Archive for July, 2010

Council tax debt on the increase

Saturday, July 31st, 2010

It has been reported that the level of council tax in Wales is on the increase, as consumers struggle to keep on top of their financial commitments following a very turbulent couple of years. Whilst the recession is officially over many people are still struggling with their money, and this is affecting their ability to pay bills.

Whilst some councils in Wales were owed hundreds of thousands of pounds in unpaid council tax last year there were others, such as Monmouthshire, that were owed over two million pounds in unpaid council tax for the year. Many councils across Wales saw a sharp increase in the amount of unpaid council tax owed to them.

Across the Gwent area councils were collectively owed nearly £7 million in unpaid council tax, and this sort of debt has seriously affected the ability of these local authorities to effectively provide the services for which council tax is paid. This means that those who are paying their council tax regularly may be made to suffer as a result of those that do not pay.

Council officials have said that officers are looking at different ways in which to improve on collecting council tax from consumers, but with job losses still set to affect consumers and with many struggling to pay other bills and debts there is uncertainty over how successful local authorities will be in terms of collecting unpaid council tax from those that have fallen behind with their tax or have simply stopped paying.

The Tax Payers Alliance said: “Council tax has skyrocketed in recent years, and a large chunk of the money that’s owed will simply reflect people’s inability to pay, and in other cases it will be wilful breaking of the law. Councils must do more to recover the money and ensure that law-abiding taxpayers do not have to pay more to make up for those who don’t pay.”

Tags: Council Tax, Wales, debt, Tax

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Small percentage of home loans arranged through brokers

Saturday, July 31st, 2010

In the past many people looking to take out home loans have gone through mortgage brokers in order to get the finance that they need, often because this has been the most convenient, hassle free, and sometimes the most affordable way of finding the right mortgage or home loan.

However, over the past couple of years the mortgage and financial markets have changed radically, with profound effects stemming from the global financial crisis and recession. This has had a huge impact on the way that people take out home loans and has had a particular effect on the number of people that go through a broker to get their home loan.

Recent research has shown that mortgage brokers in the UK are now often unable to access some of the best deals on the market, with many lenders reserving these deals for customers that go directly through them rather than through an intermediary.

The figures suggest that mortgage brokers are now accountable for only 10 percent of home loans, with the other 90 percent of the best mortgages only available directly through lenders. Prior to the global financial crisis mortgage brokers were accountable for around 70 percent of home loans that were sold, reflecting how the mortgage market has changed over the past couple of years.

One leading High Street bank, HSBC, stated: ‘The research shows just how much the mortgage market has changed over the last two years. With loans available from brokers failing to beat direct lenders’ lowest deals for over 90% of that time, customers can no longer rely on brokers to get them the best deal in town.’

An official involved in the research added: ‘Anyone using a mortgage broker needs to be aware that the range of products available may be limited.’

Tags: mortgage, broker, mortgage broker, Bank

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Payday loans been helping struggling workers

Saturday, July 31st, 2010

The recent financial crisis has left many people struggling financially, and whilst those that are short of money would normally have relied on an increased overdraft or credit card to tide them over financially in the event that they ran short of cash or had emergency bills this is no longer an option for some people due to tighter credit conditions.

The tighter credit conditions that have come into place have caused a real problem for some people, particularly those that have no savings to fall back on if the need arises. However, for those that are working there is another option available in the form of payday loans, which are designed to provide a short term financial lifeline to those that need small loans on a short term basis.

Often people are hit with unexpected bills, emergency repairs, and other unexpected costs before their payday comes around again, and this can create a problem if they do not have the available funds to pay. With a payday loan workers are able to borrow relatively small sums of money to tide them over until payday comes around, which can be a real lifeline for those that would otherwise be stuck.

There has been some bad press about payday loans over the past couple of years, mainly connected to the interest rates charged. However, consumers are reminded that the loans are only very short term ones and therefore the amount of interest that is actually paid is not a huge amount in most cases.

One consumer said: “I’ve had to use payday loans on a few occasions when I’ve run short of cash and they have been really useful. I don’t have savings or family to borrow money off, and when emergencies come up like essential car repairs I would be stuck without facilities like this.”

Tags: loan, credit, payday loan, Interest

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BBA says mortgage lending still subdued

Friday, July 30th, 2010

A recent report from the British Banker’s Association has shown that mortgage lending levels for the month of February remained subdued. In its report the BBA stated that the UK’s big banks approved 35,275 mortgages for the month of February, which was not much higher than 35,154 seen in January. (more…)

Tags: mortgage, British Bankers Association, Financial Services Authority, finance, Banking, Personal finance

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Is it worth overpaying on your mortgage?

Monday, July 19th, 2010

Whilst there is no doubt that many people are struggling when it comes to their finances following the last couple of years, which have been financially turbulent for everyone, the one good thing that has come into effect for homeowners is the rock bottom base interest rate, which stands at just 0.5 percent, the lowest it has ever been in the history of the Bank of England.

Whilst this rock bottom base rate is good news for homeowners that are still paying on their mortgages, as it means that their mortgage repayments fall if they are on a variable rate mortgage, it is not so good for savers, many of whom are not getting returns on their savings.

As a result of this situation many people have asked themselves whether it is worth putting the money they save on their mortgage repayments into a savings account given the low level of return that they will get on it. Instead, many have opted to use the extra cash to overpay on their mortgage, which could ultimately mean that they pay far less in interest over the term of the loan and could cut the repayment term dramatically.

For some of those people that have seen their mortgage repayments drop as a result of the base interest rate the savings have been significant, and considering that the base rate has been at 0.5 percent since March of last year many would have saved a small fortune if they had put the money into savings. However, by overpaying on their mortgage some homeowners have made even more in the long run because of the huge amount of interest that they will save and the years that they can cut off their mortgage term.

Industry officials have said that by overpaying by a relatively modest amount each month whilst the going is good and the base rate is low some homeowners could shave years of their mortgage repayment term and could save thousands of pounds in interest. On the other hand putting the surplus cash into savings will earn very little in the way of interest in the current climate.

By overpaying on mortgages consumers can really make their money work for them, and even if this is only possible on a temporary basis until the base rate increases and repayments increase it can still make a big difference to homeowners.

Tags: overpay, mortgage, Mortgage loan, finance, savings

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Irish banks told to hold fire on negative equity mortgages

Friday, July 16th, 2010

Banks in Ireland that were planning to start offering negative equity mortgages have been told to hold fire by regulators until a decision has been made with regards to whether these products should be allowed. There are fears amongst officials and regulators that these mortgages will simply push consumers even deeper into debt, sparking a debate as to whether they should be allowed.

Already there are around a quarter of a million homeowners that are currently in negative equity, where they owe more on their mortgage than the property is actually worth. According to figures this could swell to around 350,000 by the end of the year, which means a rising number of homeowners will find themselves tied to their property because of the negative equity.

With the negative equity mortgages that some lenders have been planning to offer homeowners would be able to transfer the negative equity from their existing mortgage onto the new one. However, whilst this could provide convenience for those that want to move to start a family or to take up a new job it could also land many people even deeper into debt.

Regulators are said to have written to twenty one banks so far telling them to hold fire on launching these mortgages until they have decided whether it is wise to allow the mortgages to be made available.

The regulator stated: “We intend to examine the merits of such products further with a view to consumer protection to see whether such products should be available to consumers and if so what restrictions should apply. Such a product may lead to consumers being overexposed or facing future repayment difficulties.”

Tags: Ireland, negative equity, mortgage, finance

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Financial expert speaks out against stigmatising personal insolvency

Saturday, July 10th, 2010

An expert in the financial industry has recently spoken out about personal insolvency in the UK, stating that it is wrong for this course of action to be stigmatised in the way that it often is. Ed Bowsher from Lovemoney.com said that for many people personal insolvency was the only option.

Over the past few years a rising number of consumers have been hit with financial problems as a result of the global financial crisis and the recession, which has led to a restriction in funds and credit as well as many job losses. As a result of this many have had to take on more debt in order to fund even basic living costs in some cases.

However, whilst there are a number of solutions available for those that do have debts that they are struggling to repay some of these solutions – namely personal insolvency – comes with a huge stigma attached. With so much stigma attached to personal insolvency many of those that may have considered looking into this measure may end up being too scared or embarrassed to do so.

Bowsher said that it was wrong of people to stigmatise personal insolvency because for some people it really was the only effective option that was available, but as a result of the stigma consumers were failing to help their own financial situations by opting for personal insolvency.

Since last year the number of personal insolvencies in the UK are said to have increased by around 18 percent, and his indicates that more and more people are realising that this is the best course of action for them. However, officials have warned that personal insolvency is not something that should be entered into lightly as it can have a profound effect on a consumer’s financial future.

Tags: Stigma, insolvency, debt, personal

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Expectations over house prices hit by mortgage concerns

Wednesday, July 7th, 2010

According to a recent report expectations over house prices are being adversely affected by consumer concerns over mortgages. Concern amongst consumers over both the state of the economy and the availability of mortgages has resulted in expectations relating to house prices in the UK being hit. The data comes from property website Zoopla.co.uk

The figures show that there has been a drop in the number of people that are expecting property prices to go up over the coming six months. This has fallen to 78 percent this month compared to 81 percent three months ago. The figures also showed that many people still thought it was very difficult to get a mortgage, and this is thought to have impacted on expectation over property prices.

According to the Zoopla survey 77 percent of those that were polled thought that the availability of mortgages had not improved over the last three months. 27 percent of those polled thought that it was now more difficult to get a mortgage than it was in May. Another 34 percent of those polled said that they found that trying to get a mortgage was their biggest obstacle when it came to buying a property.

Another 21 percent of those that were polled said that the public sector job cuts that were outlined in the recent emergency budget by George Osborne would negatively affect the health of the property market, and 25 percent thought that rising interest rates would impact negatively on the property sector.

Nicholas Leeming, commercial director of Zoopla.co.uk, said: “The fear remains that the revival in the housing market will be derailed unless the banks make a concerted effort to increase lending. With job cuts looming in the public sector and interest rate hikes expected at some point, the new government has its work cut out for it to ensure that home ownership remains affordable and attainable for most people.”

Tags: Zoopla.co.uk, Mortgage loan, prices, property, mortgage

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OAPs paying debts with cash from equity

Wednesday, July 7th, 2010

According to recently released figures many OAPs are paying off their debts through the use of cash from their equity. The data comes from Age UK, with officials from the company stating that more than one third of pensioners who have unlocked equity in their homes have used the money in order to pay off some of their debts.

The research was carried out for Age UK by the University of Birmingham. It found that around 35 percent of pensioners who had unlocked money from their homes through equity release had used the money to clear some or all of their other debts, and around 50 percent used the cash from their equity to pay for essential repairs. The research found that 36 percent of those releasing equity from their home had used the money for a holiday.

The research found that those that were releasing equity from their homes could be divided into three distinct groups. One group, which was the group that was financially better off, often used the money to make an early bequest or a large one off purchase. The second group tended to use the money to improve their standard of living. The final group, which the group that was worse off financially, used the money to repay their debts.

The data also found that two thirds of people that were aged over sixty five were people that had no mortgage with low or modest incomes. Many were also struggling when it came to maintaining their homes. Over the past couple of years, with the difficult financial climate and recession to deal with, many more OAPs have had to consider the option of equity release in order to manage financially. Many are also struggling on their current pensions.

Tags: equity release, debt, finance, equity, pensioners

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Payday loans – friend or foe?

Tuesday, July 6th, 2010

Payday lenders have received a lot of bad press over recent years over the level of interest that they charge on their short terms loans for borrowers that are looking for money to tide them over for a short period of time. With many payday lenders the APR charges can indeed be very high, which can instantly put some people off. However, there are also a number of benefits to these loans, which could make them useful for some people.

Whilst the APR on payday loans can be high it is important to remember that the loans are designed to be used over a very short term such as several weeks. As the name of the loan implies this type of loan is meant to be taken on a short term basis to tide borrowers over until payday, and this means that borrowers will not really end up paying that much for their borrowing.

Payday loans can prove ideal for those that find themselves short of money one month or have unexpected bills or emergencies arise for which they do not have the funds. These loans are not designed to be used on a regular basis in the same way as many people use their overdrafts every month, as otherwise they will prove costly. However, as a one off or for occasional use they often provide an effective solution for those in short term financial need.

Another thing to bear in mind with payday loans is that there is usually no credit check required, so those with damaged credit will not have to worry. However, borrowers will need to prove their income, personal details, and employment details, as these loans are only available to those that are working and can therefore repay the loan when they get paid.

The upper limits on payday loans can vary depending on the lender and on the income of the borrower. Generally payday loans are for a limited amount of money, with upper limits generally tending to be around £1000 with many lenders. However, this is something that borrowers should check when looking at which payday lender to go through.

For those that need finance on a long term basis a personal loan or credit card is the best option, but for those that just need to bridge the gap until payday comes around again payday loans can prove to be a good choice.

Tags: payday loan, loan, finance, credit, Personal finance

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Businesses need to show future plans to get finance

Tuesday, July 6th, 2010

Over the past few years many small and medium sized businesses in the UK have struggled to get loans and finance from banks, and in the same way as with consumers the availability of loans and credit for businesses dried up following the onset of the global financial crisis. As the banking industry was brought to its knees in the financial meltdown many businesses were forced to look elsewhere for finance or even close their doors for good. 

However, over recent months things have been improving to some degree for the banking and financial sectors, which has seen the availability of finance ease up a little for both consumers and businesses. Despite this ease is credit conditions, however, lending to businesses still remains low, and a recent report has suggested that in order to get finance businesses will not need to demonstrate clear plans for growth and success.

The government has called on lenders to ensure that business loans are made available for businesses that are striving to grow and flourish, stating that they are vital to the future success of the economy, and the government has taken a number of steps to try and increase the availability of loans for businesses. However, following the events of the last few years in the financial sector banks are naturally being very cautious about handing out loans to both businesses and consumers. 

One bank has recently stated that whilst banks are keen to support businesses in the UK they also needed to see some form of commitment to growth and success for the businesses that were looking for finance.

Brian Colquhoun, Yorkshire Bank’s North West regional director, said: “We’re entering another crucial stage of the economic recovery. On the whole, banks are keen to support businesses in what remains a tough environment.   From a Yorkshire Bank perspective, we’re as keen as ever to support trading businesses that have strong management and clear plans for growth. From a customer point of view, management teams are emerging stronger from the experience of the downturn. They’re looking to create lasting relationships with a partner that has the ambition and vision to provide a solution to financing needs. Banks with clear appetite to lend will benefit from this.”

Tags: business, lending, Bank, loan, Banking

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