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Many consumers still facing huge debt levels

Wednesday, January 26th, 2011

Figures from the Bank of England have indicated that many people in the UK are still struggling with huge debt levels, with a lot of the debt having been accrued some time ago. The central bank has suggested that consumers had started to tighten their belts even before the VAT increase came into play at the start of this year. However, many still face huge levels of debt this year according to the report.

Many consumers are still paying off debt that was accrued last Christmas according to the data in the report. Figures have shown that over recent months consumers have been paying back debt rather than accruing it, and the VAT increase has resulted in more people tightening their belts so that they do not fall into further financial difficulties.

However, there are many factors that are out of the control of consumers, such as inflation levels, the VAT increase, job losses, and spending cuts, all of which could have a severe negative impact on the state of household finances. This means that even with the best of intentions many people could be set to face another difficult year with high debt levels to deal with.

Whilst personal insolvencies are said to have fallen officials are concerned that the level of insolvencies is still high. Many are calling for increased assistance for consumers to learn how to manage their money better.

One official from the insolvency service said: “Although personal insolvency levels are no longer rising, they remain stubbornly high, reflecting the high levels of personal debt that persist across the country. Prevention is much better than cure as far as personal finances are concerned. Review your personal finances frequently and make sure you are not taking on debt you can’t afford to repay.”

Tags: official, control, Business Finance, increase, prevention, VAT increase, start

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Could you cope with the interest rate increase?

Monday, January 17th, 2011

For nearly two years many homeowners on variable rate mortgages have revelled in the fact that the base interest rate has fallen to an all time low, having dropped to just 0.5 percent in the first quarter of 2008. The drop in the base rate meant that many people saw their monthly repayments plunge, leaving them with more disposable income and enabling them to dodge the risk of losing their property through being unable to meet their repayments.

Over the past couple of years people have used the extra money that they have saved on their repayments for a variety of things, from bumping up their savings or paying off debts and mortgage balances to treating themselves to some luxuries. However, nobody knows how long this low rate of interest will last, and some are speculating that it could come to an end in the near future, with many predicting that interest rates will increase this year.

This leaves consumers in a difficult position. On one hand they the interest rate could stay at this record low for some time to come, enabling the average homeowners to enjoy having more money and make plans for using the money to maximum effect. On the other hand the fact that interest rates could suddenly increase means that consumers have to be prepared and need to ensure that they will be able to afford the repayments.

The problem comes for those with fairly hefty mortgages, as even a relatively small increase in interest rates could make a difference of hundreds of pounds a month, which many may find difficult to get their hands on. This could quickly lead to missed repayments, and ultimately to repossession.

One solution for homeowners who do not feel that they would be able to cope with an interest rate increase would be do look at switching to a fixed rate mortgages, where the interest rate and repayments would remain fixed for a specified period of time, enabling homeowners to enjoy increased peace of mind and stability with their finances. However, this does mean that as long as the base rate stays at this low you will usually be paying more than those on variable rate mortgages.

With an interest rate increase likely over the coming months, based on predictions from industry experts, it is well worth thinking about whether you could cope with a rate rise should it take place, and if not look at the various options open to you.

Tags: peace, Picture Ratings, maximum, hefty mortgages, fact, increase, interest rates

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More than half of families struggling with debt

Saturday, November 13th, 2010

It has been revealed in a recent report that more than half of UK families are now struggling to repay their debts, and this could get worse as living costs continue to increase. The research results have been released on the back of warnings from the Bank of England that the cost of living is set to increase. This will put even greater strain on households that are already struggling with their finances.

Mervyn King, the governor of the central bank, said that the increase in living costs was down to a number of factors, including soaring commodity prices, rising power bills, and the up and coming VAT hike that will see VAT increase to 20 percent at the start of next year. The Bank of England also revealed that more than 50 percent of families in the UK were already struggling to keep up with debt repayments, and these rising costs could make the situation even worse.

Around 51 percent of households in the UK are now said to be struggling with their debts and finances, and this is said to be the highest on record with the Bank of England, which started keeping records fifteen year ago. The central bank warned that inflation is likely to rise and remain high for longer than had been predicted just a few month ago. King said that businesses were having to pass on soaring import costs to customers, which would put further pressure on inflation.

Inflation currently stands at 3.1 percent, and this is considerably higher than the 2 percent target set by the government. The Bank of England now believes that inflation will not all back to its target level of 2 percent until at least 2012.

Tags: Mervyn King, start, UK, bank of england, governor, increase, central bank

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Nearly 10 percent of pensioners still have a mortgage

Saturday, November 6th, 2010

Recently released figures have shown that close to 10 percent of pensioners in the UK still have mortgage related debt that they need to pay off. This is a far cry from the relaxed retirement that many pensioners may have once been expecting. The mortgage debt means that instead of enjoying their golden years many of these pensioners are having to continue working.

In some cases the pensioners still owe huge amounts on their mortgages, and have to look at remortgaging. The research was carried out by the over 50s specialist Saga, which provides a range of services aimed at this age group. Around six thousand people were polled as part of the survey, and the results revealed that 8.6 percent of those aged sixty five and over still had a mortgage.

Another report that was released recently indicated that this was a problem that would only get worse. The report was released by Policis, and showed that a massive 53 percent of people aged fifty or over with a mortgage had a loan that they would still be paying past their 65^th birthday.

Figures from the Office for National Statistics have shown that there are 866,000 pensioners in Britain that are still working. There has also been an increase in the number of women aged 65 or over that are becoming insolvent, with the figure increasing by 42 percent. A rising number of older people have also said that they intend to borrow into their retirement to fund their plans for the future.

The director general of Saga, Ros Altmann, said: ‘There are a lot of people who are going to have to keep on working just to pay their debts. They have no choice.’ Speaking about the number of pensioners that have jobs he added: ‘It is an indictment of the way our savings culture has almost fallen apart.’

Tags: indictment, increase, specialist saga, mortgages, choice

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Fears over cut in York debt advice

Saturday, November 6th, 2010

Over the past year the level of personal debt in York, as in many other places, has soared, as a rising number of households struggle with their finances and end up replying on credit to pay for everyday purchases and pay bills. This has resulted in an increase in the number of people that have debt that they are struggling to repay, and many have ended up seeking advice about how to best deal with their debts.

However, concern has now arisen over the possibility of many people struggling to even get advice on how they can try and address their debt issues following news that the debt advice service at the York Citizen’s Advice Bureau faces being axed. Between the start of April and the start of October this year the debt advice service at the York CAB is said to have received enquiries for help from 2876 people, and this compared to 2027 people looking for help during the same period a year earlier.

Over the six month period the total amount of debt that was addressed by the York CAB came to more than £10 million. The waiting time for people to get the advice and help that they need has also increased as a result of the higher demand for debt advice, and has increased to around five weeks, whereas a few years ago it was just ten days. There are now concerns that the decision to cut the service could seriously affect the lives and health of those facing financial difficulty.

One official said: “What the debt team at the CAB has found, and this is backed up psychological research, is that debt is bad for your mental health. One-in-two adults in debt have some form of mental health condition. Whether the debt problem causes the health problem, or the other way round, is often difficult to determine, but we know that as well as helping clients with their debts, we see a marked improvement in their mood, ability to cope and plan for the future.”

Tags: increase, news, amount, month, help, form, personal debt