Past Articles for May, 2008

The newly nationalised Northern Rock bank is expecting a considerable surge in the number of people approaching its staff for debt advice, it has been suggested.

An internal memo revealed that the bank is set to more than double the number of debt management experts on its workforce by March of next year.

Household budgets are being squeezed across the UK and Northern Rock appears to be anticipating a significant increase in the number of people needing assistance in dealing with their debts.

Additionally, it is thought that the bank is actively encouraging its mortgage customers to switch to other lenders in an effort to reduce the scale of its loan book.

The BBC reports that the bank is hoping to cut its outstanding loan level in half from £100 billion as part of a plan to repay the £24 billion loan handed to it by the government.

Meanwhile, a report from MoneyFacts.co.uk revealed that mortgage deals made available in the UK are now only on offer for an average of 11 days.

Written by Frank Charlton

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Cars are the single greatest lure for British borrowers who are being driven into the red, according to recent research.

Figures compiled by Experian show that almost one in five men and one in ten women in the UK are being tempted to risk a debt management headache in order to buy the car they want.

And for many the motivation to spend beyond their means is to seem wealthier than in fact they are, with one in three people admitting that appearances are important to them.

The findings from the information services firm come despite the fact that millions British consumers are finding it difficult to become debt free, particularly since the start of the credit crunch.

Kirk Fletcher, managing director of Experian’s automotive division, said: “This survey highlights the fact that the consumer’s desire for a car that projects the right image remains as strong as ever.”

Earlier this week, Egg revealed that the typical individual in the UK now pays out more than £1,000 each month on bills, food and debt repayments.

Written by Frank Charlton

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The UK’s housing sector slump has gathered pace in recent weeks, according to the latest data from the Nationwide Building Society.

Average house prices are now 4.4 per cent below the corresponding figure for 12 months ago and the speed at which typical property prices have fallen has surprised many leading experts.

Would-be first-time buyers are struggling to find a mortgage deal and homeowners are finding it difficult to meet their debt management demands as the picture for the housing sector becomes increasingly gloomy, Nationwide suggests.

The building society’s figures show that the average house price in the UK fell by around £5,000 over the course of May, which amounts to a record monthly slump.

Fionnuala Earley, Nationwide’s chief economist, remarked: “The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment about the housing market.”

According to Credit Action, the typical British family is currently paying out £3,765 each year to service the interest on their debt management burden.

Written by Lucy Matthews

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Mortgage-related debt management problems in the UK look set to become more serious than the crisis that occurred in 1992, it has been claimed.

According to a report from the Axa insurance firm, there are more homeowners with borrowing arrangements that leave them vulnerable to repossession and arrears than was the case 16 years ago.

Tens of thousands of properties were repossessed in 1992 but more people are now in jeopardy because they have taken on a home loan that amounts to four, five or even six times their annual earnings, Axa insists.

Axa is recommending income protection insurance and Iain Mallon, from the company’s marketing team, said: “The economic growth experienced in the UK in the past 15 years has encouraged a short-term view of finances with a buy today and pay tomorrow attitude.”

Earlier this week, Paul Holmes, chief executive at Firstrung, described the house price boom of recent years as being a “disaster” for anyone not yet on the property ladder.

Written by Lucy Matthews

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Money problems and debt management issues are the number one concern for consumers living in the UK, it has been revealed.

Research carried out recently Prudential has found that financial matters are more of a concern for British people than even the health of their own families or their own wellbeing.

In response to its own findings, a statement from Prudential said: “With thoughts of the credit crunch and house price slumping all around, it’s difficult to escape the sense of financial foreboding.”

According to the data from the financial services firm, calculating their household budget is the primary objective of more than a third of all UK consumers and only five per cent are aiming primarily to take a holiday.

The children’s saving scheme KidStart reported recently that an increasing number of grandparents are using their own money to help out younger generations of their family who are struggling financially.

Written by Giles Stevenson

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Cuts in the base rate of interest will not be made until August at the earliest, according to the assessment of one economic expert.

Howard Archer, chief UK and European economist for Global Insight, maintains that the Bank of England looks set to adopt an “extremely” careful approach to setting interest rates in months to come.

With millions of consumers struggling to become debt free, many will be hoping for base rate reductions but such a move will not be made in June, Mr Archer has asserted.

However, the economic analyst is convinced that borrowing costs will fall steadily over the coming year and that at some point in 2009 the base rate could be as low as four per cent.

“It currently seems highly unlikely that the bank will be prepared to trim interest rates again until August at the very earliest,” he made clear.

So far in 2008, the Bank of England has cut the base rate of interest by 0.25 per cent on two occasions and left it unchanged in January, March and May.

Written by Giles Stevenson

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The numbers of people in the UK complaining about the financial services they have received have reached record levels, it has been revealed.

An unprecedented number of almost 800,000 enquiries were made to the Financial Ombudsman Service (FOS) over the course of the past year and more than 123,000 official complaints were made.

Thousands of people have seen their debt management difficulties worsened by overdraft charges and related issues were singled out as a prime concern for disgruntled consumers contacting the FOS.

Sir Christopher Kelly, the chairman of the Ombudsman remarked: “The sudden surges in banking and insurance disputes this year have meant that predicting, managing and dealing with complaint volumes has been more of a challenge for us organisationally than ever before.”

British banks recently made clear their intention to appeal against the High Court’s decision to allow the Financial Services Authority to rule on the fairness or otherwise of the charges they levy for unauthorised overdraft use.

Written by Dan Mather

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Mortgage deals being made available in the UK are disappearing much more quickly than was the case a year ago, according to recent research.

Figures compiled by MoneyFacts.co.uk have shown that the average length of time during which a mortgage product is on offer now stands at 11 days, which is a 30 per cent shorter period than was typical 12 months ago.

The issue could be a serious concern for anyone hoping to maintain control of their debt management position when their current mortgage deal comes to an end.

Indeed, the price comparison firm behind the latest data insists that securing a mortgage deal has now become “more of a lottery than an art” in the UK.

“I believe banks and building societies are being forced into these measures due to current market uncertainty,” said Darren Cook from MoneyFacts.co.uk.

According to figures from Credit Action, including mortgage arrears, the average British household has an outstanding debt management burden worth in excess of £57,000.

Written by Dan Mather

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The average British consumer needs more than £1,000 in order to make ends meet, according to the latest figures.

Financial services firm Egg maintains that the typical UK consumer needs roughly £1,077 per month in order to cover their household bills and their debt repayments.

Repaying personal loan and credit card debt puts serious strain on household incomes and most working Britons would be unable to support their families if they lost their job.

Tobias van der Meer, head of consumer banking and investments at Egg, commented: “As a rule of thumb, it has long been considered sensible for families to have cash savings of at least three months’ income, for any of life’s emergencies.

“However, our research highlights that far from being a precaution, these savings are a necessity.”

Meanwhile, the Co-operative Bank reported recently that people living in the UK spend on average more than £9,000 on Saturdays throughout the year.

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Fears over the rising rate of inflation have sparked an upsurge in debt consolidation activity in the UK, it has been suggested.

Concerns over the rising cost of living have motivated around seven per cent of British consumers to consolidate their credit card debt into a personal loan they hope will be easier to pay off.

Meanwhile, more than one in ten people have switched their credit card provider in search of a better deal since the alarm was first raised over inflationary pressures, Alliance & Leicester reports.

“Taking advantage of the best financial deals on the market is always important, but more so in the current environment,” said Emma Walkley, current account manager at Alliance & Leicester.

“We would advise people to take a good look at their finances and see how they can be improved,” she added.

Credit reference firm Callcredit reported last week that around 40 per cent of UK consumers would see their savings run out within a month if their income streams dried up.

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