CAB recommends teen finance lessons

Financial lessons for Britain’s teenagers have received strong support from the Citizen’s Advice Bureau (CAB).

With debt levels now outweighing national GDP, the bureau said that teaching young people how to budget more effectively was “fundamental”.

The CAB issued the statements in reaction to the government’s announcement last month that a new subject covering financial issues is to be introduced into the secondary school curriculum.

A spokesperson said: “We very much welcome the move to improve people’s skills in personal finance, because what we know that a lot of debt problems are caused, at least in part, by a lack of understanding and a lack of confidence in dealing with money matters.

“There are a whole variety of ways of engaging young people of that age with the issues,” they added. “There are many different methods, ranging from drama to a whole load of other things. So I think that there is no shortage of good ways of making this a subject that young people want to know more about.”

Also supporting the new lessons is recent research from the Institute for Public Policy Research, which suggested that a couple with two children could be as much as £32,000 wealthier due to sound decisions made stemming from an improved financial education.

Tags: Britain's teenagers, lack, financial issues, variety, Financial lessons, couple

Mortgage lending hits record level, says CML

Mortgage lending has hit a new high, according to latest statistics from the Council of Mortgage Lenders (CML).

Gross lending hit an all-time July record of £34.4 billion, according to figures released by the industry body today.

Although the amount is slightly down on June’s results, this nevertheless represents a 13 per cent rise on the equivalent figures for 2006.

A CML spokesperson said that the record figures did not mean that the trend was set to increase: “As we move into the autumn the cumulative effects of [interest] rate rises will become more pronounced, and we expect this to feed through to lower levels of mortgage lending as the year progresses.”

Interest rates were raised by the Bank of England in July to 5.75 per cent, the fifth such increase in a year.

Commenting on the CML’s figures, chief economist at the Royal Institute of Chartered Surveyors (Rics), Simon Rubinsohn, also counselled caution, saying that “the turmoil in financial markets will push up mortgage costs for in vogue longer term fixed rate deals and will further slow the residential property market.

“With 90 per cent of borrowers opting for fixed rate security, those who are already financially stretched will find themselves paying a higher price for the added peace of mind,” he added.

Tags: June, year, chief economist, record, peace, Institute

House accessibility plunges

The chance of first time home buyers being able to afford a house has plummeted in the last ten years.

Since 1996, accessibility has dropped by an astonishing 230 per cent, matching the low levels seen during the 1980s, says the Royal Institute of Chartered Surveyors (Rics).

An average couple who are looking to get on the property ladder will have to fork out 81.8 per cent of their joint take-home pay, just to make up the £32,784 of up front costs needed to buy a typical house, including deposit and stamp duty.

In 1996, a couple only needed 25.2 per cent of their joint income to start the process of buying a home and analysts predict that things are set to get worse, with a 12 per cent rise in prices in the next two years.

“Spiralling house prices have created a property glass ceiling for many first time buyers,” said David Stubbs, Rics senior economist.

“With couples needing nearly 82 per cent of joint take-home income to fund the upfront buying costs of a typical home, the government’s plans to create an inclusive society seem like a pipe dream.

“Unless the government builds more affordable housing, and raises the stamp duty threshold, many households will continue to struggle to access the housing market,” he added.

Mr Stubbs went on to say that tomorrow’s (January 12th’s) interest rate decision would be watched closely by many households, although analysts expect that another rise will be announced.

Tags: GBP, property ladder, typical house, upfront buying costs, process