Archive for December, 2010

Many will experience pay freezes next year

Thursday, December 30th, 2010

According to recent reports many people are set to experience pay freezes next year, which means that more and more people will struggle to keep on top of their financial commitments, and many may fall into increasing debt because of the cost of living rising whilst pay is being frozen.

Last year also saw many workers having no pay increases, as companies tightened their belts and either reduced pay increases or froze them altogether. Many officials believe that next year is going to be equally as challenging, and many people will have to continue struggling along with no increase in their pay.

The concern that many people have is that whilst pay is being frozen or rising only marginally the cost of living is continuing to soar, with prices on things such as food and petrol rocketing. On top of this, January will see the VAT increase of 2.5 percent kick in, which means that consumers will be paying more for many of their purchases even though their salaries are not increasing.

For that are already struggling to repay their debts and keep up with their financial commitments the lack of salary increase coupled by the soaring cost of living and the hike in VAT could lead to real problems, and could leave many unable to make payments on debts and other financial commitments.

However, the British Chambers of Commerce said that things may not be as bleak as they seem, stating: “Despite a number of businesses suggesting that pay will be frozen, almost as many are suggesting wage rises in 2011. Equally, many businesses say they will deal with reductions in public spending by taking a hit on the bottom line, rather than by reducing staff numbers. This continues a trend we first saw during the recession: firms doing whatever they can to retain staff, even when conditions are more challenging.”

Tags: salary, business, petrol, Cost of living, financial commitments, top, pay increases

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Slow year ahead for UK property market

Wednesday, December 29th, 2010

According to recent reports the UK has a slow year ahead of it when it comes to the mortgage and property markets, as challenges and difficulties in these sectors are still rife. Whilst there has been talk of recovery for both the mortgage and property sector following the global financial crisis and the recession there are still many hurdles to overcome, and it is unlikely that there will be much improvement over the coming year.

When it comes to property prices many industry experts are expecting property values to drop again this year, with supply outstripping demand in what has become a very difficult and turbulent climate. The mortgage market will also remain subdued, with factors such as job losses, low consumer confidence, and lack of deposits fuelling a lower level of mortgage applications and approvals.

The Spending Review from the coalition government has resulted in a hundreds of thousands of expected job losses, and this will make both consumers and lenders err on the side of caution. Consumers will be too worried about their job security to apply for mortgage finance, and lenders will be very cautious about who they lend to given the climate.

First time buyers are also still struggling to raise the deposit levels that lenders are demanding, which will also affect the number of mortgage applications and approvals, and will mean that once again the buoyancy is stripped from the property market, further driving down prices.

One industry official said: “Although there may have been recovery in the property and mortgage markets since the worst of the credit crisis and recession there is still a very long way to go. The expected job cuts from the Spending Review will do nothing to help these sectors, as it means that both potential borrowers and lenders will be on their guard.”

Tags: recent reports, credit crisis, improvement, caution consumers, mortgage markets, buoyancy, Mortgage loan

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Borrowing could rise due to VAT increase

Tuesday, December 28th, 2010

According to a recent report the level of borrowing in the UK could increase this week, as consumers try and find ways to fund the purchase of more expensive items before the VAT increase kicks in at the start of January. Whilst the 2.5 percent increase in VAT won’t make a significant difference to the price of small, everyday items it can have a big impact on the amount paid for more costly items, and many will therefore be rushing to buy big ticket items before the VAT rise comes into play.

For those thinking of buying things such as televisions, fridge freezers, washing machines, computers, and other appliances and gadgets, the VAT increase could make a big difference and many may therefore be keen to make these purchases now and save on the 2.5 percent increase. However, with Christmas only just over many may not have the ready cash to pay for the items having already spent a fortune on Christmas.

Some industry officials believe that many of those determined to beat the VAT rise will turn to borrowing to fund their purchases, and this could mean turning to credit cards, overdrafts, and even personal loans. This could see the level of borrowing increase over this coming week, as consumers race to make their purchases before the VAT increase and whilst the sales are still on.

One official said: “There will be many people who may have been planning to make a larger purchase or even book a holiday in 2011, but want to save money by avoiding the VAT increase and by making their purchase whilst the sales are still on. For many of these people the only option when it comes to funding their purchase may be to borrow money.”

Tags: VAT, difference, option, purchase, Sales, race

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Should you spend money in the sales?

Tuesday, December 28th, 2010

With the post-Christmas sales now in full swing many people have rushed out with their credit cards to buy all sorts of things that they don’t want and don’t need simply because the price is lowered at this time of year. This has fuelled concern amongst industry officials with regards to how much debt many people will end up in, having already spent a fortune on Christmas and now giving their credit cards a good bashing at the sales.

So, should you give in to the temptation of the sales or should you simply reflect upon the amount that you have spent over Christmas and try and tone down the purchases for a while? Well, the concern seems to be over people that are rushing to the sales to buy things that they do not actually need simply because the price is right, which in effect makes the purchase a waste of money, albeit a cheaper waste of money than it would have been if not in the sales.

The sales are great for people that are looking to make a purchase and can save some money on the cost as a result of the slashed prices that shops try and entice consumer with. So, for instance if you were planning to buy a new fridge freezer in the coming months buying in the sales could be ideal, as it will save you the additional VAT that will come into force at the start of January and will enable you to enjoy cut prices.

If on the other hand you have a perfectly good fridge freezer but you buy one simply because it is cheaper than it was before the sale then you may effectively be wasting money that you cannot really afford. It is important to think about the purchases that you make in the sales rather than snapping up anything with a reduced sticker on it, as this way you will be saving money on the things you need rather than wasting money on the things that you don’t.

If, for instance, you are going to a wedding in 2011 and you know you will need to get a new outfit, now could be the ideal time to get it so that you can get it at cut price. Another good idea, if you have the available funds, is to start thinking about birthdays and Christmas for 2011. The cost of many gifts is slashed right after Christmas as shops try and get rid of excess stock, so you could save money on everything from gift sets and jewellery to fragrances and more.

Tags: rushing, price, sticker, prices, post-Christmas sales, right, Value added tax

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Sensible Tips for Debt Consolidation

Tuesday, December 28th, 2010

When sensible tips for debt consolidation are used it is possible to get out from under the financial stress. These tips can help to clear up the outstanding debts by budgeting properly, not taking on new debt and rather than having 10 bills each month it is consolidated into one. (more…)

Tags: Debt-snowball method, financial obligations, estimates, financial, credit

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Paying debt could be better than saving

Friday, December 24th, 2010

Many people these days are struggling with a range of debts that they have accrued, and in the current financial climate coping with these debts has become more and more difficult for many people. However, many people that are worried about losing their jobs or about the ongoing challenges and difficulties in the financial markets may be trying to put money aside into savings even though they also have high interest debts.

Some industry officials have said that some people may find that they are far better off using their money to pay off higher interest debts rather than to put the cash into savings. However, whilst paying down debt is going to be more beneficial to consumers in a number of ways one official said that this would only be suitable for people that had at least some level of personal savings that they could use freely in the event of an emergency.

Many of those that are putting money into savings are getting little to no return on their cash because of the low interest rates that financial institutions are paying on savings accounts now, whereas if they used that same money to pay off high interest debts they could save a fortune in the amount of interest that they pay.

However, at the same time people do need to have some money put aside that they can use in the event that an emergency arises, otherwise if something unexpected occurs they may not be able to get their hands on the cash that they need to deal with it.

An industry official said: “As long as consumers have at least a little bit put aside in savings then any further excess cash may be best used by putting it towards savings in order to save money on interest.”

Tags: challenges, Financial institutions, industry official, Money, interest debts, savings accounts, debt

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Getting debt advice in the New Year

Tuesday, December 21st, 2010

Over the past couple of years getting debt advice in the UK has become more and more difficult, as the demand for these services has rocketed because of personal debt levels, the global financial crisis, and the recession. Many people have found themselves in a position where they need to get advice relating to their debts, but getting access to these services and this advice has become a more difficult and long winded process.

It is likely that following the New Year many people will be hoping to sort out not only their existing debt but also new debt that they may have built up over the festive season, and it is likely that debt charities and advisors are going to see a sharp increase in the number of people looking for advice and assistance once January rolls around. For those hoping to get advice this can mean more lengthy delays.

Those that think that they may need help and assistance with their debts next year are therefore advised to seek help early on from one of the various debt charities and debt management agencies that are around. With delays becoming longer all the time as demand for these services continues to increase registering early on for an appointment could make all the difference.

One official said: “With the impact of the government Spending Review, uncertainty over job losses, and the financial hangover of Christmas many people will be seeking financial advice about their debts. Whereas people used to get an appointment in a matter of days this now stretches to a couple of weeks, and if demand continues to increase it could become an even longer wait. It is therefore important to register your interest early on if you want advice in the New Year to help manage your debts.”

Tags: official, debt relief order, United States public debt, finance, management, season, debt

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Will Indian bank raise competition stakes in UK mortgage market?

Monday, December 20th, 2010

The mortgage market in the UK has been very competitive for a number of years, with a range of lenders vying for the business of consumers when it came to doling out mortgage loans. However, things changed radically several years ago, when the global financial crisis swept across the UK and took its toll on the financial and property markets as well as on household finances.

Suddenly, the many lenders that had been desperate to hand out money without so much as a second glance were shying away from even considering people for mortgage loans. The competition in the mortgage sector throughout the UK plummeted as a result of so many lenders severely restricting their lending levels, and suddenly many of those that would have easily been able to get a mortgage in the past found themselves being turned away from one bank after another.

Whilst things are now said to be easing up a little more following the end of the recession, things are still tight when it comes to mortgage lending and many first time buyers and other potential buyers are still struggling to get the finance that they need to purchase property. First time buyers face a double whammy, as not only are they at the receiving end of banks’ caution to hand out mortgage loans but they have also found themselves unable to get a loan because of the high level of deposit being demanded by lenders.

However, according to recent reports the competition in the mortgage market could be improved in the UK next year, as newcomers to the market make it more likely that consumers will be able to get better deals. One of the big names that is looking to enter the mortgage market next year is the supermarket giant Tesco, which is already in the throes of developing a full service bank and believes that its entry into the mortgage market could prove beneficial for consumers.

It has now been revealed that the UK arm of the State Bank of India will be launching what it describes as ‘competitively priced mortgages’ from next year, and this will be the first Indian bank to make its entry to the UK mortgage market at a time when the nation is desperate for increased competition. The bank has confirmed that it will launch its mortgage range within the next six months, which could make it easier for consumers – including first time buyers – to get the mortgage finance that they need.

Tags: state bank of india, caution, UK mortgage market, property markets, Business Finance, market, second glance

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End of year could see increase in payday loans

Saturday, December 18th, 2010

It has been claimed that the end of the year could see an increase in the number of payday loans being taken out, as many desperate consumers who have run short of cash head to payday lenders to try and get an advance on their next pay packet. There are a number of factors that could contribute towards this increase, which could continue into January.

Many people will be spending a huge amount of money on things such as Christmas gifts, going out, clothes, food, and travel over the festive season, and this means that they will run out of cash far earlier than they normally would, leaving them financially high and dry unless they have some savings put aside to subsidize their spending.

Another factor that could increase the chances of payday loans being taken out is that many people get paid a little earlier than usual in December, but at the same time as usual in January. This means that many may have to make their salary last five or six weeks, which means that they are likely to run out earlier than usual and find themselves looking for a financial lifeline.

Whilst payday loans can prove useful to people in such circumstances, many are worried that they can lead to spiralling debt, and can also result in huge fees in terms of interest, especially if the borrower gets into the habit of rolling the loan over from one month to the next.

One official said: “Consumers should think carefully before heading off to take a payday loan, and should only do this if completely necessary. In the first instance just try and make your finances stretch, and make some cutbacks on spending. However, if you cannot do without a loan, payday lenders are a far, far better option than risking some unscrupulous and unregulated loan shark.”

Tags: better option, head, payday, payday lenders, Luis Gutiérrez, desperate consumers

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Debt worries could rise next year

Friday, December 17th, 2010

Over the past couple of years many people have experienced huge difficulties when it comes to their personal finances, and a huge number of people have experienced difficulties when it comes to keeping up with their repayments and making their budgets stretch far enough. The financial strains that have impacted on people has resulted in many having to seek financial advice and debt advice to try and get back on track.

However, whilst the past year has been bad for a lot of people things could get increasingly worse next year, despite the fact that the recession is over and interest rates are still at their rock bottom level of just 0.5 percent, which is the lowest that they have ever been in the history of the Bank of England, which spans over three centuries.

A number of factors have been blamed for the possibility of increased financial problems for many households in the UK as the New Year approaches. One of these is the coalition government’s Spending Review, which will see a range of cutbacks that will affect consumers from all walks of life in terms of things such as benefits and jobs.

Impending job losses and rising unemployment is expected as a result of the Spending Review and cutbacks, which will leave many people in a difficult position. There is also a VAT hike that is due from the start of January, with VAT rising by 2.5 percent. This will impact on the cost of purchases for consumers, as will the high level of inflation.

One official said: “It’s likely that a rising number of people will be seeking advice from debt agencies and charities next year as the effects of things like government cuts, VAT hikes, increased petrol and food prices, and rising unemployment start to take effect.”

Tags: New, retail, budgets, possibility, range, rock bottom, walks of life

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Consumers advised to shop around for loans

Tuesday, December 7th, 2010

At this time of year many people may end up looking for a loan, with some wanting a loan in order to fund Christmas purchases, others looking to consolidate their debts with a loan, and some simply looking to get a loan to make payment for a one off purchase either before the VAT increase kicks in or when the sales start.

One consumer campaign group, Which?, has stated that consumers should make sure that they shop around in order to get the best deal on a loan, adding that heading to their bank may not necessarily be the right option, as they could end up paying way over the odds by asking to borrow money from their bank.

In fact, the group suggested that it might be advisable for consumers to head to the local supermarket in order to get a competitive unsecured loan, as this could work out cheaper in terms of both repayments and overall interest. Many supermarkets now offer personal loans, and have appeared on a number of best buy tables when it comes to value for money on borrowing.

Figures show that the rates of interest being charged on personal loans from a range of High Street lenders are far higher than the rates being charged by some of the supermarket giants, including Tesco and Sainsbury’s. The consumer group also said that consumers could get cheaper rates with larger loans, and could benefit from recent drops in personal loan interest rates, which could save them more money.

One official from Which? said: ‘It seems perverse that consumers are offered a better rate the more debt they take on, but that unfortunately is the way the market works. If you’re planning to borrow smaller amounts, it’s worth considering the alternatives, including credit cards, in-store interest-free credit, credit unions or peer-to-peer lending sites such as Zopa.’

Tags: best deal, rates, local supermarket, odds, payment, loan, Person-to-person lending

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Debt problems could be worse due to higher energy bills

Friday, December 3rd, 2010

Industry officials have expressed concern over how the many people in debt in the UK will be affected by increased energy bills, which will have a huge impact on consumer budgets during the cold weather. With temperatures already having plunged to sub-zero temperatures many households are now relying on their electric and gas heating, but many may be putting themselves in danger by being too nervous to use their heating due to costs.

Officials have said that by increasing energy prices by unnecessary levels energy firms are making peoples’ lives a misery. Those that are worried about the amount that it will cost to heat their homes are in danger of making themselves ill by living in temperatures that are too low. However, those that do use their heating could end up with huge bills that will plunge them even further into debt.

A number of reports have slated energy firms for bumping up the cost of energy usage in the run up to the cold weather, despite the fact that they are enjoying huge profits. It is claimed that whilst wholesale energy prices may have increased for providers the level of increase that they have applied to consumers is way higher than the increases that they themselves face.

Energy providers in the meantime have tried to justify the increases in energy prices by saying that although they have come at a bad time they, as providers, are also having to pay more money.

One industry official said: “After a two year lull, household energy prices are about to resume their steady climb upwards again. Unfortunately for consumers, the 8% or £99 reduction seen over the last two years failed miserably to reverse the impact of the 42% or £381 increase seen in 2008. And now, whatever small benefit was seen is about to be wiped back out again.”

Tags: household energy, unnecessary levels, run, whilst, bad time

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Survey reveals debt worries amongst consumers

Thursday, December 2nd, 2010

Many people are in debt these days, with personal debt levels amongst some households having increased as a result of the global financial crisis and recession, which has left many people strapped for cash. However, there are concerns amongst a large number of people with regards to how they will repay their debt and whether they will ever be free of it.

According to the survey nine out of ten people have run up unsecured debts, and many of these are concerned over whether they will be able to pay back the debt. Around 89 percent of consumers aged between 18 and 35 had debts that they had run up in the form of loans, overdrafts, and credit cards, and a third said that they did not think that they would ever be free of the debt.

The survey also showed that 54 percent of consumers would have to continue borrowing money in order to fund the lifestyle that they wanted. Another 20 percent of consumers said that they were not worried about their loved ones having to cope with their debt in the event that they died before the debt had been repaid. A massive 80 percent of consumers said that even in the current climate it was still too easy to borrow money on credit cards and through banks in the form of loans.

One industry expert said: “The majority of UK adults owe money in some way, shape or form, but to see that almost a third think they’ll never be free from debt is quite alarming. When borrowing money from any source, how you are going to repay it should always be in the back of your mind. A lot of people don’t really think about the consequences of borrowing money and it can be easy to get complacent, but keeping it all under control should be a priority from the off. Only borrow what you really think you can afford to pay back.”

Tags: lot, event, mind, result, massive 80 percent, majority, finance

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Ease of internet shopping could lead to rise in debt for cardholders

Thursday, December 2nd, 2010

For many credit card holders trying to keep out of the red can be very difficult, but in the past having to make a conscious effort to go out and hit the shops in order to go on a spending spree was the one saving grace of many shopaholics, as it reduced the chances of them spending money that they couldn’t afford because they actually had to go to a fair amount of effort to do it.

However, the increasing popularity and ease of internet shopping could be the undoing of those that cannot resist making purchases despite a potentially dire financial situation. In fact, many officials are concerned that online shopping could lead to a further increase in debt levels for people that may already be struggling with credit card debt.

A report was released recently by Sainsbury’s Finance, and officials from the firm said that consumers’ love of online shopping could mean that in the near future more and more people could end up having to seek help with their credit card debts. This time of year, in particular, can be difficult, as many people go online to get Christmas gifts and then end up spending more than they planned to by making unplanned purchases. This is something that a number of debt management firms are also concerned about according to reports.

Kevin Still, director of Atlantic Financial Management, said: “The Internet offers a very cost effective way of buying essential household expenditure items, but there is sometimes a temptation to use a credit card instead of a debit card because of concerns over purchase protection and sometimes just convenience. This can lead to credit card debts building up if not properly budgeted for.”

Tags: Debit card, Ease, conscious effort, household expenditure, debit, Sainsbury's, Commerce

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Low mortgage approvals could lead to falling property prices

Wednesday, December 1st, 2010

Industry experts have said that property prices in the UK could be set to fall again amidst low mortgage approvals. The news comes after figures were released showing that October saw the lowest level of mortgage loan approvals since February. The figures were released by the Bank of England, and showed that mortgage approvals had fallen for the sixth month in a row.

During the month the total number of mortgage approvals came to 47,185. In a consistent market the expected level of mortgage approvals for the month would be around 70,000. Industry experts have said that the mortgage market is still ’severely depressed’. They have also warned that property prices do not show any signs of improvement.

One economist said that six months of mortgage approval falls reflected the severe difficulties that the mortgage market was still experiencing, and added that things were unlikely to change for the better over the course of next year. Banks are becoming increasingly strict with regards to mortgage lending in light of fears relating to job losses stemming from public sector cuts.

Further reports have shown that those with smaller deposits are likely to continue facing much higher rates of interest on mortgages even though there are now more mortgage products available that there were when the country was in the midst of the recession.

One economist said: “The sixth consecutive monthly fall in mortgage approvals for house purchase underlines the message that the mortgage market is severely depressed. We expect it to remain that way throughout 2011. The troubles in the mortgage market are still with us. With little chance of a meaningful recovery in mortgage approvals for the foreseeable future, we expect that credit conditions will continue to weigh on house prices for some time to come.”

Tags: credit, way, time, mortgage, light

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