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.”

Tags: concern, Minister, addition, business, strong possibility, interest

UK asking prices getting lower

A recent report has shown how asking prices on properties in the UK are getting lower with a fall of an average 3.2% in asking prices over recent weeks. The data comes from property experts Right Move. Many experts have already predicted that the housing market will continue to cool down over the coming year, and there has already been much evidence that the housing market is far more subdued than it was earlier in the year, with a number of factors dampening the housing and mortgage sectors.

One of the factors that is thought to have affected the housing market is the roll out of Home Information Packs, which were rolled out to all residential properties being marketed for sale in England and Wales from the middle of December 2007. This has caused “further confusion at a sensitive time for the property market” according to some experts. However, experts from Right Move have added that there is always a slowdown at this time of year.

Asking price averages have also fallen because there are now more smaller, lower prices properties coming onto the market rather than larger, more expensive properties, state experts. There was an average fall in asking prices of 6.8% in the London area according to figures, and this has also been partly blamed on the level of smaller properties coming on the market rather than larger houses and apartments.

One Right Move expert stated that over the coming year house prices are more likely to stagnate than actually crash. He also said: “New listings are low at this time of year so the artificial wave of ‘low-end’ sellers has really distorted the average prices of properties new to the market.”

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Tags: mortgage, uk, first time buyer, housing market, United States housing bubble, evidence

Student finances not ‘greatly’ affected by credit crunch

The National Union of Students (NUS) has announced that finances for this year’s intake of students were not ‘greatly’ affected by the credit crunch.

A spokesman for the NUS said that there has been little evidence to suggest that banks are overly worried about students.

He said: “The risk outlay on students is that much less than for giving out a mortgage and they also take the view that a graduate is likely to be a customer for the rest of their life and they are willing to take that risk.”

HSBC’s adding of interest to graduate accounts is the only evidence of a tightening of credit he commented.

Statistics published by the Office for National Statistics show that the maximum amounts available to new students in 2007-8 are 76 to 85 per cent higher than they were ten years ago.

The NUS is a voluntary membership organisation comprised from student representative organisations in colleges and universities from across the UK and Northern Ireland.

Tags: nus, evidence, economics, office, finance, life, National Statistics, voluntary membership organisation

Bank holds interest rates

The Bank of England’s monetary policy committee (MPC) has decided to keep interest rates at 5.75 per cent for at least the next month.

Although rates have not risen since July, that was the fifth rise within 12 months and there were concerns earlier in the year that rates would hit six per cent before the end of 2007.

However the inflation rate currently sits at 1.9 per cent, below its target level of two per cent and the current problems in the financial markets are making further rises less likely.

In a statement that accompanied the decision, the MPC said that it had considered carefully the effects that recent credit market problems, brought about by the collapse of the US sub-prime borrowing market, could have on the inflation rate.

Responding to the news, the Council of Mortgage Lenders (CML) welcomed the bank’s decision to hold rates steady at 5.75 per cent.

Micheal Coogan, director general of the CML, said: “Credit conditions have tightened since the rate went up in July, and a further increase would have added to the liquidity problems we are already seeing in some sections of the market.

“At the same time, there is now much clearer evidence that the cumulative effect of five rate rises since last August is slowing activity in the housing market.”

Tags: bank, Council, cml, time, interest, US

Nationwide house price report shows slowdown

Nationwide house price report shows slowdown

Further evidence for a rapidly-cooling house price market comes today, with the release of the monthly report from lenders Nationwide.

Seasonally adjusted, house prices made a gain of 0.1 per cent for July – the slowest growth for over a year, and a negation of the gains from the last set of results in June.

The annual rate of inflation is also down, currently standing at 9.9 per cent: numbers had been in the double digits for the last three months.

Nationwide starkly stated that the “risk of monetary overkill” looms large over the housing market.

The lender also welcomed the government’s housing green paper, which proposes that more affordable homes be built; yet “as the recent flooding shows, the challenges ahead are substantial”, it adds.

Many analysts will be surprised by the results, with Reuters reporting that a 0.5 per cent gain and an annual reading of 10.6 per cent had been predicted.

Tags: Toronto, growth, government, housing market, Real estate, slowdown

PPI market faces scrutiny

The Office of Fair Trading (OFT) has decided to refer the UK payment protection insurance (PPI) market to the Competition Commission (CC).

A public consultation was held following an original proposition by the OFT for the referral back in October.

Businesses, consumer organisations and trade associations were asked to give their views on the market and the responses confirmed the OFT’s prior concerns.

“Our examination of the evidence presented to date gives us reasonable grounds to suspect that there are features of this market which restrict competition to the detriment of consumers,” said John Fingleton, chief executive of the OFT.

“Despite some evidence of a degree of consumer satisfaction with aspects of the product, the evidence as a whole suggests consumers get a poor deal.”

The organisation says that the CC can now carry out a thorough investigation of the market, offering the chance for a solution to be reached.

The Financial Services Authority is currently working to remedy some of the problems present in the market in terms of selling practices. However, the OFT feels that this alone will not fix the current problems.

Those of you considering a loan may find that you are better off getting PPI, but should shop around for the best deal.

Tags: public consultation, commission, evidence, United Kingdom, consumer, trading