Past Articles for May, 2008

The boom in the price of properties across the UK has been a disaster for many thousands of people not yet on the housing ladder, it has been claimed.

According to Paul Holmes, chief executive Firstrung, the dramatic increase in house prices has been good news for “middle England” but harmful to the prospects of younger consumers.

Would-be first-time buyers have been left with the prospect of a serious debt management burden if they want to get on to the housing ladder in a climate of falling prices, Mr Holmes maintains.

“Quite frankly, for first-time buyers it was not good news that property prices were going up, it was a bloody disaster,” said the Firstrung boss, whose company offers various solutions to people looking to get on the housing ladder.

The latest figures from Nationwide Building Society showed that April saw the sixth consecutive month of falling house prices in the UK.

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An increasing number of British women are aiming to become financially independent, according to recent research.

Many thousands of women are among the millions of UK consumers looking to clear debt and three-quarter of female Britons feel the idea of men being a family’s main breadwinner is outdated.

A smaller proportion, close to two-thirds, of British men agree that their role in family is not necessarily that of the sole wage-earner and women are increasingly taking charge of their own financial affairs, the Carter Allen Private Bank reports.

“It’s intriguing to see that more men feel there is a place in society for the traditional ‘male breadwinner’ than women,” said Sally Watts, marketing director at the group behind the research.

“This highlights the changing attitudes amongst young British women towards independence and financial self-sufficiency.”

A report last year from uSwitch revealed that British women accounted for more than £30 billion in unsecured personal loan and credit card debt.

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Aging Britons are increasingly emptying their pockets in order to help out their children and grandchildren financially, it has been suggested.

More and more grandparents in the UK are using their own funds to provide assistance to their often-indebted offspring, reports the savings scheme KidStart.

Thousands of British grandparents have debt management issues of their own but six per cent are helping younger generations of their family to raise enough cash for a housing deposit.

Furthermore, almost one in three aging Britons are using their money to make sure their grandchildren have the toys and clothes that they want.

Among the most common reasons for grandparents to dig into their pockets and help out the younger members of their family is to assist them in buying a new car, KidStart reports.

Figures from Credit Action have shown that British consumers of all ages pay out close to £257 million in interest on their collective debt management burden every day.

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The lack of credit availability has seen the rate of financial services switching activity fall over the past 12 months, according to a recent study.

Figures from MoneyExpert.com have revealed that there were 17 per cent fewer instances of financial service switching in the first three months of 2008 compared with the same period in 2007.

As millions of consumers have struggled to become debt free, lenders have trimmed the number of deals they offer and borrowers have had little room for debt management maneuvers since the start of the credit crunch.

In addition, the rates of interest being offered by service providers have become less attractive in recent months and so fewer people have been motivated to switch, MoneyExpert.com reports.

Reflecting on the findings, the company’s founder Sean Gardner said: “The credit crunch is having an effect on people’s ability to move as lenders increase rates and prices and withdraw products.”

Last week, Emma Walkley, current account manager at Alliance & Leicester, advised UK consumers to be as pragmatic as possible as they look to softlink=”clear_debt”>clear debt.

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Women who wish to avoid debt in retirement have been given three pointers for future financial security by the principal adviser of Ruth Whitehead Associates.

Commenting on the fact that many women do not make any provision for their personal pension, Ruth Whitehead said: “They still, even in the 21st century, sacrifice their own futures because they’re concentrating on the needs of others.”

Taking out a pension could help women get into a position where they are debt free when they are older.

Another pointer from Ms Whitehead is to “keep plugging away at Isas” every year and to invest in property.

“If you do these three things, you should be fine when you’re 65,” she concluded.

Women who missed out on making National Insurance contributions between 1996 and 2002 will have the opportunity to buy back these gaps under new plans announced by the Department for Work and Pensions earlier this month.

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British consumers should be pragmatic about the current economic climate, it has been suggested.

According to Emma Walkley, current account manager at Alliance & Leicester, many people are looking for ways in which they can cut back on their expenses.

Among the actions taken by consumers is switching their credit card debt to a zero per cent deal - a step taken by 12 per cent of survey respondents - while a fifth have sought out a new utility provider.

Ms Walkley stated: “As a nation we are fairly financially minded which means that when budgets are stretched we can plan pragmatically how to cope.”

The Alliance & Leicester research also found four in ten Britons budget carefully each month and live within their means.

This is compared to 17 per cent who admitted spending all their money each month, while eight per cent push their debt management limits by going overdrawn every month.

A moneysupermarket.com poll found consumers’ budgets are being stretched to their limits as food and fuel prices continue to rise.

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Consumers hoping to become debt free could be facing an uphill battle as the price of essentials is likely to carry on rising.

Joel Segal, lead partner of consumer products at Ernst and Young, told BBC Radio 4’s Farming Today rising food and energy prices could lead to financial strain for consumers.

Escalating costs are the result of high inflation and a general food shortage, he suggested.

Consumers face difficult decisions when it comes to how they will spend their disposable income, Mr Segal suggested.

He noted that Britons will have to consider whether they are willing to spend less on clothes and if they are willing to switch from eating organic chicken to free-range or mass-produce.

In addition, Mr Segal highlighted that vulnerable members of society - such as older people - could be hardest hit, with those with limited disposable income having to make “some tough choices between eating [and] heating”.

The last year has seen food price inflation rise by over seven per cent, with fuel prices up by 19 per cent and utility prices rising more than eight per cent, according to Alliance Trust.

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Rising fuel prices are adding to the debt management struggles of British consumers, it has been suggested.

Price comparison website moneysupermarket.com claimed that urgent action is needed in order to ensure people’s debt problems are not exacerbated by such price increases.

Research by the site found that two-thirds of Britons feel they will not be able to cope financially if fuel price hikes continue.

Head of debt at moneysupermarket.com Tim Moss said consumers are being “stretched to breaking point”.

“People are really starting to suffer and need help urgently,” he added.

Mr Moss said those with financial problems should consider their debt management strategy and figure out exactly how bad their situation is.

He advised prioritising bills and essential expenses such as mortgages, rent and utility bills, while sacrifices may need to be made on things such as magazine subscriptions or pay-TV.

Speaking on BBC Two’s Newsnight, energy minister Malcolm Wicks has claimed the government “certainly” understands the pressures felt by consumers as a result of the high price of fuel.

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Couples who pay for their wedding by means of loans and credit cards should think carefully about adding to their debt, according to one expert.

Donna Werbner of Fool.co.uk said people who take on a lot of credit card debt to fund their big day will find that their wedding could be “memorable for all the wrong reasons”.

She said couples who do this will find they pay off this credit card debt for the rest of their lives.

Ms Werbner’s comments come after the financial website discovered one in ten people plan to pay for their credit card entirely via a credit card or personal loan.

Some three per cent plan to take out a remortgage or second loan to fund their wedding.

“There’s no doubt weddings are becoming more expensive, but people seem to lose all sense of proportion when it comes to budgeting,” warned Fool.co.uk.

Wedding Guide UK claims the average wedding costs around £11,000, but adds that it is “quite possible” to spend anything between a few hundred pounds and more than £20,000.

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More people are turning to the buy-to-let market if they struggle to sell their property, according to the Royal Institution of Chartered Surveyors (Rics).

Statistics from the organisation show a rise in new landlord instructions for the first three months of 2008 and it is believed this shows that sellers are becoming landlords in the current market conditions.

Rising rental yields and an inability among buyers to secure mortgages have been suggested as contributing factors.

James Scott-Lee, Rics spokesperson, said the letting market is gaining from the loss of the sales sector.

“With rental expectations high, landlords will continue to enjoy this increasingly lucrative market,” he predicted.

Rics’ figures also found that more landlords are holding onto their properties after their tenants’ leases expire.

John Heron, managing director of Paragon Mortgages, recently said that tenants seem to remain in private rented accommodation for longer in the current market conditions.

He predicted high levels of demand for rental properties in the near future, unless something is done to improve the situation for first-time buyers.

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