29/10/2008 by Dave.

The FSA has revealed that repossessions, where the house has been successful sold by the lender, have rocketed by 71 per cent in Q2 2008, to 11,054 cases.

According to its latest Mortgage Lending and Administration Return report into mortgage lending in the UK over the second quarter of 2008, there are 312,000 in arrears in the UK, a rise of 16 per cent on 2007 figures.
On average 2.58 per cent of mortgage books are not fully performing, almost double the Council of Mortgage Lenders’ industry average of arrears.

The FSA says that 312,000 mortgages are in arrears of more than 1.5 per cent. It says this figure can be reasonably transposed to equate to three months of arrears.

The report found that the stock of possessions in the UK has also soared to 21,407 cases.

The total value of outstanding loans is £1,178bn, an increase of 7.5 per cent compared to Q2 2007. But quarterly growth continues to slow, with a Q2 increase of just 1 per cent.

The FSA says new lending peaked in Q3 2007 last year at £102bn before declining to £72bn in Q2, leaving gross lending 26% lower than a year earlier.

It also found that significantly fewer new loans have an LTV of more than 90 per cent, reducing from a peak of 15 per cent of new lending in early 2007 to 10 per cent in 2008 Q1 and Q2. The use of combinations of high LTVs and high income multiples has also declined to 7 per cent of new lending in each of Q1 and Q2.

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22/10/2008 by Dave.

Various mental health organisations have expressed concern that the credit crunch is adversely affecting the psychological wellbeing of many Britons, and could even trigger a “mental health disaster”. 

Health insurer Bupa has uncovered that a third of British worker are severely worried about the security of their jobs, and two out of five have said that levels of stress at work have risen since the onset of the financial crisis.

Mental health charity MIND has also stated that the volume of calls to its helpline has doubled year-on-year to October. The charity has put the increase down to the financial fallout.

Additionally, a study conducted by the Legal Services Research Centre revealed that roughly 130,000 people have visited their GP about debt-related stress recently, costing the NHS between £15 and £20 million.

Mental health ailments like stress, anxiety, depression and insomnia have largely been blamed on the rising cost of living, soaring debts and the threat of redundancy, repossession and recession.

In a 400 page report on Mental Capital and Wellbeing, the Government’s Foresight programme identified a strong link between mental health problems and debt.

The report found that debt-ridden individuals have two to three times the rate of depression, three times the rate of psychosis, double the rate of alcohol dependence, and four times the rate of drug dependence compared to the general population.

As recession becomes a reality and the economic downturn hits home for many in the UK, mental health worries are only expected to worsen.

A spokesman for the Department of Health has urged those in debt to seek professional advice about their financial troubles. “The key thing is that people who are experiencing stress and worry about financial issues know where to go to get help and find solutions.”

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12/10/2008 by Dave.

When times get tough, people get tougher. The City grows savage, companies turn cut throat and dogs start eating dogs. Well perhaps the economic crisis hasn’t quite filtered down to the canine world yet, but seeing as a poll found one in ten children were stressed about money, it could just be a matter of time.

 Amongst all the vicious thrashing about to stay alive in the market, a multitude of unscrupulous endeavours have sprung up and regulators are now hungry to clamp down on them. Fingers are pointing, fines are flying about and allegations of fraud are being issued whilst sideliners bleat about the need for transparency.

One sector to have come under attack would be the sale and rent back industry. “Vultures!” They’ve been branded by charity Shelter. Painted as predators trapping vulnerable, debt ridden homeowners with promises and short term relief, horror stories concerning the deals have begun to appear in the press. But are we really seeing the whole story? Or are a suspect few shaming an otherwise honest service?

Sale and rent back schemes work by offering to buy hard-up people’s homes and then renting them back to them. It’s seen as a quick form of debt relief and a way out of expensive home repayments, as the rent is often much cheaper. The upside is that families can remain in their homes, deals can be arranged rapidly and it can stop repossession.

However, horror stories have involved these companies buying homes for as little as 20% of the market value and forcing people out after a matter of months.

Estimates say that 2,000 firms offering sale and rent back deals have emerged in the last three years and up to 20,000 people have sold their homes to them. Surprisingly, this sector has been going uncontrolled and after a spate of negative press, the Office of Fair Trading (OFT) has called for it to be regulated by the Financial Services Authority (FSA).

Identifying that there is “potential for severe detriment to homeowners”, the OFT has recommended that compulsory regulation is implemented, along with increasing consumer awareness and improving information about housing benefits to weed out the crooked operators from the legitimate ones.

Those within the sale and rent back industry are dismayed to find their reputation tarnished by rogue “vultures”. Chairman of the National Landlords Association (NLA), David Salusbury, has affirmed that the majority of landlords involved in sale and rent back schemes go about their business with “professionalism and integrity” and bemoaned the fact that “a small number of ‘rogue’ operators have now brought the entire market under scrutiny.”

The director of DB Housing, a company that offers the sale and rent back option, Daniel Lowerson has assured people that recent press about sale and rent back schemes “focuses on the negative aspects of a tiny minority in the marketplace. We don’t necessarily classify ourselves as a sale and rent back company, we have the option of shared ownership but we also offer full rescue projects and home recovery schemes. In my opinion, I welcome news that the FSA will regulate the industry. As soon as it’s regulated the better, as then good companies who do business correctly can thrive.”   

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24/07/2008 by Dave.

An industry figure has claimed around one-fifth of people face having their homes repossessed because they have borrowed too much to purchase them.

Frances Walker, a spokesperson for the Consumer Credit Counselling Service (CCCS), claims some people are looking at the prospect of losing their properties because they can no longer afford to repay the amount they borrowed.

When describing the increase in the number of calls her organisation has received she said: “What we are finding is about a fifth of the people have simply borrowed too much and it might have to be [that] you give up your house”.

Those who are struggling to repay their mortgage should prepare a budget to help manage monthly outgoings and organisations such as the CCCS and Credit Action can help them formulate a plan, Ms Walker added.

According to the Council of Mortgage Lenders, more than 27,100 homes have been repossessed so far this year, the highest figure recorded since 1999.

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22/07/2008 by Dave.

People in the UK and Ireland are feeling their debt burden hit their quality of life more than any other European countries, according to a survey released this week.

The findings from price comparison site uSwitch.com pile on the misery faced by consumers in the wake of recent warnings by the British Chambers of Commerce of a pending recession in the UK. 

News that the Consumer Price Index (CPI) is running at an 11 year high of 3.3%, coupled with the recent warning that the price of goods is climbing faster than at any time in the past 22 years will do little to move the UK ahead in the rankings for some time.

Mervyn King, governor of the Bank of England warned consumers last month to brace themselves for “the most difficult economic conditions in two decades,” blaming a sharp increase in inflation from 2.1% in December to 3.3% in May on the increased cost of food, fuel, gas and electricity.

Spain was found to have the best quality of life and France in second place, while the UK and Ireland languished in the bottom two places, largely because of increasing inflation and third highest spending on utility bills.

Between 2006 and 2008 alone, the cost of diesel in the UK has increased by 38%. The UK is now the most expensive place to buy diesel at £1.32 per litre, 20p more than the European average.

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16/07/2008 by Dave.

The UK’s overdraft and personal loan debt levels have increased from £161 billion to £177 billion over the past year, with more people having to use them to cope with everyday living costs.

Recent figures from the Bank of England reveal the average authorised overdraft rate on a current account rose from 17.4 per cent to 17.9 per cent in June yet increasing numbers of consumers are forced to use those funds as the cost of living continues to soar, the Telegraph reports.

In addition, fewer personal loans are being granted by lenders, which is leaving people with few options, according to Tim Moss from moneysupermarket.com.

“The number of personal loans has fallen dramatically due to the tougher lending criteria from banks, so to still see such a rise in personal debt implies that people are using their overdrafts as a way to cope with everyday living costs,” he told the news provider.

According to figures from the Office of National Statistics, nearly two-thirds of consumers are unaware of what they are being charged by their overdraft provider.

Research conducted by Grant Thornton in 2007 found people in Britain accumulated so much debt it surpassed the entire value of the economy.

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11/07/2008 by Dave.

A debt advisory company is advising consumers whose debts have reached unsustainable levels they must take serious action before the problem escalates.

Consolidation firm debtadvisersdirect.co.uk claims people with significant money problems should seek advice from a professional who can discuss the various options available to help manage the problem.

A spokesperson for the company said those with financial difficulties which have become unsustainable should take steps to organise their repayments and work towards a solution.

“Once someone’s debts have reached a point where their income simply won’t stretch far enough, it’s imperative they take more direct action as soon as possible, whether that means a debt management plan, a debt consolidation loan or a different debt solution,” the representative said.

New figures from the Chiltern Debt Monitor have revealed people in debt can only afford to pay a quarter of it each month, however consumers owe on average £1,274 less than they did in August last year, falling from £26,662 to £25,388.

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09/07/2008 by Dave.

Research undertaken by the Money Advice Trust has revealed that around 165,000 households in the UK owe money to an illegal lender. The Trust has this week launched an online information hub which is set to be the most comprehensive source of information relating to debt.

As debt in the UK has spiralled out of control in recent times, this online help service is set to aid debt charities and others in the advice sector who need access to debt statistics and other data that could help them help those in need of debt advice. 89% of people questioned said that receiving advice has helped them from getting into further trouble.

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03/07/2008 by Dave.

The total average amount of debt has decreased steadily - although disposable incomes have dropped and it’s taking people longer to become debt free, according to the latest Chiltern Debt Monitor.

The study found that the amount people have left to spend each month, once living expenses are accounted for, has dropped by almost £10 and it is taking an extra three months to clear debts, compared to August 2007.

This means that people in debt can realistically only afford to pay a quarter of their contractual credit commitments each month, down 1%.

However, people owe £1,274 less each on average than they did in August of last year, down from £26,662 to £25,388.

Chiltern’s Nathan Gladwell says: “Our figures show that people are applying the brakes sooner with their spending, or seeking help earlier than they were previously which is a positive sign.”

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26/06/2008 by Dave.

Nearly half of people in the UK are worried about falling into debt over the next year, new research has found.

According to a survey of 2,000 adults by YouGov, 46 per cent stated they are concerned they may not be able to make ends meet due to a rise in general living costs.

The research found women are the most worried about falling into debt, with 50 per cent saying they are concerned about falling into financial difficulty, while 57 per cent of men and women in the 35 to 44-years-old category stated they were anxious about money.

Owen Roberts from Creditcall, which commissioned the study, said rising costs of food and fuel are having a major impact on people’s personal finances.

“It appears that people are most concerned about short-term survival in light of spiralling costs, and many can’t see the situation improving over the coming 12 months,” he said.

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