More…

More…

More…

More…

More…

More…

More…

More…

More…

More…

Property prices have fallen to more affordable levels for those wanting to buy and interest rates on secured loans have fallen by record levels in the space of two months, with the prospect of further reductions in the New Year, saving borrowers a large amount of their regular monthly loan payments and thereby freeing up more disposable income to enable them to meet their other financial commitments.

Despite this reduction in the cost of a loan, affordability is still an issue for many homeowners who are continuing to find it difficult to keep up with their loan repayments, according to the latest survey from the UK housing review, which has been jointly conducted by the Building Society’s association and the Chartered Institute of Housing.

The survey found that the average cost of owning a home had risen to 22 per cent of household earnings and although this may not seem a lot to some people, the figure has risen from a low point of 12 per cent in 1994. The highest costing area, not surprisingly, is London, where the average is 26.8 per cent of earnings and the lowest is Scotland, with only 15.2 per cent.

Neil Johnson of the Building Society’s Association said “Although the headlines are dominated by talk of falling prices, with the review finding that the long term supply and demand problems remain, it looks like the affordability problems will not have left the market by the time that buyers return.”

More…

As a result of this, an ever increasing number of people who are desperate for a loan are turning to doorstep lending companies, to help them meet their financial needs, often ending up with a very expensive loan.

Following a complaint made by the National Consumer Council (NCC), now known as Consumer Focus, regarding how customers had very little way of making a comparison between different doorstep loan companies, a new website has been launched by the Competition Commission to try and help those borrowers who are looking for a doorstep loan to be able to make an informed choice with regards to the lender they choose, although by the very nature of this type of lending, a borrower is more likely to take a personal loan out with whichever company happens to knock on their door.

Lenderscompared.org.uk has claimed to be set up in association with various consumer organisations, including the National Consumer Council, amongst others, but the NCC has now said that it is disassociating itself from the website.

A spokesman for the organisation said “We don’t know how our name got in there. They are obviously trying to associate us with their work. We’re not against doorstep lending per se, but we believe there is not enough competition in the market. We recognise it is an important source of credit for some people, but we want a competitive lending market, which it is not at the moment. Some of the rates charged on this site make it extortionate.”

More…

On the face of it, this seems like a good idea which could save many people from losing their homes, but experts are now claiming that borrowers with homeowner loan arrears should be wary of the scheme, as it could end up costing them much more than the original amount over a longer term of years.

UK home owner loan companies have a legal right to pursue a borrower for arrears for a period of 12 years, although the Council of Mortgage Lenders (CML) has agreed to reduce this to six years and concerns have been raised that someone who opts for the loan interest deferral scheme could be chased by their lender for six years after the original problem started, causing additional stress for the borrower, not to mention the additional cost of the compound interest over the period.

Many experts believe that the UK is in for a long recession and if someone were to take a two year break from their home owner loan interest payments there is no guarantee that their personal financial situation will be any better in two years time, thereby leaving them with an even bigger problem of increased repayments and higher arrears than they were facing two years previously.

Some say that this scheme is doing nothing more than postponing the inevitable, but making the situation worse and borrowers should take it into their own hands to sort out some sort of suitable protection plan, such as payment protection insurance (PPI) for their home owner loan, to avoid the problem altogether.

More…

The new scheme allows a borrower to defer the interest payments on their loan for a period of up to two years, if they are unable to afford to make the payments in the event of them being made redundant and will provide help for anybody who has an existing secured loan or mortgage of up to £400,000.

Although the scheme has been widely welcomed by industry experts and is likely to save a large number of home owners from losing their homes, it should be noted that this is not a benefit scheme where the loan interest payments are made for the borrower, it is a deferment scheme whereby the borrower will still have to make the loan repayments at some point in the future and should be thought of as a safety net to see someone struggling with their loan through a difficult time.

One industry expert said “It is imperative that those people that need to take advantage of this welcome government intervention realise that they need to start repaying their mortgage interest on their own as quickly as possible.

The longer they put off paying means that they end up owing more in the long term as interest on the interest will keep ratcheting up. If those struggling to meet their repayments don’t quickly see a change in their circumstances, namely find a well paid job, then they may well end up in an even worse position than they were in when they applied for this state aid.”

More…

The survey has shown a marked shift in the nation’s financial priorities, as for the first time since the survey was started eight years ago, there was a net reduction in the amount outstanding on personal loans and other debts over the course of the third three months of the year.

In total, borrowers managed to pay off around £23 billion more of loan debt than they took out in new loans. But it would seem that borrowers have given up saving in order to repay their loans, as net saving levels dropped over the same period to a low of £19.3 billion, which was almost half the level of savings made during the second three months of the year.

This shows a huge change of emphasis in the attitude of people in the UK. During the second quarter of the year, for every pound put into savings, 15 pence was taken out in new personal loans, whereas over the course of the third quarter, for every new pound in savings, we actually repaid £1.24 of debt.

This shows that individuals are starting to become concerned about their financial future and want to get their financial affairs into the best shape they can during uncertain times.

Although it is commendable that people are repaying their loan debts, the fact that savings levels have dropped so significantly is a concern, although this could be accounted for by falling interest rates on savings accounts and a general lack of consumer confidence in the banking system at the current time.

More…