31/03/2008 by Dave.

Debt problems are escalating in the UK – and rising living costs have been identified as the key factor in leading people to spend beyond their means.

Halifax claimed that Britain was not a “debt-ridden society,” stating that borrowing was an integral part of the economy, but acknowledged that it was reaching worrying levels and now entailed higher costs.

A YouGov poll published in the Daily Telegraph this week showed 56 per cent of people to be struggling harder to make ends meet now than a year ago, a trend the bank attributed to the stuttering economy and growing inflation.

Gareth Mackie, a spokesperson for Halifax, said: “The main pressures on savers are rising costs, like day-to-day living costs, which put pressure on people’s ability to save.

“The advice is to keep on top of bills first of all because they’re the important things to pay, be it mortgage, rent, council tax or utility bills.”

He added that borrowers encountering difficulties should speak to their credit providers and also consult other banks or building society, adding that spiralling personal debts are in no-one’s interest.

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28/03/2008 by Dave.

The Citizens Advice Bureau has sounded a warning about the growing risks of mortgage defaults and repossessions in the UK.

Some 35 per cent more people registered a plea for help with the charity over mortgage repayment issues this January and February than for the same period in 2007.

The group handled around 5.7 million new problems in 2006/7, of which one third concerned debts, prompting major concerns that mortgage arrears and credit card debts are affecting more and more people.

Teresa Perchard, director of policy at Citizens Advice, said: “These latest figures paint a worrying picture, suggesting a significant number of households are struggling to meet their most basic living costs.

“The combination of big increases in household bills, especially fuel, and rising housing costs is putting additional pressure on people’s finances when they are already stretched to the limit.”

While energy prices have been hiked up, many new homebuyers have also found their finances stretched by the tightening of credit availability in the credit crunch and new demands for 25 per cent deposits on residential mortgage deals.

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26/03/2008 by Dave.

People are changing credit card packages at breakneck speed in a bid to reorganise their debts and find better rates, it has been claimed.

Financial site MoneyExpert claimed that some 5.7 million UK consumers have chosen to change credit cards over the last six months.

The figures mean that 400,000 more people switched credit card lender in the second half of last year – as the credit crunch set in – than in the first half of 2007.

A MoneyExpert official said: “With bills increasing across the board it would not be a surprise to see further rises in credit card switching in the next six months as consumers struggle to cope.”

Lower interest rates on new credit card deals have been identified as a key factor in leading people to switch, with 0 per cent purchase and balance transfer deals giving many spenders some respite and allowing them to meet their monthly obligations.

Recent research from MoneyExpert also found that 3.2 million Brits own five or more credit cards, suggesting worrying levels of personal debt are being accrued

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24/03/2008 by Dave.

Citizens Advice (CAB) has seen a dramatic surge in consumers seeking help with mortgage arrears in 2008.

In the first two months of the year, Citizens Advice Bureaux across England and Wales saw mortgage arrears enquiries climb by 35 per cent compared to early 2007 - with the total number of debt problems dealt with amounting to 215,000 across three-quarters of Bureaux.

Meeting other household bills such as water, gas and electricity and council tax, was also seen to be a growing issue.

Debts is top priority for consumers contacting Citizens Advice, accounting for one in three enquiries, with those relating to credit, store and charge cards forming the largest individual category.

However the figures for plastic debt bucked the trend usually seen at this time of year, falling by 9 per cent, with overdraft issues up 7 per cent to fill the gap.

Teresa Perchard, director of policy for Citizens Advice said: “These latest figures paint a worrying picture - the combination of big increases in household bills, especially fuel, and rising housing costs is putting additional pressure on people’s finances when they are already stretched to the limit.”

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21/03/2008 by Dave.

The global credit crunch continues to roll on and mortgage borrowers are still being affected.

That is according to City Index Advisory, which said that people are still struggling to get their hands on mortgages.

During an appearance on BBC Two’s ‘Working Lunch’ programme, managing director Richard Cunningham said that the lack of available credit is having a massive impact in the UK.

“Credit and the availability of credit is what drives financial markets, but also is what drives genuine day-to-day economies,” he commented.

“It [a lack of credit] means that individuals can’t borrow money on credit cards so easily, they can’t borrow money for mortgage purposes.

“And if there’s a high level of debt… that lack of availability of credit, and it’s a harder credit to finance, becomes a real issue for everybody, both the man on the street as well as the financial institutions,” added Mr Cunningham.

In the wake of the credit crisis, 125 per cent mortgages have been pulled from the shelves, while there has been a significant reduction in the number of 100 per cent mortgages available.

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20/03/2008 by Dave.

UK buy-to-let property investors may turn away potential tenants who receive the local housing allowance (LHA) because they feel they cannot trust them to keep up with rent payments.

New research from the National Federation of Residential Landlords (NFRL) suggests that many buy-to-let investors are unhappy with the LHA scheme.

It is a break away from the traditional housing benefit scheme, which saw rent paid directly to landlords from the government.

With the LHA, money will go to the tenant, who is then free to find accommodation and pay the landlord personally.

The NFRL research shows that many buy-to-let investors may begin turning away potential tenants over fears of missed rental payments.

“At forums I have attended, landlords have complained about not being paid rent,” Tom Reynolds, from Hampsons letting agents, told the Observer.

“In the past, they have been very accepting of housing benefit tenants because they would get regular payments, but now fewer may be prepared to accept them,” he added.

The government is trialling the new LHA scheme in 18 areas with a view to expanding it across the country.

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19/03/2008 by Dave.

The average britain spends about two years - 16,848 hours - of their life worrying about spending and borrowing habits, a Co-operative bank survey found.

Of 3,000 UK adults quizzed, 48 per cent were “concerned or deeply concerned” about their increasing levels of personal debt.

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17/03/2008 by Dave.

Around 340,000 people who took out so-called ’safe’ mortgages in 2003 are set to receive a “£1 billion mortgage shock” this year.

That is according to new research from Mortgage Monitor, which claims that hundreds of thousands of people will struggle to keep up with repayments when their deals come to an end in 2008.

The five-year fixed-rate deals were seen as ’safe’ when they were taken out in 2003 but since then rates have increased by as much as 35 per cent.

It means that many people are due to see their repayments rise sharply and the survey revealed that borrowers are becoming increasingly concerned about the situation.

A total of 23 per cent of those questioned said that they are becoming more anxious about their ability to keep up with mortgage payments, 14 per cent claimed to suffer insomnia as a result of their concerns.

“The massive bill that homeowners face makes it more important than ever that they can find impartial advice and guidance to help them navigate the mortgage market,” explained Les Jacobs, Mortgage Monitor chairman.

“For many, finding the right deal will make the difference between making ends meet or facing financial strain or even repossession,” he added.

The Financial Services Authority has launched a major advertising campaign, aimed at helping borrowers who are coming off fixed-rate mortgages to make informed financial decisions.

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13/03/2008 by Dave.

One in six people believe that a recession is already taking hold, while many more are concerned that the UK is on the brink of a protracted financial downturn, according to experts.

A survey from Fool.co.uk has found that while many Brits are already convinced that a recession is occurring, as many as a third of people believe that a severe downturn will go on for at least two years.

The group claimed that the ‘credit crunch’ is already a reality in people’s minds – and would be reflected by tighter control of hitherto rash credit card spending and personal debts.

David Kuo, head of personal finance at Fool.co.uk, said: “The term credit crunch has become a part of our everyday vocabulary over the past eight months, but it’s instructive to see how people feel about a looming recession.

“In an economic downturn there will be opportunities and threats, and we can take steps to maximise the first and minimise the second. And simple measures such as reining in spending will ensure that we have a pot of spare money tucked away to see us through a slump.”

With repossessions rising as mortgage payments are missed, many others are concerned that homes they are investing in are depreciating at a rapid pace – and the survey revealed that 13 per cent of people have had their homes valued in response to negative equity concerns

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11/03/2008 by Dave.

House price falls have increased to near ‘historic levels’, the latest house price balance compiled by the Royal Institution of Chartered Surveyors (Rics) has revealed.

According to the survey, 64.1 per cent more chartered surveyors have recorded a fall than a rise in house prices - up from 54.7 per cent in January.

This rivals the all-time low of June 1990 when 64.5 per cent more chartered surveyors noted a fall than a rise in prices.

It is thought that the price falls have been driven by weak demand rather than an over-supply, as there has not been an upturn in the number of instructions to sell property - and this is unlikely to change given that employment conditions remain strong, meaning homeowners are under little pressure to sell.

Meanwhile, weak demand caused the stock of unsold property on surveyors’ radar to increase by 8.5 per cent in February.

“Confidence in the market is clearly having an effect on prices,” commented Rics spokesman Ian Perry.

“A combination of a lack of available finance and weakening demand is causing a slow drop in capital values. While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices.”

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