Family debt set to spiral

It has been suggested recently that family debt is set to spiral out of control over the next four years, with families expected to be struggling with average debts of around £84,000 per household. A report claims that the level of total household debt by 2015, including mortgages, loans, and credit cards, will reach an amazing £2,126 billion. For many this prediction is cause for concern given the difficult financial future that many people are already facing.

The documents were released by the government’s spending watchdog, the Office for Budget Responsibility. Over recent months this agency is said to have significantly increased its predictions when it comes to the size and level of household debt in Britain. At present the debt level stands at £1,628 billion but it is predicted that this will increase every year until the end of parliament in 2015.

The Office of Budget Responsibility has said that part of the reason for this increased forecast when it comes to household debt is the austerity drive from the government, which is set to have a huge impact on families and households, affecting their finances hugely. In June of last year the prediction was that household debt would stand at £1,823 billion by 2015.

There are concerns that as a result of the government cutbacks, the soaring cost of living, and wage freezes or cuts, many families will have no other option but to increase their debts in order to keep their heads above water, but their ability to do this and to repay their debts will eventually run out, leaving them in a very difficult financial situation.

Labour’s treasury spokesman David Hanson said: ‘Hard-pressed families will have to borrow more money to deal with the effect of George Osborne’s tax and benefits squeeze.’

Tags: situation, option, Business Finance, credit, government cutbacks

Broken rung on the property ladder

A new report has shown that the UK’s property ladder has a serious broken rung, which is namely the first rung that so many first time buyers are anxious to get their foot onto. A new report entitled ‘Broken Ladder’ has been released by the Home Builders’ Federation, and its contents show just how serious a problem it has become for potential first time buyers to realise their dreams of homeownership.

Shockingly the report suggests that in the current climate someone looking to get onto the property ladder would have to spend every penny of their income saving for two years simply to raise the deposit that most lenders were demanding, and in London this figure increased to three years. This would mean having no money for rent, food, clothes, or living expenses.

Over a five year period first time buyers would still have to save 50 percent of their income to put aside towards a deposit in order to raise the amount that lenders wanted, and again this would be even higher in areas such as London. The Home Builders’ Federation has said that the situation has now become critical at a time when the property market is already in turmoil.

A spokesperson for the Home Builders’ Federation said: “These figures reveal the extent of our housing crisis. First-time buyers – the life-blood of the housing market – are almost entirely shut out. The lack of mortgage availability is further strangling a market already choking on a lack of supply. We desperately need an increase in lending and a properly functioning and sustainable mortgage market. At the same time, the Government must ensure that the new planning policy and incentives they are basing the success of their housing plans on are put in place immediately. Without more houses and more mortgages, young families will be unable to have the security of a roof over their heads and the housing crisis will very quickly reach the point of no return.”

 

Tags: Home Builders, food, income, young families, incentives, Real estate economics

Mortgage arrears up by 30 percent

Over the past year the level of mortgage arrears amongst homeowners in the UK has increased by around 30 percent according to recent reports, and this is despite the fact that the UK base interest rate has been at its lowest level in the history of the Bank of England since April of this year. Read more

Tags: average, variety, mortgage arrears, place, situation, current climate, Mortgage loan, mortgage repayments

Repossessions fall in second quarter

Since the onset of the global credit crunch, and with interest rates having soared over 2006 and 2007, many homeowners have struggled to keep up with their mortgage repayments, which led to soaring repossession levels in the UK. The numbers of repossessions over the past couple of years have made for gloomy reading, prompting the government to take action such as slashing interest rates to an all time low.

However, a recent report has shown that in the second quarter of this year the number of repossessions in the UK has dropped by 9 percent, and industry officials have claimed that this is down to a combination of factors.

The rock bottom base interest rate of 0.5 percent is one of the factors that has been attributed to falling repossession numbers. Another factor that is claimed to have helped cut repossession numbers is the way in which cases are now handled by courts and lenders.

Between April and June of this year 13,610 homes were repossessed in the UK, and this compared to the 14,884 homes that were repossessed in the first quarter of the year between January and March.

However, compared to the second quarter of last year repossession levels are still up by around 23 percent. The Financial Services Authority has said that one of the main reasons behind the quarterly drop in repossessions is likely to be the changes that have been made in relation to how repossession orders can be granted by courts.

One official said that it was also down to the fact that people were becoming more confidence about approaching their lenders when they ran into financial difficulties. He said: “Borrowers that have been in arrears believe that their lender has been helpful and has treated them fairly. Those that face payment problems should therefore not be daunted by their arrears, but should take control of the situation by seeking help as soon as they can.”

Tags: mortgages defaults, repossessions, situation, reading, second quarter, control, recent report, drop

Negative equity could hit many more

As a result of the house price crash that has seen a large percentage wiped off the value of UK properties over the past eighteen months it has been estimated that around one million homeowners have already been plunged into negative equity, which is where they owe more on their property than the actual value of the home. Read more

Tags: Mortgages, negative equity, households, house value, fall, bank of england, situation, property market

Borrowers could get help from credit card firms

According to recent reports some consumers could get assistance from credit card companies if they are struggling with their credit card debt, as part of a package of proposed measures resulting from recent meetings between officials from the credit card industry and senior government officials. Concerns were raised about the situation in the credit card industry when reports showed that whilst the base rate had been plummeting over recent months credit card interest rates were still very high. Read more

Tags: rate, government officials, card, situation, Minister Gareth Thomas

Abbey applies charges to accounts in credit

The High Street Spanish owned bank, Abbey, has found itself in trouble after a number of customers complained about having various charges applied to their account even when they were within their credit limits. According to reports a number of customers have found different charges applied to their bank accounts, ranging from a few pence to pounds, and none of the charges have been justified. Read more

Tags: letter, situation, bank accounts, Debit card, abbey

House price falls worse than last crash

In the 1990s, many people will remember that there was a house price crash that plunged many homeowners into negative equity, and a lot of people will have concerned memories of this time following the past year, when house prices have been tumbling month on month. However, according to officials from the Halifax, its records show that based on a peak to trough bases the current situation has already outstripped the 1990s crash. Read more

Tags: house prices, past year, prices, Real estate economics, negative equity, situation, finance, halifax

25% of the nation could face fuel poverty

Energy prices have been at the centre of heated controversy over the course of this year. At the start of the year the big energy firms in the UK cheerfully announced that because the price of wholesale energy had risen the cost of energy usage for customers would be going up, and just weeks later, true to their word, they increased energy usage costs quite significantly, leaving already struggling household to cope with more financial worry and strain. Read more

Tags: situation, gordon brown, report, fuel, GBP, money, electricity bill, quarter

‘Concerned’ Brits struggle with debts

Many Brits are struggling to keep their debts under control as over one in ten reveal they are “very concerned” about their financial situation.

This figure (11 per cent) has gone up from seven per cent in just three months, with around 2.7 million people saying they have sunk further into debt by over ten per cent, according to MoneyExpert.

Sean Gardner, chief executive of the company, commented: “With the festive season just around the corner, we can only predict that the number of people worried about their ability to deal with their debts is likely to increase.

“Christmas is a massively expensive time of year so you can’t help but worry that many more are likely to become increasingly concerned about how they’ll cope.”

However, he said, there are signs that people are beginning to get their borrowing levels down, with 27 per cent of Brits successfully cutting their debts over the past three months.

Mr Gardner added that consumers must, above all, work out a repayment plan and avoid burying their heads in the sand when confronted with debt.

Tags: borrowing, work, sand, Sean Gardner, repayment plan, Business Finance

Government plans to ‘nationalise’ Northern Rock

The government has made plans to effectively nationalise the struggling bank, Northern Rock, to protect its customers, it has been claimed.

Already, the Bank of England has loaned £23 billion to the bank, following a run on deposits – the first run on a British bank in many years.

In addition, the Treasury has promised to underwrite 100 per cent of all deposits in the bank, a commitment worth another £20 billion.

Although a number of companies are bidding to take over Northern Rock, Thisismoney claims to have learned that the Treasury is preparing plans to take the bank into public ownership.

Last night, chancellor Alistair Darling announced that the government will soon publish a statement on the principles affecting any takeover – which will give a critical insight into whether nationalisation, formal or informal, is likely.

In a letter to the chancellor, acting Liberal Democrat leader Vince Cable complained: “We are now in an absurd situation where banks can take ludicrous gambles with their customers’ money, knowing that if it all goes wrong the taxpayer will bail them out.”

Tags: Alistair, taxpayer, deposits, liberal democrat leader, Banking (Special Provisions) Act, situation, banks, run

Don’t let ‘money fear’ take grip

Sainsbury’s Bank is encouraging Britons not to put their heads in a financial sandpit and to face the reality of their banking problems.

Research carried out by the group suggests that some 2.8 million consumers, or six per cent of the adult population, purposefully ignore the state of their financial situation.

According to Kevin Barrett, head of channels at Sainsbury’s Bank, almost two million Britons refrain from divulging their financial positions with partners because they are worried about the potential reaction.

Over one in ten people also claim to have left credit card and bank account statements unopened as a means of procrastinating over financial matters.

Mr Barrett said: “Our advice to people suffering from this condition is not to put your financial management off, problems can arise if you don’t keep an eye on things.”

He added: “For example, without regularly monitoring your statements you won’t be able to identify issues such as identity theft. Take control of your finances now, look at your expenditure, plan your budget and by all means, seek advice or counselling if you need to.”

To avoid getting into the situation of ‘money fear’, Sainsbury’s Bank calls for consumers to face up to their financial situation, to prioritise debts and to plan a budget and stick to it, among others.

Tags: account, money, situation, consumers, potential reaction.Over, identity

Bad credit doesn’t mean bad mortgage

It is something that occupies the minds of many young adults today but a leading mortgage broker claims that bad credit need not mean higher mortgage rates.

London and Country (L&C) claims that 71 per cent of people with credit problems who have visited them have walked away with a mainstream mortgage deal.

This is despite the borrower’s belief that he or she will be hit hard for a previous bad record.

L&C admits that most lenders will not deal with people who have recent defaults and County Court Judgements but points out that the situation is never black and white.

It is possible that some lenders will be more lenient than others and the broker claims that many people with only minor blemishes may be surprised by the kind of deals available to them.

“All too often, people assume that because they’ve had some credit problems in the past, they will have to pay a much higher interest rate and in some cases, high broker fees,” said James Cotton, mortgage specialist at L&C.

“In fact, our research shows that by getting whole of market advice from L&C, borrowers can seek out the best deal for their circumstances and can often secure a better rate than they thought possible.”

The news will be welcomed by first-time buyers, many of whom are of the belief that they will have to wait years until they can get a mortgage.

Tags: advice, circumstances, specialist, Mortgage broker, interest rate

£6.1bn cost of holiday cancellations

British holidaymakers lost a combined total of £6.1 billion last summer because they had to cancel their trips.

Figures released by More Than show that millions of people lost out financially because they did not have travel insurance.

People were forced to pay for travel and accommodation which they had booked despite never actually making it to their destination.

Travel insurance is a key element to any holiday and can at least help to prevent a bad situation from getting any worse.

More Than says that 26 per cent of travel claims it dealt with last year were for cancellation of holidays, something the firm believes is positive news.

“It’s encouraging that holidaymakers are catching on to the importance of travel insurance, but many still don’t realise that by purchasing their policies late, they miss out on valuable cancellation cover,” commented Keira Clarke, head of travel insurance at More Than.

“We encourage travellers to arrange their insurance at the same time as they book their break, to ensure they’ll be covered if anything goes wrong before the trip.”

According to More Than, the average travel insurance claim for cancellation of a holiday stood at around £856 last year.

Tags: travel insurance.People, cancellation, accommodation, situation, firm, Travellers, something, total