Brill, a director at the company, said that the ideal 110 per cent buyer was “The young professional… who hasn’t got a deposit and knows they are going to have a nice increase in salary in a couple of years time.”

However, he warned that “if we have a crash in property with a negative equity from a 110 per cent mortgage”, holders “could end up with further negative equity.

“That is one of the big disadvantages”, Mr Brill surmised.

The Council of Mortgage Lenders (CML) recently revealed that the proportion of first-time buyers in the UK rose from 48 per cent to 56 per cent in 2006.

Tags: house prices, couple, Economic history, increase, first time buyer, proportion, professional

Scottish house prices grow

Those of you considering taking out a mortgage on a property in Scotland may want to act quickly after prices in the country recently spiked.

Figures from Lloyds TSB Scotland show that house prices in Aberdeen, Edinburgh and Dundee increased in the last quarter.

The reasons behind this are varied, with Lloyds putting it down to a rise in mortgage transactions, a low number of homes on the market and a rush to take advantage of fixed-rate deals as interest rates rise.

The average property price in Scotland rose by 6.8 per cent in the three months to April 30th, putting the average price at £154,344.

“Average prices [in Scotland] are some three quarters of the UK level and continue to be propelled by a combination of favourable economic background and demand for houses exceeding the supply,” commented professor Donald MacRae, chief economist at Lloyds TSB Scotland.

“Recent rises in interest rates will have a slowing effect on these house price increases. This latest surge is expected to moderate and may be followed by a decrease in the next quarter.

“This latest increase in Scottish prices may well be the last surge before the much forecasted slowdown,” he added.

The biggest house price increases were seen in Aberdeen where the year-on-year rise was 25 per cent.

Tags: uk, professor donald macrae, £154, Economic history, aberdeen, lloyds tsb, increase, edinburgh

Scottish house prices slow down

The top end of the Scottish housing market is showing signs of slowing down, according to Lloyds TSB.

The Bank’s Scotland House Price Monitor (SHPM) has highlighted that the market continues to grow, but has slowed down when compared to previous figures.

Looking at the three months leading to January 31st, the SHPM showed that the average house price rose by 3.3 per cent, well below the annual rise of 11 per cent.

The biggest annual rise can be seen in Aberdeen, where there was an 18 per cent increase. Although this is a large rise, it follows a slowdown in the spring of 2006.

The figures from Lloyds make good reading for those of you looking to take out a mortgage on a property in Scotland and, although overall prices appear to be falling, the Scottish market is still doing very well.

“The rate of increase of house prices in Scotland continues at a robust pace propelled by a favourable economic background and demand for houses exceeding the supply,” said professor Donald MacRae from Lloyds TSB Scotland.

“First time buyers are showing increased interest in the market. The Scottish economy is forecast to show growth of around 2.25 per cent in 2007.”

Looking at the slowing down of price increases on some Scottish properties, Mr MacRae said that this is just a natural trend.

“There is clear evidence of a slowdown in price increases at the higher end of the market,” he commented.

“Recent increases in interest rates will continue to moderate further house price rises from these high levels. The prospect for the Scottish housing market is a gentle slowdown in the rate of price increase.”

If you want to invest in a property it may be worth considering Scotland, where the average house price is around £147,763.

Tags: Economic history, average house price, Scottish economy, gentle slowdown, lloyds tsb, trend, favourable economic background