Finance Matters

• 02Sep

  Hidden Costs Creep Into Overdrafts

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  From IVANews:

  Since the credit crunch hit, the banks seem to have changed the rules on numerous forms of credit. Hidden fees have crept into many credit card deals and interest on personal loans has increased across the board. Now it seems it is the turn of the overdraft, with many banks altering the terms and conditions of their overdrafts.
  There are some who believe that the banks are changing their overdraft policy in response to the outcry over unfair bank charges for unauthorised overdrafts, bounced cheques and other penalty charges.. This may be so, but if their intention is to make their charges fairer and simpler, there is a long way to go yet. While many of the new overdraft conditions appear to be offering customers a better deal, a closer look at the small print shows that in many cases, customers are worse off than before.
  The Lloyds TSB overdraft, for example, has trimmed it’s overdraft charge from £30 to £15. But they have also started charging their customers a daily fee for b…

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• 02Sep

  Nationwide Sees a 40% Drop in Mortages This Year

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  From IVANews:

  Britain’s largest mortgage lender has reported a 40% drop in value of its new mortgages, as the housing market dries up and the UK’s debt problem worsens. Nationwide had a total of £6.7 billion in mortgages this financial year compared to £11.2 billion the previous year, and has blamed “unprecedented market conditions” for the sharp drop.
  Nationwide claim that this drop is controlled and anticipated, and that they expect to ride out the downturn without any serious mishaps. The society has said that just 0.36% of its 1.5 million mortgage customers had fallen at least three months behind in their mortgage repayments, compared to an industry average of 1.21%, though it may be too early to tell – the coming months may see a significant increase in the number of people falling into arrears with their mortgages.
  While it seems likely that Nationwide will survive without any significant troubles, how their customers will fair remains to be seen. Nationwide have been more…

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• 02Sep

  OFT Prepares to Rule on Bank Charges…and the Banks Prepare to Appeal

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  From IVANews:

  The Battle of the Bank Charges continues…
  The Office of Fair Trading is drawing closer to reaching a decision on whether or not banks will have to repay millions of pounds worth of bank charges to ordinary consumers. Last month, a High Court Judge gave the OFT permission to make a ruling on whether or not banks have been overcharging for missed direct debits, bounced cheques and other late payment charges. Banks routinely charge up to £39 for each infraction, allegedly to cover administration costs – independent research suggests that the true costs of these charges to the banks is as little as £2 a time, and that the banks are making a small fortune from them.
  But it isn’t going to be an open and shut case. Several large banks have already successfully been granted the right to appeal against the OFT’s decision when it eventually comes. Whether or not the appeals are successful, they will prolong the case and delay any return of money to consumers by up to two ye…

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• 02Sep

  Debt Hits Middle Classes, As Affluent Areas See 200% Rise in Debt Problems

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  From IVANews:

  Millions of middle class debtors are finding themselves in serious trouble, recent research from debt advice charity Transact has shown, as the credit crunch starts to hurt wealthier UK residents. Debt advice charities in more affluent counties, such as Tunbridge Wells, Cambridge and Horsham, have seen an increase in enquiries of up to 200% in the past twelve months.
  Anecdotal evidence from these charities suggests a significant switch towards wealthier middle class debtors who are suffering from the effects of the credit crunch. This growing breed of client includes a retired bank manager from Sussex with an annual income of £40,000 and £110,000 of debt across 20 credit cards and loans. In the Midlands, an IT manager on a £28,500-salary has £28,500 of unsecured debt and a county court judgement against him.
  The data suggests that the drop in house prices and rise in mortgage payments is to blame for this sudden rise in middle class debt and insolvency. Plenty of wealthier individu…

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• 02Sep

  Threat of Debt to Those With Mental Health Problems

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  From IVANews:

  People with mental health issues are more than three times more likely to develop a severe debt problem than the average consumer, recent research has shown. The report, produced by mental health charity Mind, has shown that those who suffer from bipolar disorder (also known as manic depressives) are especially vulnerable, as during their ‘manic’ phases they are prone to expensive shopping sprees and impulsive purchases.
  Of course, this isn’t to say that people in debt are more prone to mental health problems. The vast majority of debtors are ordinary people who have seen their debts pile up for ordinary reasons – job loss, routine overspending, a long sickness, and so on and so forth. What these findings do highlight is the how vulnerable certain groups can be in a culture of easy credit. The targeting of credit cards to the young has been widely criticised, and with good reason – it normalises debt for young people just as they begin to earn. Equally, numerous m…

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• 02Sep

  Two Years of ‘Stagflation’ Ahead, Bank of England Warns

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  From IVANews:

  Debtors who are struggling with the rising cost of living will have a long time to wait before things improve, the Bank of England has warned. The bank has predicted that Britain faces at least two years of “stagflation”, a period of rising interest and limited financial growth. The Bank also suggests that Britain may face a housing crisis to match the US, with the threat of rapidly falling prices matched by a significant increase in the number of repossessions.
  The only silver lining to this economic cloud is that the Bank of England is expected to cut interest rates twice in the months ahead and hence reduce the cost of borrowing. However, there is no guarantee that the savings will be passed on to ordinary debtors. Recent cuts in interest rates have helped mortgage providers rather than homeowners, as lenders seek to protect themselves against the worsening economic situation. Borrowing, both in for mortgages and ordinary credit, is likely to continue increasing in cost, as are…

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• 02Sep

  Repossessions Rise by 16% In the First Quarter

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  From IVANews:

  The number of homeowners under threat from repossession has risen significantly this year, recent statistics from the Ministry of Justice has shown. Mortgage possession claims (the first stage in a repossession) have increased to 38,688 in the first , a 7% rise on the previous quarter and a 16% rise compared to this time last year. After a mortgage posession claim is issues, the next stage is a mortage possession order – these too have risen by 7% this year, 17% year on year. The first quarter of 2008 has also seen a 6% increase in the number of County Court Judgements being issued, another indicator that ordinary consumers are struggling to make basic payments. Overall, the Council of Mortgage Lenders expects repossessions to nearly double by the end of the year, as they are expected to rise from 27,000 in 2007 to 45,000 in 2008.
  With the double effect of a sharply rising cost of living and mortgage prices that are spiralling upwards, many homeowners are finding themselves trapped…

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