Banking crisis easing according to central bank

It has been reported that the Bank of England in the UK has claimed that the crisis that has hit the banking industry has started to ease off, although it does not deny that the system remains highly vulnerable and could be easily hit by disruption again. Read more

Tags: credit crunch, paul tucker, Central bank, banking crisis, bank of england

40 percent bonus increase for FSA staff

In the midst of the ongoing financial crisis the UK’s financial regulator, the Financial Services Authority, has hiked up staff bonuses by a whopping 40 percent, according to recently released reports. Read more

Tags: northern rock. liberal democrats, climate, past year, fsa bonuses, figure

Consumer spending on cars set to decrease

The number of consumers expected to buy a car over the next six months is set to drop according to new statistics.

Findings from Sainsbury’s Bank show that 6.86 million people plan to purchase a vehicle between March and August 2008, almost one million less people than in the preceding six month period.

The research showed that £47.5 billion will be spent on purchasing cars over the next half year, a figure which represents a £11.1 billion decrease on the previous September 2007 to February 2008 findings.

Steven Baillie, head of loans with Sainsbury’s Finance, said: “Our findings would indicate that both the number of people who are looking to buy a car over the next six months and the total amount expected to be spent on car purchases are at their lowest levels since March 2005.”

The figures also show that up to 30 per cent of people who intend to buy a vehicle over the next six months finance at least some of their purchase with a loan.

Meanwhile, research from Sainsburys shows that over £1 billion worth of loans will be used to finance weddings during 2008.

Tags: Sainsbury, Sainsbury's Bank, looking to buy a car, purchase, period, figure, head of loans with Finance

Store cards ‘most expensive form of credit’

Store cards are probably “the most expensive form of credit that anyone can consider, claim debt experts.

Thomas Charles said that if consumers do decide to take a store card out, they should think very carefully about how they intend to pay the balance off.

James Falla, managing director of Thomas Charles, said: “My advice 100 per cent is don’t take out a store card full stop.”

He stated that this is because the average store card is 29 per cent APR, a rate which is “very, very high”.

Mr Falla also added that the credit crunch has resulted in credit criteria being tightened with some consumers claiming their limits are being reduced.

According to recent research by comparison site uSwitch, shoppers with store cards are paying an average of 62 per cent more interest than those using credit cards.

The average store card APR is 26 per cent – a figure ten per cent higher than the average credit card at 16 per cent APR.

Tags: average store card, figure, United States, Payment systems, anyone, cent, falla

Bridging finance has an ‘important role’ when credit is hard to get

Bridging loans can play an “important role” during tough financial times, one financial expert has claimed.

Business Moneyfacts said that bridging finance is “ideal” for any situation where funds are required quickly and for short periods.

Bridging loans can benefit property professionals looking to acquire property quickly at a time when the number of repossessions is increasing due to the amount of properties going to auction, claims the firm.

Lee Tillcock, editor of Business Moneyfacts said: “Investors buying at auction have often used bridging because they are required to complete within a few weeks of a successful bid when conventional mortgages are sometimes unworkable.”

He added that in a financial environment where credit is difficult to secure, the bridging option can provide a short term solution while that “ever-more-elusive long-term mortgage” is finalised.

Meanwhile, figures recently released by the Council of Mortgage Lenders show that in 27,100 homes were repossessed last year.

This is the highest figure since 1999 and a 21 per cent increase on the number in 2006.

Tags: finance, loan, figure, personal finance, term mortgage, cent, Bridge loan, Council

Ethical consumer investment increases by 18% says survey

Up to 85 per cent of consumers expected to put their savings into an individual savings account (Isa) before April will use an ethical investment scheme new research claims

According to a survey from the Co-operative, this figure has increased from the 67 per cent who said they would invest ethically in the same survey last year.

The latest results show that nearly 80 per cent of respondents believe that ‘green’ investments can perform as well, if not better than mainstream markets.

Zack Hocking, head of investments at Co-operative Insurance, said: “While ethical investment still represents a small amount of the overall market, evidence strongly suggests that growth is set to continue.”

Mr Hocking added that the Co-operative expects increasing numbers of consumers to invest ethically as the deadline approaches.

Meanwhile, according to moneyextra.com, a survey from Nationwide estimates that savers in the UK could be paying more than £230 million extra in tax by not taking advantage of their yearly Isa allowance.

Tags: investments, figure, investment, head of investments, GBP, yearly isa allowance, expects increasing numbers, amount

Millions switched banks in 2007

According to recent report millions have dissatisfied customers have switched from their existing bank to another bank this year, indicating the high dissatisfaction levels with the banking industry.

Read more

Tags: overall figure, bank accounts, switch bank accounts, Poor customer service, report

Remortgaging is ‘very popular’

Remortgaging has become ‘very popular’ in the last few years, according to a spokesperson for independent mortgage adviser Charcol.

Ray Boulger, senior technical manager at John Charcol, said: “The average life of a mortgage now is only three and a half years. And the reason it is so low is that a lot of people do remortgage frequently.”

He advised that those who are considering remortgaging need to examine their arrangements approximately three months before they reach the end of their current deal.

The key consideration to look at when remortgaging is how much such a deal will cost over the entire duration of the mortgage period, said Mr Boulger.

“The most important thing is to make sure the new mortgage you take out is affordable,” he concluded.

In November of this year, the Council of Mortgage Lenders reported that remortgaging and other lending was at £11.1 billion in September.

This figure was higher than the £11 billion of lending in August and the £10 million in September of last year.

Tags: mortgage adviser, remortgaging, spokesperson for independent mortgage adviser Charcol, adviser, consideration, figure, mortgage lenders, half

Debt becomes ‘norm’ for Brits

Getting into debt is now accepted as normal and in many cases necessary, an industry expert has said.

Alastair Mathews, director of policy educational charity pfeg, explained that if people wish to go to university or buy a house, most will rely on loans to do so and will thus not be able to avoid getting into debt.

With credit easily available to those needing it over the past few years, it has been easier than ever to build up considerable debt.

“We have almost officially built debt in to the system now,” said Mr Mathews.

He continued: “We have a changing culture from the traditional British attitude of wanting something and saving for it – where maybe you waited for half a lifetime for it – to now, where the feeling is ‘if I want something, I’ll have it’.”

According to statistics from Credit Action published this month, total personal debt in Britain stands at £1,380 billion. This figure has gone up by an impressive £120 billion (10 per cent) in the past twelve months.

Tags: industry expert, debt, cent, figure, director, Britain, business

Rising inflation targets young and old

Inflation is rising, and it is hitting the oldest and the youngest hardest.

In October, inflation rose above the predicted rate of 2.1 per cent – itself above the Bank of England’s 2.0 per cent target – but for over-75s and under-30s, the figure was even higher, at 2.5 per cent.

The breakdown of the impact of inflation on different age groups has been carried out by the Alliance Trust Research Centre.

Younger people have been hit by above-average increases in the price of food, rent and education, while older people have been especially vulnerable to changes in the cost of food, which constitutes a high proportion of their outgoings.

Although energy costs have dropped in recent months, this has been outweighed by rising prices in other areas.

Inflation in food prices this year stands at 5 per cent, while road fuel prices are rising by 12 per cent.

Shona Dobbie, head of the Alliance Trust Research Centre, said: “Throughout the course of our study, which started in 2003, the elderly have consistently suffered the highest levels of inflation. Now they are being matched by the young.

“More than four years of higher-than-average inflation has been eating into pensioners’ budgets and it looks like this situation is going to continue for some time. We are also concerned about the more recent trend of young adults also facing inflation which is significantly higher than the headline rate, largely due to higher rents and education costs, as well as the costs of basic goods.”

Tags: fuel prices, inflation targets, fuel, figure, road, Business Finance, above-average increases, headline rate

Fixed-rate mortgages on expensive buys

Property investors are advised to take out fixed-rate mortgage when purchasing high-value properties.

According to Bestinvest, when mortgage repayments increase by even a small amount, homeowners paying off debts on a high-value property can find their repayments increasing dramatically.

With any changes to the Bank of England’s interest rate, house prices and borrowing costs are directly impacted. With a fixed-rate mortgage, buyers are not vulnerable to these fluctuations.

Peter O’Donovan, mortgage manager at Bestinvest, advised that young professional first-time buyers should consider a mortgage with a fixed rate: “It obviously is down to the person’s view of risk, and what they have in the background to support their mortgage repayments.

“But in general I would suggest to people borrowing a larger sum for the first time to take a fixed rate, because it’s quite a large part of their disposable income going [towards repayments].”

The latest statistics from the Council of Mortgage Lenders show that 3,000 mortgages worth £250,000 to £500,000 were taken out in July this year by first-time buyers. This represents a rise from January’s figure of 2,000.

Tags: figure, risk, interest rate, Peter O'Donovan, fixed rate mortgage, manager

Students expect to be in debt

Young people in university education now treat debt as an expected way of life, it is claimed.

National Debtline spokesperson Becky Boden-Wilkes has commented that young people in Britain are no longer frightened and more accustomed to getting in to debt because they are used to acquiring an overdraft or student loan from the age of 18.

However, despite most graduates expecting to accrue a debt total of £15,000 by the age of 21, she said, students are not worried about the issue because they belief their learning potential accrued from university will enable them to pay of their debt later in life.

Thisismoney.co.uk recently reported that debt among UK graduates has increased by 197 per cent over the last decade to a current total debt figure of £3.2 billion.

Ms Boden-Wilkes acknowledged that students are encouraged to make friends and meet new people when they begin university, which can result in a substantial expenditure of money.

“There definitely needs to be more talk about budgeting and people working out what they need each week,” she said.

Tags: UK graduates, substantial expenditure, university education, figure, budgeting, cent, Public finance, Britain

Gapyear travellers “don’t understand insurance”

People taking a gap year do not understand travel insurance and see taking it out as an obligation, according to one industry figure.

Tony Griffiths, the founder of gapyear.com, states that although gapyear travellers are becoming more aware of the importance of taking out insurance, they do not understand “what it is or what it does”.

Mr Griffiths also said that some travellers feed they are “indestructible”, particularly males who are aged between 18 and 24. He also added that many people have a “it won’t happen to me” attitude.

“The reality is most of the claims are for things like people falling off a curb. We had an example of someone who fell off a curb in Barcelona and broke their ankle.”

Gapyear.com is part of the Gapyear Company, which is an organisation that provides free information and advice to people considering taking a year out.

It states that 25 per cent of people on a gapyear have either no or inadequate insurance, and that the average spend of 18 to 24-year-olds while travelling is between £3,000 and £4,000.

Tags: advice, Financial economics, com, reality, cent, figure, Gap, Australia

Mortgage lending down

Mortgage lending fell in April of this year but is still markedly higher than the same period in 2006.

Figures from the Council of Mortgage Lenders (CML) show that borrowing fell to £28.8 billion in the month.

That is down nine per cent on the £31.7 billion which was borrowed in March but remains 18 per cent higher than figures from April 2006.

It is also the highest ever figure recorded for April but CML officials say that the market is levelling out.

“Lending is still strong, but it does seem to be stabilising in 2007 following its major growth in 2006,” said Michael Coogan, director general at the CML.

“With higher interest rates now beginning to have an impact, the modest slowing in activity that we have been expecting over the rest of the year looks set to materialise.

“Even so, we continue to expect lending in 2007 to be around four to five per cent higher than in 2006,” he added.

Tags: economics, April, borrowing, month, rest, materialise, figure

Cash machines reign supreme

The way we carry out our banking and, in particular, the way we get our cash has changed radically in the last ten years.

New research by the UK payments association Apacs has found that cash machine withdrawals nearly doubled between 1996 and 2006.

Ten years ago, only 34 per cent of our cash demands were met by cash machines, while in 2006 that figure stood at 65 per cent.

In addition, other card-based withdrawals, including cashback and over-the-counter transactions, have also grown, from eight per cent in 1996 to 12 per cent in 2006.

The total amount of money withdrawn from cash machines hit £180 billion last year, growing from £80 billion ten years previous, with Sandra Quinn from Apacs putting the shift down to a change in attitudes.

“On the supply side, there has been a steady trend by business and government away from the payment of wages and state benefits by cash and a huge growth in the number and accessibility of cash machines,” she said.

“There is now a massive number of cash machines in the UK – over 60,000 in total. Demographic trends have also shaped the pattern of cash acquisition; in 2006 for the first time, more than half of over 65s are regular users of cash machines.”

Experts predict that the trend will continue with 81 per cent of our cash coming from a ‘hole in the wall’ in 2016.

Tags: hsbc, steady trend, cash machines."Experts, hole in the wall, time, payment

Homeowners losing £40m on insurance

Homeowners who fail to shop around for home and life insurance are losing out on a combined £40 million per year.

The figure has been put forward by the Post Office which says many Brits simply get their insurance from their mortgage lender due to convenience.

Around eight million people in the UK opt to buy their insurance from the same firm that gives them their mortgage, with one in ten people incorrectly believing that it was compulsory that they do so.

A further one in 20 were convinced that their loan would be at risk if they did not also buy insurance, while 63 per cent chose their mortgage provider’s insurance because it was convenient to do so.

“Convenient doesn’t always mean cheap,” said head of insurance at the Post Office Phil Ashkuri. “Many homeowners don’t realise taking out buildings and contents insurance with their mortgage lender is generally not the best value deal. And it’s not compulsory for securing their mortgage.

“Our advice is shop around as there are better home insurance deals out there from standalone providers.”

The majority of buyers will be able to find a better deal by getting their insurance from a different source to their mortgage, loan or credit card provider.

Tags: homeowners, Agents and Marketers, better home insurance, Types of insurance, shop, Brits

Brits splash the cash on furniture

Brits are spending more on furniture and furnishings for their homes with the latest figures showing that we spent a combined £13.5 billion in this way during 2005.

The figure equates to an average of around £531.50 per household over the year or £10.22 per week.

Experts have highlighted that the amount spent on furniture and furnishings has rocketed by 70 per cent in the last ten years, with the average spend in 1995 being just £6 per week.

Although the amount being spent in this way is growing rapidly, Halifax says that there is no need to curb our spending as long as it is financed sensibly.

“When it comes to furnishings, we all love filling our homes with creature comforts but this shouldn’t leave you with empty pockets or paying high interest for months afterwards,” said Ken Stannard, head of Halifax Credit Cards.

The firm is encouraging consumers to make sure that they are fully aware of the true cost of any items they buy and wants people to shop sensibly.

Despite the high figures regarding the amount we spend on furniture, it is worth noting that the average person spends just one per cent of his or her disposable income on such items.

Tags: Business Finance, creature comforts, love, empty pockets, figure

Beware of credit card costs

Britain’s top 20 credit cards use 12 different ways to calculate interest, meaning that ‘cheap’ credit cards could cost more than you may think.

According to Which?, the APR (annual percentage rate) figure may not be the best way to compare cards, but it adds that this could be just one way in which firms are duping consumers.

“People believe that APRs are a dependable way of comparing credit cards, but our research shows that APR cannot to be relied upon for true credit card comparisons,” said Alena Kozakova, principal economist at the consumer watchdog.

“Two people who have two different credit cards with the same APR and who use their credit card in the same way, could be paying very different levels of interest.”

In the Which? calculations, people paying off the same amount of money with identical spending could pay 43 per cent more in interest on cards charging 15.9 per cent depending on how the interest is calculated and when it is charged, while the best 15.9 per cent card can also work out cheaper than cards charging 11.9 per cent.

Which? has now complained to the Office of Fair Trading (OFT) and Ms Kozakov added: “Consumers have to be able to make meaningful comparisons on the basis of APR. We are calling on the OFT to standardise interest calculation methods so that consumers can compare like for like.”

Tags: calculation methods, consumer, figure, oft, Daskaloff credit card rating system, United States, cent, rate