Posts Tagged ‘UK’

Brits take on more debt to fund rise in living costs

Friday, November 11th, 2011

As most households are only too well aware, the cost of living in the UK has soared over the past eighteen months, with essential costs such as petrol, food, and energy usage going through the roof whilst wages remain frozen for a huge number of workers. This has resulted in many households facing a severe struggle to make ends meet, with many having to take on more debt in order to cope with the rising cost of living.

In fact, according to recent reports Brits have taken on the highest levels of debt since the recession in the UK hit its peak in May of 2009, with many now having no other choice but to take on more debt in order to keep up with increases in the cost of living. Households are now said to have around £208.6 billion in outstanding debts on credit cards, loans, overdrafts, etc. which equates to around £9070 of debt for every household in the country.

Household debt, excluding mortgage debt, is said to have increased by around £5 billion in the past year alone, which the Bank of England said is the biggest annual increase since the recession. Brits have increased their debts by £629 million in the past month alone, and economists have said that people are now having to increase their debts simply to find their day to day living costs.

One economist said: “The rise in unsecured consumer credit suggests increased ‘stressed borrowing’ is occurring, with more people having to borrow to help finance their spending. This is a consequence of the extended squeeze on their purchasing power coming from elevated inflation, low wage growth and tighter fiscal policy. In addition, job losses are rising.”

Tags: power, UK, eighteen, choice, May

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King says there will be no ‘tsunami’ of repossessions

Tuesday, June 28th, 2011

After recent claims that interest rate increases would lead to a ‘tsunami’ of repossessions across the UK, the governor of the Bank of England has spoken out to express his concerns. Sir Mervyn King, the governor of the central bank, said that these claims, which were made by Richard Banks, the chief executive of UKAR (UK Asset Resolution), were exaggerated.

Whilst claims were made that there would be a wave of repossessions resulting from any rate increases King said that interest rates were set to remain low for the foreseeable future and that the claims over repossessions were being overdone. He said that even when interest rates did increase it would take time for any increases to be passed onto borrowing costs.

The governor also said that with the economy weak there were no plans in place to increase interest rates. He said that for interest rate increases to be considered the economy would need to be stronger and unemployment would need to be falling rather than increasing. He told the Treasury Committee recently that the economy at present was not strong enough to cope with an interest rate rise.

UKAR, which holds mortgages that were once owned by Northern Rock, said that the fears over a wave of repossessions were so strong that they were contacting mortgage customers who were at risk of defaulting to ensure that they were staying on track with repayments.

Banks said: “You can see if you don’t do something about it, you can see a tsunami. If you don’t get into the hills you could get drowned by this. If you don’t manage this properly it could get very messy.”

However, King stated: “The reason we would raise interest rates would be in the context of a much stronger economy with unemployment falling rather than rising. It should also be the case that the interest rates that borrowers face should not rise as fast as the rise in bank rate.”

Tags: bank of england, fears, UK, Person Communication and Meetings, Mervyn King, governor

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Crewe sees spiralling levels of personal debt

Saturday, June 18th, 2011

According to recent reports there are concerns over the spiralling levels of personal debt that are being seen in the Crewe area. Over the past few years personal debt has become a big problem in areas all around the UK, with many people finding themselves unable to manage with their high debt levels for a range of reasons, many of which are out of their control.

Concern has now been voiced by the debt charity the Consumer Credit Counselling Service over the level of debt that has been seen in the Crewe area. According to recently released figures the average amount that was owed by people contacting the charity in 2010 was £23,177. This figure related only to unsecured debts and was significantly higher than the national average of £19,338.

A new map on the CCCS website has revealed that level of debt in the Crewe area as well as other areas around the UK. The map is called Debt View and allows personal debt levels to be broken down by regions, areas and postcodes. In 2010 568 people from Crewe contact the CCCS for assistance with debt problems and this reflected an increase of 34 percent over a two year period. People have called the charity to get free and confidential advice relating to their debts.

An official from the CCCS said: “I am very concerned – not only by the high levels of debt we are seeing in Crewe, but also by the continuing squeeze on household budgets that is making it increasingly difficult for debtors to repay what they owe. I would urge anyone in Crewe who is worried about how to deal with their debts to seek free advice from a charity such as CCCS as early as possible.”

Tags: national average, percent, debt, new map, Debt View, individual voluntary arrangement, UK

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Are you at risk of defaulting on your mortgage?

Wednesday, April 20th, 2011

A number of reports recently have suggested that there are many homeowners across the UK who are at risk of defaulting on their mortgage repayments. It is already difficult for many homeowners to keep on top of their mortgage repayments namely because of the soaring cost of living coupled with job losses and frozen pay. With the cost of everything from food and petrol to insurance and energy bills having rocketed many have found that they are struggling to keep up with other financial commitments.

There are fears that if the base interest rate increases those that are on the verge of struggling with their finances will be tipped over the financial edge, leaving them without any means to make payments on their mortgage and leading to possible repossession proceedings. Whilst interest rates are currently at an all time low of just 0.5 percent, where they have been for two years, there are concerns that the Monetary Policy Committee will have to increase the base rate soon in order to deal with soaring inflation.

With this in mind it is advisable for those that believe that they will struggle to get advice as soon as they can rather than waiting for something to happen that will tip them over the financial edge. It is always wise to be prepared in terms of finances, especially given that your house could be at risk if you fall behind on mortgage repayments. This means that households who believe that even if they are not struggling now they could be if the base rate increases should start looking at ways to improve their finances in advance.

There is advice available for those that are struggling with their finances or who believe that they could be struggling with the slightest change in payments such as mortgage, rent, bills, etc. Consumers are able to get free advice from debt charities about their finances and can get themselves prepared for any adverse changes to their financial circumstances by talking to an expert before the rates increase.

A spokesperson from the Consumer Credit Counselling Service stated: “So many households are just managing to make ends meet, that even a small increase in the cost of their mortgage may push them over the edge. As far as possible, families need to think how they could pay such increases and seek help at the earliest opportunity if they feel that they cannot cope.”

Tags: Monetary Policy Committee, UK, homeowners, mortgage, Service, expert, Inflation

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Brits still prepared to get into debt

Tuesday, November 30th, 2010

It has been reported following a recent study that Brits are still prepared to spend money and get into debt despite the fact that many are concerned about the state of the economy, government cutbacks, and the security of their own jobs. Officials have said that many Brits are failing to react to the current climate in terms of adjusting their financial habits.

When it comes to saving, spending, borrowing, and repaying money many Brits have not made any changes to their finances, and are continuing as they were prior to the global financial crisis and the recession. The study was carried out by High Street banking giant HSBC, and officials said that consumers were worried about the current climate but were not making financial changes to reflect this.

The study found that a massive 76 percent of consumers were concerned about the direction in which the UK’s economy was heading, and the same number of people were concerned about their own financial situations and prospects. However, 68 percent of people had not made any changes to their finances and how they handled their money.

In fact the survey also showed that although around 19 percent of consumers had cut their spending because of the economic climate a further 15 percent had actually increased their spending. Around 26 percent of people were willing to borrow money just as much as they had been before the global financial crisis. A further 5 percent were prepared to go into even more debt.

An official from HSBC responded to the findings from the survey, stating: “This suggests people either have their heads in the sand and do not realise the need to change, or that they have simply decide to stoically ride out the recession by refusing to alter their ways.”

Tags: consumers, banking giant hsbc, UK, recession, Banking, state

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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: increase, central bank, Mervyn King, governor, UK

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Arrears and repossessions fall in the UK

Friday, November 12th, 2010

Over the past few years the global financial crisis and the recession has resulted in soaring arrears levels amongst cash strapped homeowners in the UK, and with so many people falling into serious arrears with their mortgage repayments this naturally led to a steep rise in the number of repossessions, with many homeowners losing their properties due to problems with making repayments on their mortgage loans.

However, the Council of Mortgage Lenders has now released fresh data showing that both the level of arrears amongst homeowners in the UK and the number of repossessions is falling. The CML has put the fall in arrears levels and repossessions down to a number of factors, and has said that the number of home repossessions has been falling over the last few quarters.

According to the figures from the CML         around 8900 properties were repossessed by banks in the third quarter of this year, which reflected a 5 percent drop compared to the previous quarter, which saw 9400 properties being repossessed. The drop in arrears and repossession levels also marked the fourth quarterly decline.

The figures also showed that in the three months to the end of September the level of mortgage arrears also fell, with 176,000 mortgages having arrears of 2.5 percent or more, which was a fall from 178,200 for the three months to the end of June.

Despite the fall in home repossessions one industry official said that there had been an increase in the number of possession orders being sought, and this could mean that the trend seen over the past four quarters in terms of declining repossession numbers could go into reverse. Low interest rates and increased responsibility from lenders is thought to have contributed to the current drop in arrears and repossessions.

Tags: Arrears, CML, problems, percent, UK, repossession levels, Economics

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