Past Articles for June, 2008

British consumers have been warned that they should not rely on an inheritance windfall to improve their financial wellbeing.

A report from Fool.co.uk has suggested that almost half of all adults in the UK are expecting to benefit to some extent when older generations of their family pass away but in many cases they will be disappointed.

Less than one-quarter of people expect to leave a majority of their assets behind when they die and one in 25 do not anticipate having anything left to bequeath to their children.

Some people feel that waiting for an inheritance windfall is rude, while others are hoping that their parents’ assets will help them become debt free.

David Kuo, head of personal finance at Fool.co.uk, commented: “We can no longer rely on assets being passed down the family tree.

“And for the many of us who are struggling to make ends meet, we will have to fend for ourselves in the here and now.”

The debt management problems being faced by millions of British households have resulted in a significant increase in the use of so-called doorstep loans in recent months, a report from Equifax suggested recently.

By Dan Mather

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Consumer confidence in the UK has taken another tumble and reached levels not seen since the early part of 1990.

The GfK NOP index, which is used in the assessments of the Bank of England, has put consumer confidence at -34 points as millions struggle to deal with their debt management difficulties.

Optimism over the economy has scarcely been in shorter supply since the index was first formed in 1974 and confidence among the general population has fallen dramatically, according to GfK NOP’s assessment.

Rachael Joy from the research company said: “With rising inflation, gloomy forecasts for interest rates and soaring fuel, utility and food prices dominating the front page headlines, it’s no surprise that confidence in the general economy is almost in freefall.”

Howard Archer from the Global Insight recently predicted that the economic problems will increase the number of Britons resorting to so-called distressed borrowing as they struggle to make ends meet.

By Dan Mather

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There is no end in sight for the ongoing downturn in the UK’s housing sector, according to the majority of people quizzed by YouGov recently.

Close to three-quarters of the British consumers questioned said that they expect to see the average price of property in the UK decrease over the course of the next 12 months.

Falling property prices could be bad news for anyone with a mortgage-related debt management burden but the prospects for the housing sector look unfavourable as far as homeowners are concerned.

“It is clear the positive outlook that has characterised the property market for the last few years is now a thing of the past, and people expect prices to fall over the next year,” said Adrian Coles, director general of the Building Societies Association.

Howard Archer from Global Insight recently suggested that the property market in the UK is “being throttled” by a lack of affordability and tightening lending criteria.

By Frank Charlton

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The rising fuel bills that British consumers have been experiencing in recent months could spark a drive towards more environmentally friendly living, it has been claimed.

According to a report from Tescocompare.com, many households are aiming to reduce their energy consumption in order to avoid large bills and the prospect of debt management problems.

In fact, more than half of the people polled by the price comparison business indicated that they will look to save energy in order to save money as the year goes on.

As a result, taking showers instead of baths, not overfilling a kettle and washing clothes at lower temperatures are all likely to become more commonplace as energy bills rise.

“The cost of living and household bills are creeping up and up, but there are lots of things that cost next to nothing, which we can all do on a day-to-day basis to reduce our carbon footprint and energy bills,” said Paul Baxter from Tescocompare.com.

Household bills have become a considerably larger burden for families aiming to become debt free around the UK, according to recent reports from Combined Insurance.

By Giles Stevenson

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The scale of so-called distressed borrowing is likely to increase across the country in months to come, it has been claimed.

According to Howard Archer from the Global Insight research firm, more and more British consumers will turned to credit card debt and other forms of unsecured borrowing in order to meet their everyday living expenses.

Mr Archer maintains that while the ongoing economic downturn will see more people start saving, many will be unable to do so and will instead be forced to add to their
debt management burden just to get by.

“There is also likely to be higher distressed borrowing over the coming months, as people struggle in the face of higher food prices and utility bills, as well as increased mortgage payments,” he said.

Moneyexpert recently claimed that more than one-third of adults in the UK are worried about their debt levels.

By Dan Mather

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Former pop star and reality TV regular Kerry Katona could face bankruptcy if she fails to resolve her current financial difficulties, according to reports.

The 27-year-old was told during legal proceedings at the high court recently that unless she paid off her outstanding tax bill she would likely be obliged to declare bankruptcy.

According to MSN UK, the former member of the pop group Atomic Kitten has an unpaid tax bill worth close to £420,000 and has been unable to settle it because of what her lawyer Luke Harris called “changed circumstances”.

“She’s also strenuously seeking to remortgage her properties. But if the money comes in there is no need [for further action]. I would ask for one final indulgence by the court,” said Mr Harris.

Figures released by the Credit Action charity earlier this month suggested that one person in the UK is declared insolvent or bankrupt every four minutes.

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Chancellor Alistair Darling has called for an end to what he has described as “rip-off” fees being charged by mortgage providers in the UK.

Speaking to the Liverpool Daily Post recently, Mr Darling expressed concern that homeowners who are already facing debt management difficulties are being obliged to pay fees they cannot afford.

He went on to suggest that in some cases mortgage lenders were effectively taking advantage of their customers who are looking to secure a fair deal when they come to remortgage.

The chancellor said: “We have met with the Council of Mortgage Lenders to try to reach an agreement to ensure that people are treated fairly, but if that isn’t happening, I will ask the Financial Services Authority to pursue the matter.”

A report recently from Equifax on behalf of ITV claimed that an increasing number of Britons using credit card debt to meet their mortgage repayment demands.

By Giles Stevenson

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The scale of credit card borrowing across the UK continued to increase last month, according to figures from the British Bankers’ Association (BBA).

Members of the association reported that their customers took on around £7.5 billion worth of added credit card debt over the course of May, which was higher than the average for the past half-year.

Furthermore, the data demonstrated that credit card debt funded more than 100 million purchases last month and more spending was done on plastic during the period than the same month of last year.

Statistics director at the BBA David Dooks said: “People spent more on credit cards, but repayment levels were lower than expected in May and after April’s busy month with people putting money into Isas, personal deposits were not as strong.”

In related news, the Conservative party recently called for the government to clamp down on store card credit lenders who it claims are luring people into levels of debt they cannot manage.

By Dan Mather

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The housing market in the UK is effectively “being throttled” as an increasing number of families struggle to cope with their debt management problems.

Such is the claim of Howard Archer, chief UK and European economist for Global Insight, who believes that a lack of affordability and tight lending conditions are constricting activity in the mortgage sector.

Mr Archer’s comments came in response to the latest figures from the British Bankers’ Association (BBA) that showed its members approved a record low number of mortgage deals over the course of last month.

“The BBA data graphically highlight that housing market activity is currently being throttled,” he said.

“It is very possible that the Bank of England’s next move could be to raise interest rates which would clearly be very bad news for the housing market.”

The Bank of England considered the option of raising the base rate of interest earlier this month, which could have added to the difficulties of consumers and homeowners aiming to become debt free.

By Frank Charlton

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Commodity prices are being faced with a “seismic shift”, which could ultimately see UK consumers faced with increased energy prices and an added debt management headache.

The chief executive of E.ON Dr Paul Golby told a parliamentary committee this week that the pressure on energy and other commodity prices is very definitely upward.

Meanwhile, the director of regulation for Scottish Energy Rupert Steele went on to say that “it is easy to see” how the BBC came up with its estimation of a 40 per cent rise on household energy bills by winter 2008.

Each of the six largest energy suppliers to the UK market were represented at the recent hearing and each suggested that the wholesale commodity cost rises would result in higher bills for families across the country.

Combined Insurance reported recently that the typical household bill in the UK has risen by more than one-quarter over the course of the past 24 months.

By Giles Stevenson

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