Past Articles for February, 2008

Living a single life can be beneficial for your bank balance, according to recent research carried out by Fool.co.uk.

The price comparison company has discovered that people who are not in a relationship tend to pay almost £220 less to cover the monthly rent and household bills than their coupled counterparts.

Additionally, with millions of Britons struggling with debt management difficulties, the latest research has shown that those in couples spend more each month on everything from dining out to buying new clothes.

“Money can’t buy you love, but it can help to ease the burden as payday gets further away and the bills start rolling in,” said David Kuo, head of personal finance at Fool.co.uk.

Mr Kuo went on to make clear that while being better off cannot always make up for not having a loving partner, it might make it easier to clear debt and become more financially stable.

Earlier this month, a report from Friends Provident claimed that the credit crunch has prompted many people to start paying more attention to the state of their finances.

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Many of the UK’s leading mortgage lenders have announced their intention to reduce the interest levels on their standard variable rate (SVR) deals, according to a report from Moneyfacts.co.uk.

The price comparison firm has made clear that 57 lenders around the country have cut the rates associated with their SVRs, however, many people looking to become debt free may be disappointed to learn that eight companies have made reductions that do not reflect the fall in the base rate.

By early next month, many households will see their debt management problems eased slightly when the SVR rate reductions come into effect but for others the issues look set to continue.

“Many of the big lenders were uncharacteristically quick off the mark to announce their intentions,” said Michelle Slade, analyst at Moneyfacts.co.uk.

“However, on closer inspection, none of the top five biggest lenders has any current mortgage products linked to SVR.”

It was revealed recently that the Bank of England’s monetary policy committee voted unanimously to reduce the base rate of interest earlier this month.

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With millions of British consumers struggling to find a debt solution, recent research has found that they are increasingly having to raid their own savings to solve their financial issues.

The latest figures from Birmingham Midshires have shown that more people are adding to a saving account but the amounts being accumulated have diminished considerably since early 2007.

During the past three months, the typical British saver has set aside £814 but has taken out as much as £961 over the same period, the financial services firm reports.

A general worsening of the UK’s economic condition and the seriousness of the country’s personal debt management issues are seen as the primary reasons for this so-called savings deficit.

“The current economic climate - a time when purse strings are tightening throughout the UK as a result of increasing bills and higher levels of debt - has had a distinct impact on balances,” a statement from Birmingham Midshires read.

Engage Mutual Assurance reported recently that British parents expect to cut back on their contributions to child savings accounts as a result of the financial pressures they will face this year.

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The base rate of interest in the UK will fall further over the course of the next few months, one expert has asserted.

Howard Archer, chief UK and European economist at Global Insight, has predicted that the headline cost of borrowing will be reduced by at least a quarter-point in April or May, which could offer some relief to the millions of people facing debt management concerns.

Mr Archer’s comments came after it was revealed that the Bank of England’s monetary policy committee was unanimous in its decision to reduce the base rate when the met earlier this month.

“We expect the Bank of England to trim interest rates by a further 25 basis points to five per cent in April or May, with the exact timing depending critically on just how weak the economic data is over the coming weeks,” Mr Archer said.

Earlier this week, a report from Moneyfacts claimed that increasing numbers of UK credit consumers are taking on secured long-term loans in an effort to reduce their
debt management burdens.

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Homeowners need to take action quickly if they are to deal with the “twin threat” of falling house prices and rising repayment demands, it has been claimed.

David Kuo, head of personal finance at Fool.co.uk, has insisted that people facing mortgage-related debt management difficulties should speak with their lenders and find out what they can do to improve their circumstances.

Many homeowners are finding affordable mortgage deals difficult to come by as their old arrangements expire but ignoring the issues and hoping for the best is no way to resolve these kinds of concerns, Mr Kuo has suggested.

“The twin threat of falling house prices and rising mortgage repayments is a frightening proposition that could shatter the dreams of many recent buyers,” he said.

“It is important to determine your lender’s policy, and the best way to find out is to ask.”

Citizens Advice recently accused the subprime mortgage sector of undermining the value of home ownership in the UK.

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British Gas has been slammed by uSwtich.com for reporting massive profits just days after introducing energy price hikes across the UK.

According to the price comparison company, the energy supplier has lost any sense of balance between managing the interests of its shareholders and of its many millions of customers.

With households around the country struggling to become debt free, many have seen their finances stretched further by rising gas and electricity bills and uSwitch.com has insisted that they have the right to feel cheated by British Gas.

“Revealing huge profits only a month after hitting customers with an inflation busting price hike is like having a £571 million elephant in the living room - it was never going to go unnoticed,” said Ann Robinson, director of consumer policy at uSwitch.com.

Last week, the Department for Work and Pensions encouraged elderly Britons to insulate their homes more effectively in order to save money on their heating bills.

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The Bank of England’s monetary policy committee (MPC) voted unanimously to reduce the base rate of interest for the UK at its most recent meeting, it has been revealed.

According to the minutes of the MPC’s February meeting, eight members of the committee voted in favour of cutting interest rates by a quarter-point, while one wanted to see them trimmed by half a percentage.

Many homeowners and consumers with debt management problems had been hoping that the bank would reduce the base rate because the effect might help them to meet their repayment demands over the coming months.

As part of its assessment of the economic condition of the UK as a whole, the MPC noted that the number of people being approved for mortgage loans in recent weeks has reached unusually low levels that have not been seen since 1995.

Despite the “dampening” of the housing market, the Council of Mortgage Lenders recently revealed that affordability worsened for first-time property buyers around the country during 2007.

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Jeremy Browne, the MP for Taunton, has urged consumers who are facing serious debt management problems to seek help from personal finance professionals.

Mr Browne has suggested that many people could be making their debt issues worse by refusing to face up to the reality of their financial situation and to take steps to improve it.

He also claimed that individual debt management issues can have an impact on the health of small businesses and ultimately the local economy of certain areas of the country, the Somerset County Gazette reports.

“There is a growing debt problem in Britain which will cause difficulties for many local businesses and individuals,” Mr Browne is quoted as saying.

“When debts get out of hand many people either panic or try to ignore the issue,” he added.

Figures released by MoneyExpert.co.uk recently indicated that millions of UK consumers added to their debt levels over the course of the past three months.

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Consumers in the UK need to be on their guard against the unscrupulous practices of property sale and lease back scheme providers, it has been claimed.

Key Retirement Solutions has expressed its concerns that homeowners facing
debt management problems could enter into unfavourable sale and lease back agreements because of the lack of effective regulations in the sector.

The equity release company has warned that while these schemes are presented to homeowners as a quick way to solve financial difficulties they should be taken seriously by potential customers.

To highlight its concerns, the company has quoted the National Association of Sale and Rent Back as saying: “There are providers who have been specifically targeting the vulnerable and not offering a secure tenancy going forward and it is this practice which is giving the entire sector a bad name.”

Earlier this month, the Council of Mortgage Lenders predicted that the rate of home repossessions will increase over the course of this year as debt management woes worsen for consumers around the country.

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British homeowners are confused about what kind of mortgage arrangement will suit them best when their currently deal expires, according to recent research.

Figures from Abbey Mortgages have shown that around two-thirds of all the people it polled would be uncertain over what kind of home loan arrangement would offer them the best deal in the coming months and years.

With millions of homeowners struggling to become debt free, many people are uncertain about how any changes to the base rate of interest and the overall economic climate will impact their personal finances, Abbey has suggested.

Nici Audhlam-Gardiner, head of Abbey Mortgages, commented: “Depending on who you talk to there are different outlooks for the UK economy and for Bank of England base rates.

“This uncertainty leaves homeowners with a bit of a dilemma on their hands.”

The Consumer Credit Counselling Service recently suggested that people who use multiple forms of plastic to spend money often find themselves confused about how much credit card debt they have accumulated.

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