Rent increases tip renters over financial edge

According to recent reports many people who are in rented accommodation are being pushed over the financial edge as a result of not only huge rental increases but also the soaring cost of living, which has impacted hugely on their finances and their ability to keep up with rent payments. According to one leading debt charity the number of people seeking help with regards to their rent payments has soared since the onset of the recession, rising by a massive 84 percent.

National Debtline has stated that the number of people approaching debt charities and advisors for help with regards to rent arrears on their homes is continuing to increase.

One of the reasons behind the rising number of people struggling with their debt is the fact that so many more people are now being pushed towards renting due to problems getting a mortgage, which means that there are more people in a position to fall into arrears with their rent. According to figures the number of people renting in England has increased by 40 percent since 2005 and the rise in demand for rental homes has pushed rental prices up to record highs, leaving renters having to deal with crippling rents as well as soaring living costs.

One industry official said: ‘A few years ago many people in today’s rent market would be planning on buying their first home, but now it seems they are struggling to even pay the rent. On top of those people who call National Debtline with specific problems in affording the rent, there will be even more who are cutting back sharply elsewhere to make sure they can cover rent payments. This in turn can lead to other debt problems, with credit cards, overdrafts and loans being relied upon to pay for food and other essentials.’

Tags: Charitable organization, huge rental increases, impacted, rental prices, rent, accommodation, fact, number

Debt affecting the lives of many students

There is little doubt that the high levels of debt that students have to get into in order to get an advanced education have affected their abilities to do many things in life. For many people that leave university with high levels of debt the next decade or more could be spent focusing on repaying the debt, with everything else having to be put onto the back burner.

A study that was recently carried out has revealed the extent to which many students are having to put their lives on hold in order to focus on their student debt after leaving university. As a double whammy, many now not only face the prospect of having to spend over a decade repaying their student debt but also face very bleak prospects of getting a high paid job because of the current climate.

Uswitch.com carried out research to show how many students are having to put their lives on hold in order to repay their student debt. Over 30 percent had been unable to start a pension when they wanted to according to the reports and nearly 50 percent had been forced to put off buying a home. Nearly 60 percent of students had been unable to save money because of their debts and close to 30 percent had delayed plans for marriage.

One industry official said: “The fact that graduates have to put their life on hold because they are knee deep in student debt is a sorry state of affairs. And as fees go up, students risk running up even bigger debts. But without a degree, getting a job in today’s stagnant market may be even harder.”

He added: “Going to university used to be the norm, but it is now becoming a catch 22. It is also worrying that students are going to university blind to the financial implications. Higher fees and lack of job prospects may be out of your control, but if university is right for you it’s more important than ever that you are as financially prepared as possible.”

Tags: debts, Student loan, Financial services, fact, Higher fees, study, life, official

Are you considering a fixed rate mortgage?

There are many people at the moment who are considering switching to a fixed rate mortgage amidst fears that the base interest rate could increase over the next few months, leading to a rate rise on variable rate mortgages and resulting in higher mortgage repayments. Over recent months many homeowners have waited with bated breath each time a Monetary Policy Committee meeting takes place to see whether the base rate is set to increase.

The speculation with regards to whether the base rate will increase over the next few months has continued to increase. Many believe that the base rate will stay at its record low of 0.5 percent for some time to come because of concerns about the continued fragility of the UK economy. With the rate setters still having to consider the effects a rate increase could have on the economy at what is still a very difficult time some believe that it would be irresponsible for the MPC to increase the rate at this stage.

At the same time many believe that the fact that inflation has soared to way over the 2 percent target set by the government means that the MPC will have to increase the base rate in order to bring inflation down and then keep a lid on it. If this is the case then the base rate may increase sooner rather than later, which could result in homeowners with variable rate mortgages seeing their interest rates and repayments go up.

Anyone that is considering whether or not to switch to a fixed rate mortgage needs to do a little research. It is important to look at the fixed rates that lenders are offering to determine what sort of rate you will be able to get if you do decide to switch. It is also important to work out whether you would be able to afford any increases in repayments if the base rate was to rise.

In this particular climate, with so many differences in opinion with regards to future interest rate movement it is difficult for people to decide whether to switch to a fixed rate deal or just continue with a variable rate one and hope for the best. Some people have already taken action and switch to a fixed rate before the rates go any higher in anticipation of a base rate rise.

One official said: “The stand-out trend in the mortgage market at present is the increase in the number of rate-wary borrowers remortgaging onto fixed rates. People know that rate rises are coming and they are locking in now before fixed rates move higher. Essentially, borrowers are running for cover.”

Tags: speculation, anyone, increase, rate increase, fact, interest rate, uk, committee meeting

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

Using comparison sites for insurance

The cost of home insurance and vehicle insurance can be very high these days, and for the many households that are already struggling to make ends meet financially it can be difficult to afford these rising costs. At the same time having this sort of insurance in place is important to ensure that the home or vehicle is protected, and of course in the case of vehicle insurance it is a legal requirement.

The rising cost of insurance has resulted in an increase in the number of people looking to switch their cover to another provider in order to reduce costs, and this has resulted in a myriad of insurance related price comparison sites springing up over the past couple of years. These sites can often provide consumers with ease, convenience, choice, and speed when it comes to switching their insurance cover.

So, just how effective are these price comparison sites? In actual fact they can be highly effective in helping consumers to find low cost insurance deals that suit their needs and reduce costs, and they are very easy and simple to use. Consumers are able to compare a wide range of insurance options all under one virtual roof with a price comparison site, and the process is quick, simple, and convenient.

In order to use these comparison sites consumers simply need to enter details of their insurance needs and some personal details onto the website, and this will then bring up a list of potentially suitable and affordable insurance plans and providers. The consumer can then simply compare the costs and features of the policies and decide which one best suits their needs and their budget. This enables the consumer to arrange a new insurance policy quickly and easily, and to browse the options and compare with minimal hassle.

However, there are also a couple of things to bear in mind when considering using these comparison sites to cut insurance costs. First of all not all insurance providers are available through comparison sites, so you need to bear in mind that you might still find a cheaper deal directly through an insurance company rather than through the comparison site, as these deals may be available through an insurance provider than does not operate through comparison sites.

Also, remember that there are now many comparison sites in operation, and it is worth checking at least a couple of sites before you make any commitment in order to ensure that you get the best possible deal.

Tags: suit, budget, price, suits, fact, insurance deals

Increase in insurance claims from gap year students

According to a recent report there has been a marked increase in the number of insurance claims being made by gap year students. One insurance firm has reported that the number of claims that are being made by gap year students on their travel insurance policies has leapt by more than half compared to a year earlier.

EssentialTravel.co.uk. which provides travel insurance, said that from December of last year and May of this year the number of claims on its backpacker insurance policy had increased by over 61 percent compared to the same period a year earlier. Just over 52 percent of claims were down to medical expenses, and over 18 percent were for personal effects according to the insurance firm’s figures.

More than half of the claims that were made originated in Asia and Australia, and officials said that this was due to the fact that regulations in these destinations regarding dangerous sports was more relaxed than in many other destinations. The higher claims for personal effects were put down to backpackers often travelling with costly items such as cameras, laptops, and similar high value gadgets.

The group also pointed out that the value of the claims being made by gap year travellers had increased over the past year, rocketing from £77 per claim to £584 per claim, which reflected an increase of 658 percent.

Stuart Bensusan, of EssentialTravel.co.uk, said: “It is unnerving, particularly for parents, to hear that claims from backpackers encountering mishaps abroad are on the rise, but it goes to show how important it is for them to take out adequate insurance before they leave. Preparing for a gap year abroad is arguably the most exciting time in a young person’s life and nobody wants to think about the potential pitfalls.”

Tags: gap year, travel insurance, fact, group, insurance claims, finance, Insurance, dangerous sports

Rules tightened on renting homes by banking industry

According to recent reports the banking industry has decided to clamp down and tighten the rules when it comes to renting out homes. Read more

Tags: short term basis, financial crisis, blasé, fact, industry

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

Tags: giant american express, addition, year, Debit card, back scheme, american express credit cards, fact

OFT Slates Loan Company

The UK watchdog, the Office of Fair Trading, has recently slated a well known loans company that specialises in lending to those that have damaged credit and are unable to find traditional finance from regular High Street banks. Read more

Tags: circles, yes loans, credit, oft, anger, fact

Poor results for equity release advisors

A recent study into the skills and knowledge possessed by equity released advisors has produced poor results according to a recent report, with many of the advisors that were tested showing a lack of knowledge and offering poor quality advice to the rising number of people that have expressed interest in equity release programmes. Read more

Tags: benchmarks, number, equity release, Knowledge, Independent Financial Adviser, fact, offering, equity release advisors

Government and many other credit cards fail to do proper income checks

In the current financial climate most industry experts would agree that credit card providers need to ensure that they carry out proper income checks on applicants to ensure that they can afford the repayments on their credit card debt, particularly given the high level of defaults. Read more

Tags: fact, way, income checks, rate, Labour, Credit Cards, lack, political parties

Consumers advised to pay credit card debt and not save

In the current economic and financial climate, with the recession threatening the jobs of many people, it is not surprising that many people decide to put every spare penny into savings in the event that they should find themselves short of cash or experience a drop in income. Read more

Tags: savings, interest rates, base, Stoozing, fact, Credit Cards, savings account, credit card debt

Prices of UK Homes Still Falling

With the increases in mortgage lending that occurred in the UK during the month of March, many homeowners felt that the recession was nearing an end and that they would soon start to see an increase in house prices. Read more

Tags: home buyers, April, housing market, Mortgages, duty

PM – financial system needs to be regulated through five core principles

The Prime Minister, Gordon Brown, has recently explained why there is such a dire need to look at how the financial industry is regulated in the UK, and to address the issue of stricter regulation not just in Britain but also in other countries so that the needs of the future can be met. Read more

Tags: International Monetary Fund, shadow, fact, bank industry, bank

Another bank gets nationalised

Earlier this year the financial headlines were filled with news about the government taking over the stricken bank Northern Rock. Over the past few days the government has used the same legislation that was used in the Northern Rock takeover to rush through the nationalisation of another troubled bank, Bradford & Bingley. According to reports the government will be taking on the £50 billion loan book of the troubled bank, much of which has been lent to buy to let investors, whilst the Spanish owned bank Santander, which also owns Abbey, takes on the savings account side of the business, said to be value at £20 billion. Read more

Tags: northern rock, Financial services, fact, largest level, bank, bradford & bingley, stability, savings

A quarter of a billion pounds left in accounts says investment provider

A new initiative has been launched to reunite consumers with their lost bank accounts after it was announced that an estimated quarter of a billion pounds has been forgotten.

National Savings and Investments said that the main reason for money being left in accounts is moving house.

Ayesha De Silva, online manager for NS&I, said: “People often hold an account with two or three different providers over the course of a lifetime and when they move house, it’s the simple fact they forget to tell all the relevant people.”

She added that this situation is exacerbated by every move that a person makes meaning that the funds can just “sits there for years and years and years”.

In research carried out by TNS Phonebus last year, national statistics show that ten per cent of people believe they have lost savings they had as a child.

Only 26 per cent of these people have tried to reunite themselves with their lost money.

Tags: inflation, lost bank, National Savings, quarter, cent, house, bank accounts, fact

Foreign currency mortgages: Long-term debt solution

Investors in the UK could find that taking out a foreign currency mortgage will clear their debt in the long term, it has emerged.

According to David Alexander, chief executive at Alexander Associates Group, the best option for those hoping to rely on the strengthening sterling to reduce their debt is a multi-currency mortgage.

“You would hope over a period of 25 years that you would clear your whole mortgage if you’re managing it via a multi-currency mortgage… You would hope that on an annual basis you would average five per cent reduction in your debt,” he said.

He added that those going into a multi-currency mortgage must understand the fact that it is always a long term investment, “just as a mortgage is a long-term debt”.

Reuters reported the pound reaching a four and a half year low against the euro this week, which is also currently enjoying an all-time high against the US dollar.

Tags: high, uk, David Alexander, finance, Financial services, fact

Old people ’struggling’ to get insurance

Ageism is rife when it comes to f”>insurance, according to a spokesperson from Age Concern.

The spokesperson said that many people from the older generation who are still healthy are turned away by insurers.

She explained that one third of people have experiencing age discrimination from insurance companies, with 92 per cent of travel insurance policies imposing upper age limits.

“Someone’s age should not determine whether they are fit to travel. When older people themselves see no barriers to travelling and there are no relevant medical issues then companies should not restrict their activities,” she said.

Furthermore, she continued, insurance companies should be responsive to those who could negatively impact upon their business by looking elsewhere for cover.

Saga claims that the rise in the number of over-50s travelling is proven by the fact their long-haul business has doubled over the last 11 years.

Tags: fact, cover, number, finance, saga

‘Danger thresholds’ show borrowers most at risk

An industry expert has highlighted the fact that many people falling outside “defined thresholds” could be adversely affected by credit crunch.

Fool.co.uk urges mortgage borrowers to recognise the risks they could face from the wider impact of global credit problems by taking guidance from the Bank of England’s Financial Stability report.

It states that those with repayments of over 55 per cent of their total household income are most at risk, standing outside the defined thresholds.

David Kuo, head of personal finance at Fool.co.uk, advised: “Consumers should draw up a Statement of Affairs immediately to get a useful snapshot of their finances. The snapshot will tell, at a glance, whether you fall into one of the ‘at risk’ categories.

“Failing to draw up a Statement of Affairs in the current difficult financial climate is tantamount to driving a car without shock absorbers.”

The Financial Stability report speaks of a “tightening” in the money markets, pointing to the need for more focus on liquidity management and better stress testing among other things.

Tags: income, The, loan, report, Head of Personal Finance, bank of england, testing, fact

Britons ‘banking billions’ at home

UK consumers have managed to hide a whopping £4.6 billion worth of cash around their homes, with the average Brit stashing £127 and an affluent eight per cent sitting on anything between £300 and £1,000 in cold hard currency.

That is according to new research from home insurance provider Cornhill Direct. The company found that 40 per cent of homeowners believe it is a good idea to keep money in the house, while 45 per cent believe that the recent Northern Rock situation could result in more people keeping hold of their own money.

Interestingly, Brits were not put off by feelings of uneasiness about keeping cash at home (one third), nor by the fact that one in ten have had funds go missing.

Mark Bishop, a representative for Cornhill Direct, commented: “Our home contents policy provides protection for money kept in the house, but it is never a good idea to keep large sums in the house.”

Back in May, Virgin Money estimated that Brits were keeping £3.5 billion in cash at home. Based on a forecast of future inflation, it predicted this money would lose around £200 million in purchasing power by 2010.

Tags: Northern Rock situation, home contents policy, Cornhill Direct, new research, northern rock, cent, power, fact

Students should take out content insurance, expert says

Britain’s students were strongly advised today to take out contents insurance on their possessions.

Cooper Healey, who runs Manchester Student Homes – a provider of private sector student accommodation – said that the insurance was important as protection against possible theft.

“There is a chance that you will become a victim of crime,” he said.

Mr Healey added, however, that there was “safety in numbers” in halls of residence “to some extent.

“The fact that [students] are often surrounded by CCTV which acts as a deterrent,” Mr Healey said. “Often they have 24-hour staff on site or otherwise they have a security patrol and security numbers so that does make parents feel very safe about where their child is going to be living.”

There is an increasingly unfavourable financial climate for students to take out perceived “non-essential” cover, however.

Not only are student loans on the rise – which have hit £20,000 for some university entrants this year – but rent is increasing, as well.

In a recent survey by the National Union of Students (NUS), rent was found to have increased by £19 per week on average in the last three years.

Tags: student loans, safety in numbers, sector, fact, victim of crime, CCTV, Manchester Student Homes, education

The dangers of cycling

The Tour de France is set to kick-off in London on July 7th and that means cyclists will be out in force across the UK.

A major event such as this is likely to attract thousands of bikers to the roads but Cornhill Direct warns that many may not have adequate insurance.

The firm says that a number of people are putting themselves and others in danger by failing to ride their bikes properly and within the confines of the law.

Almost half of cyclists admit that they regularly ride on the pavement, despite the fact that it is illegal, while 14 per cent do not indicate when turning and 20 per cent regularly jump red lights.

All of this makes for a dangerous ride and 69 per cent of riders have fallen off their bike at some point, with 14 per cent being knocked off by another vehicle.

“Cycling is hugely popular in the UK and riders would be wise to make sure they have the right insurance cover,” said Mark Bishop from Cornhill Direct.

“If a cyclist were to injure someone they could face a bill of tens of thousands of pounds and if they were injured and unable to work it could cause them and their family real financial problems.

“While cycling can be great fun and good for you, it also carries risks and there is no excuse for riding recklessly and many cyclists admit to doing just that,” he added.

Tags: bikes, Recreation, adequate insurance, someone, cent

Calls for financial education receive support

Calls from the British Bankers’ Association (BBA) for improved financial education in the UK’s schools are receiving widespread support.

The BBA claims that by educating youngsters in personal finances, they are more likely to be able to manage their money in later life.

This in turn will improve the nation’s financial capability and, hopefully, means that fewer Brits will find themselves in debt due to poor management of credit cards and other types of loans
in the future.

“We believe the best way to help people make sound decisions about what to do with their money depends on education. This should start young,” said Angela Knight, chief executive of the BBA.

“Until teachers can no longer choose between teaching financial literacy or not and whilst it remains un-assessed, it is hard to see how we can move from excellent pilot schemes to a complete roll-out across every UK school.”

The BBA’s stance on this issue has been well received by many industry figures who back the idea that personal finance should become a core part of the national curriculum.

“We are pleased that the BBA recognise the importance of personal finance becoming part of the core curriculum in schools and the fact that this should be examinable,” remarked Phil Hall, spokesman for financial education charity ifs School of Finance.

Even if you have already left school it is not too late to learn about money and how you can improve your financial situation.

Tags: fact, debt, literacy, core, british bankers association, pilot

Costs may fall on 100% mortgages

The fact that many first-time buyers are taking out 100 per cent mortgages may be a good thing.

Many commentators and industry experts have warned that the mortgages are dangerous as youngsters are being saddled with large amounts of debt.

However, Ray Boulger, a senior technical manager at John Charcol, says with more people getting them, we will soon start to see 100 per cent mortgages that are value for money.

“Despite the furore surrounding the availability of mortgages reaching as much as 125 or 130 per cent of a property’s value,” he said.

“In actual fact, very few people qualify for that amount of money and the average plus size loan to value is more like 103 per cent.

“The good news for borrowers here is that as competition increases, the premiums usually associated with these kinds of mortgages should be reduced,” added Mr Boulger.

The rise on popularity of 100 per cent mortgages is down to an increased number of people going to universities, according to Mr Boulger, with more people coming away with debt which prevents them from being able to save up for a deposit.

It is predicted by the technical manager that the cost of borrowing on a 100 per cent mortgage will “come down by the year end”.

Tags: economics, Ray Boulger, year end, fact, popularity

Danger of only investing in your home

We are being warned that we could be setting ourselves up for a fall by investing almost all of our money into a single property.

That is according to a report which states that almost two-thirds of us are running the risk of financial ruin by investing too heavily in a single asset.

Researchers at Durham University have discovered that as many as 62 per cent of us invest the majority of our money in a house and could face real difficulties if a housing market drop, like that seen in the late 1980s, were to take place.

“This study really draws attention to the precarious position of the majority of English homeowners’ savings,” said Susan Smith from the university.

“While many would think it strange to invest everything they have into one particular company, to all intents and purposes more than seven million people in England are doing just this by ‘banking on housing’.

“In fact, they are investing almost everything they have into just one building, in one neighbourhood, in one town, in one region, despite the hindsight of a recent housing market collapse,” she added.

The research found that 30 per cent of people take out a mortgage but do not see their home as a way of storing and accumulating wealth.

This apparent lack of vision when it comes to the housing market is even more alarming when you realise that 59 per cent have no other savings or investments to fall back on.

Homeowners are being advised to ensure that they have some secondary savings.

Tags: asset, collapse, property, home insurance, university, Susan Smith, realise, fact

2006 lending hit record levels

Lending in the UK reached record levels during 2006, with the Council of Mortgage Lenders (CML) saying there was a 20 per cent rise on 2005.

In total, £346 billion was lent, with November proving to be the year’s most popular month for borrowing.

In fact, November was a record-breaker itself, recording the highest lending figures ever at £33.1 billion.

The huge lending figures have been attributed to a number of factors, including annual house price growth (around seven per cent) and increased house sales (14 per cent).

“The commentators who thought the housing market would crash in 2006 were wrong,” said Michael Coogan, director general of the CML.

“Last year the market proved itself to be in robust shape and we expect it to remain so during 2007.

“Going forward, many of the key drivers of the market remain positive. The economy is healthy, demand for housing is strong, and house prices continue to rise. As a result, mortgage lending this year is expected to be even higher than in 2006.”

Despite Mr Coogan’s positive outlook for the housing market during 2007, he does have a word of warning in light of the recent interest rate rises.

“The recent increases in interest rates might make many aspiring home-owners think twice about getting on to the property ladder, and we expect to see levels of activity dampen as the year progresses,” he added.

Tags: fact, Economic history of the United States, council of mortgage lenders, house price, activity, cent rise, Council, General