2011 May | Glitec Loans

Archive for May, 2011

Many consumers destined for soaring debt

Tuesday, May 31st, 2011

It has been claimed in a recent report that many workers in the low and middle classes in the UK may be destined to struggle with debt for the next few years. The report claims that many low and middle class workers will not see any sign of a pay rise until at least 2015, which means that they will be stuck on the salary that they are currently on – or may even have their salary reduced – for at least the next three years or so.

In the meantime, the cost of living continues to soar, which means that whilst these workers have to cope with the same level of pay they are having to pay more for everything from the cost of energy usage to the cost of running a car, putting food on the table, and paying their bills. In addition to this, when the base interest rate increases from its all time low of 0.5 percent, many will be tipped over the financial edge, as their mortgage repayments rocket.

The report was released by the think tank Resolution Foundation, with officials from the group stating that it would be around 2015 before people in these classes saw any improvement with their pay scales. The report said that this was down to the effects of the recession and government cutbacks and could cause serious problems for those that see their outgoings steadily increasing whilst their income remains static.

James Plunkett, who authored the report, said: “We all know that the recession has hit living standards hard. But something deeper has changed in our economy — even during the so-called boom years, ordinary workers weren’t seeing their living standards rise. The big question now is what will happen when growth resumes — will ordinary workers reap any of the benefits? This report suggests that is far from certain.”

Tags: food, outgoings, level, recent report, cost, Resolution Foundation, something

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Mixed reactions expected to BoE figures

Monday, May 30th, 2011

Later this week the Bank of England is expected to release figures relating to consumer borrowing, credit, and mortgage lending. Many believe that the data in the report will show how lending, consumer credit, and spending has become increasingly subdued. However, it is thought that although some people will find the data in the report worrying many others will be relieved by the slowdown in lending and spending figures.

Over the past decade many people have burdened themselves with a huge amount of personal debt, as finance was easily available to the masses before the financial crisis. Over the past few years, whilst banks have become far more stringent with regards to lending, many people have been spending on their credit cards and overdrafts amongst other things in order to keep their heads above water financially.

However, the spending and lending figures in the report are expected to be weak. For many officials in the city this could represent a worrying time that could have a worrying knock on effect on the economy and on consumer confidence levels. However, some others believe that this is a sign that consumers are now getting over their addiction to debt and borrowing and that people are now more focussed on paying off their existing debt and living within their means than taking on increasing amounts of debt.

Peter Dixon, strategist at Commerzbank, said: ‘Within the context of rebalancing the economy away from personal debt, these low figures may be no bad thing. Those who argue that borrowing should be stronger are missing the bigger picture.’

Ross Walker, economist at Royal Bank of Scotland, said: ‘The British household sector needs to de-leverage. This is happening, but at a snail’s pace. That said, a more rapid correction would probably be associated with recession in consumer and property markets.’

Tags: bank of england, crisis, Consumer, strategist, worrying time

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Rising rents affect non-homeowners

Monday, May 23rd, 2011

As many people will already know getting a mortgage in the current financial climate has become increasingly difficult, with many lenders currently because very cautious about who they lend to and how much they are prepared to lend. As a result of this the demand for rented accommodation from private landlords has been soaring, with many people fighting over each property that comes up for rent.

However, it has now been revealed that the average rents that are being charged on properties have reached record levels, with the amount having reached an average of £692 per month in April. This is 0.8 percent higher than it was for the previous month and around 4.4 percent higher than the same time last year. Landlords are now charging an average of £30 a month extra on rents in the current climate, putting additional financial pressure on tenants who have no choice but to rent because of the mortgage situation.

London and the South East of England saw the biggest increases in rents. Officials have said that the warm weather and bank holidays weekends in April resulted in a rising number of people looking around for rented accommodation, which has been driving prices up further. The cost of renting has now risen to its same record level that was reached in November of last year.

The number of missed and late payments in April also increased, with one official stating: “The final bank holiday of the month delayed many rental payments, but on top of this, thousands of tenants took advantage of the opportunity and booked holidays, which has impacted on the timely payment of rent. Nevertheless, despite the short-term factors, landlords need to remain especially vigilant over the medium-term. We are yet to see the true picture emerge from public sector spending cuts, and changing employment situations will hamper many tenants’ ability to meet their monthly rent cheque on time.”

Tags: advantage, landlords, mortgage, financial, Bank

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Repossession numbers could increase

Friday, May 13th, 2011

Over the past year or so repossession numbers have been declining, which has come as good news for homeowners and for the property industry as a whole. However, according to recent reports repossession numbers are on the rise again after it was revealed that 9,100 properties had been taken back by lenders in the three months leading to the end of March.

Between the last quarter of 2009 and the first quarter of this year repossession numbers had been falling each quarter according to figures, but the first quarter of this year saw an increase of 15 percent in repossession numbers. The Council of Mortgage Lenders has predicted that repossession numbers will continue to rise this year, adding that the figure could go as high as 40,000 repossessions or more over the course of the year.

The low base interest rate is, at present, helping some families to cope with repayments on their mortgages, as it has resulted in their repayments being lower. However, if the base rate increases this could results in an even higher number of repossessions this year, with more people unable to keep up with their mortgage repayments. Officials have put the financial difficulties that consumers are facing down to a range of different factors, such as the government’s austerity drive, the soaring cost of living, a freeze on wages, and higher taxes.

A CML official said: ‘Looking ahead, the financial position of many households is likely to be stretched for some while, and some will inevitably find themselves in difficulty. Lenders have a range of options to nurse borrowers through temporary problems, but will clearly need to be mindful of the regulator’s concern that too much forbearance may be as bad as too little.’

Tags: rate, regulator, cost, recent, loan, higher number

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About Debt Relief Orders

Tuesday, May 3rd, 2011

There are many different types of debt solutions available these days for people that are struggling to keep up with their repayments on debts but do not want to bury their heads in the sand and pretend that there is not a problem. Some of the options that are available for those that have debts that they are struggling to repay include Individual Voluntary Arrangements and Debt Management Plans. Another, more recent, option that has become available is DROs or Debt Relief Orders.

Debt Relief Orders are a debt relief option for people that meet specific eligibility requirements and they come with both pros and cons. In order to be eligible for a Debt Relief Order you need to have debts of no more than £15,000, you must have no more than £50 disposable income after all bills and living costs have been paid out, you must own assets worth no more than £300, and your car must not be worth more than £1000.

With Debt Relief Orders the orders last for twelve months, during which time your creditors cannot chase or pursue the debt or take any action without court permission. You do not make any monthly payments over that twelve month period and once the period is over your debts are written off leaving you free to start afresh with your finances.

There are some pros and cons to consider when you are looking at Debt Relief Orders. Some of the pros include being able to have your debts discharged after twelve months, not having to make any payments for the twelve month DRO period, and being able to start afresh after the twelve month period. On the downside you cannot be a homeowner because it would be classed as an asset, you cannot have a pension pot because that would be seen as an asset, you have to meet the strict criteria, and you would sustain damage to your credit.

If you believe that a Debt Relief Order might be the right solution for your debt problems it is advisable to speak to a debt expert about it. You can contact a debt charity in order to learn more about DROs and find out whether you would be eligible. However, even if you are not eligible or suitable for a DRO there are other debt relief options that a qualified and experience debt advice officer can discuss with you.

Tags: debt management, Pension, debt relief order, GBP, solution, twelve months, debt advice officer, qualified and experience debt advice officer

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Many may use personal loans for DIY projects

Tuesday, May 3rd, 2011

It has been reported recently that the DIY project that people have been carrying out over the long bank holiday weekends along with those that many will be carrying out over the summer could lead to an increase in personal loan debt. Many people who are planning to carry out improvements to their homes will be taking out a personal loan in order to do this according to industry experts.

For many people the summer months are the perfect time to carry out repairs and improvements but after several challenging years in terms of finances many cannot afford to pay for them outright. Some people have already said that they will be paying for any improvements on their credit cards, although this provides only a relatively short time to repay the debt without clocking up lots of interest. However, with personal loans the repayment periods are more generous, which means that those carrying out a lot of work on the home will have longer to repay the balance. Of course you will still be charged interest but the rates on personal loans are much cheaper than they are on most credit cards.

However, industry experts have said that consumers who are taking out personal loans in order to fund their DIY and home improvement projects will need to be careful that they do not go over the top with the amount that they borrow or spend. This could lead to a people approaching the Christmas period with a significant amount of debt already built up.

One expert stated: “If you do take out a personal loan for home improvements, make sure you borrow the right amount and don’t be tempted to over borrow for the sake of it.”

Tags: repairs, project, home, summer, Many people, personal loan