Past Articles for April, 2007

W3 Debt Solutions recorded an increase of 183 per cent in the number of people in this particular age bracket opting for IVAs during the half-year until the end of February 2007, reports Lancashire Evening Post.

Debts totaling thousands of pounds are now common among twenty-something consumers and many young adults still face debt management woes well into their 30s, according to the north-west debt solution firm.

“I am very worried about this dramatic rise in debt. With more and more young people opting to go to university, almost all leave with sizeable debts that take years to pay off,” Carl Scott, managing director at the company, told the local news provider.

According to accountancy firm KPMG, there were in excess of 100,000 IVAs entered into across England and Wales during 2006.

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With bank charges stretching further the finances of those facing debt management difficulties, the past three months have seen current accounts become a “new switching battle ground”, according to MoneyExpert.

Figures from the price comparison service show a current account exodus of around 450,000 banking consumers in the first financial quarter of 2007 and according to MoneyExpert appear to demonstrate that Brits will no longer “stand for poor service or for uncompetitive deals”.

Sean Gardner, chief executive of MoneyExpert, said: “Of course, switching out of a poor deal is a good idea but consumers should be wary of changing just for the sake of it.

“You need to search the market carefully and choose the right product for you - let’s not forget that the cheapest deal isn’t always the best deal.”

Current account bank charges can make it more difficult for many consumers aiming to find a debt solution and the issue is the subject of an ongoing investigation by the Office of Fair Trading.

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It is widely expected that the Bank of England will increase the cost of borrowing in an effort to limit inflation and millions of credit consumers around the country look set to find it more difficult to find a debt solution as a result, Mr Glendinning suggests.

To make his case, the moenysupermarket.com boss points to research from his own company, which shows 25 per cent of British homeowners with a mortgage are “struggling” with their repayments following the most recent rise in interest rates.

“Mortgage borrowers could be facing a massive rise in their mortgage repayments with a typical monthly payment rising to £1,037.08 per month from the current £818.75 if the group of leading economists are right and the base rate rises to 7.5 per cent to quell inflation,” said Mr Glendinning.

It was revealed recently that the Bank of England’s monetary policy committee was not unanimously in favour of maintaining the base rate of interest at 5.25 per cent when last they met.

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Joint chief executive at the Hunters Property Group Kevin Hollinrake told the York Press that repossessions will result if the Bank of England opts to raise interest rates next month, a move he views as “extremely likely”.

Credit consumers across the country will find it increasingly difficult to clear debt in the event of a rise in the cost of borrowing and for many in North Yorkshire it would be enough to lead to their home being repossessed, Mr Hollinrake suggests.

“Inflation has now reached its highest level in more than 14 years and it seems almost certain that we will see an interest rate rise next month,” he is quoted as saying.

“This is bad news for anyone with a mortgage and could even lead to a further rise in home repossessions.”

According to the Consumer Credit Couselling Service, British homeowners look set to be on the debt management rack for the entire of 2007.

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A study carried out recently by moneysupermarket.com suggests that not switching an arrangement away from a mortgage provider’s standard variable rate is leaving millions of British consumers out of pocket.

On expiry of an introductory mortgage deal, providers commonly put their customers on a repayment rate two per cent higher than the Bank of England base rate and up to three per cent higher than the best deal available, the latest study claims.

“Many people are not making their money work hardest for them,” said Louise Cuming, head of mortgages at moneysupermarket.com.

“It’s unbelievable so many people are playing into the lenders’ hands and paying the standard variable rate,” she added.

Millions of British homeowners could find their finances stretched further and their risk of bankruptcy increased next month when the Bank of England is widely expected to increase the base rate of interest to 5.5 per cent.

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Finances are being tightened and debt management woes are mounting across the country, while the average household running cost now amounts to £11,035 each year, Sainsbury’s Bank research suggests.

Essential expenditures for many people such as energy supplies and mortgage repayments have been rising steadily over the last two years, at an average increase of around £3.28 per day, the new study reveals.

Robert O’May, home insurance manager at Sainsbury’s Bank, said: “It’s becoming more expensive to run a home, which makes it all the more important for homeowners to shop around to make sure they are getting the very best deals available.”

It was established recently by an Alliance & Leicester report that consumers aged in their early 30s face a higher average debt management mountain than any other age range in the UK.

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Around 4.5 million Brits aged 55 or over have not made financial plans for their forthcoming retirement and many of these consumers could face debt management troubles as a result, research from Abbey Savings suggests.

In addition, finding a debt solution could prove even more troublesome for the two million or so Brits aged over 55 who reportedly have given no thought whatever to forming a retirement plan.

Reza Attar-Zadeh, head of savings at Abbey, said: “This research shows the potential retirement time bomb that the 50-plus generation are facing.”

Last month, research from the Consumer Credit Counselling Service revealed that debt management problems increased more quickly for Brits aged over 60 than for any other age range around the country during 2006.

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Research carried out by Stroud & Swindon claims that for millions of Brits, details of income tax and stamp duty, as well as mortgages and ISAs often prove confusing and unclear.

Furthermore, the study by what is the UK’s 15th largest building society suggests that the problem is more prevalent among the nation’s women that it is among men.

Paul Chafer, sales and marketing director at Stroud & Swindon, said: “Understanding basic personal finances is key to consumers making the most of their income and, ultimately, avoiding significant debt problems.

“While it is worrying to see that the UK population has a relatively low financial IQ, it is particularly concerning to see that women are not measuring up to their male counterparts.”

According to figures released earlier this year by accountancy firm KPMG, there were enough Brits entered into an Individual Voluntary Arrangement during 2007 to fill the new Wembley Stadium.

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Official minutes from the most recent MPC meeting show that two of the nine committee members felt it was necessary to increase the cost of borrowing and put further pressure on the million facing debt management difficulties in April.

Despite the lack of unanimity over the issue, the MPC opted to maintain the base rate at 5.25 per cent at least until May, when many observers now expect an increase to be introduced by the bank in light of the most recent inflation statistics.

According to the minutes of the MPC meeting last month a number of members felt that “there was no compelling case for a change”.

Raising the interest rate to 5.5 per cent would see credit consumers around the country facing higher repayment costs as they attempt to clear debt.

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CCCSVA, as the new operation is to be known, is now able to offer its debt advice services to those people whose situation makes them most suitable for an IVA in light of their particular debt management concerns.

A percentage of the thousands of people who approach the CCCS for advice on becoming debt free could benefit from an IVA and what the charity is convinced will be a “compassionate” debt advice service.

“CCCSVA is based in Leeds, yards away from the headquarters of the Foundation for Credit Counselling. As its staff builds up it will help an increasing number of people whom IVAs can help,” a statement from the organisation explained.

A report from the CCCS last month suggested that the burden of Britain’s debt problems looks likely to be increasingly shifted to older generations.

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