While the government will no doubt claim some responsibility for the recent fall in pension fund deficits, the main reason is the rise in stock markets over the last 24 months – although this rise may be in danger as world stock markets continue to suffer from the US lending crisis. 

A recent survey by Lane Clark & Peacock found the top 100 companies in the UK have seen their pension fund positions turn from a £36 billion deficit to a £12 billion surplus over the last 12 months.  While the main reason has been the rise in stock prices, many have also undergone major rationalisation of their pension arrangements, adding extra funding, converting a number of final salary schemes in to money purchase, and reeling in future pension payments for existing members.   So is the worst now over?

While this reprieve has been welcomed by many, especially current and future pensioners, the situation could take a turn for the worse as quickly as it has picked up.  There are a couple of factors to take into account, including :-

Worldwide Stock Markets

Worldwide stock markets have fallen sharply over the last 2 weeks, with many forecasting further falls to come.  This will have an immediate impact upon the funding situation for many pension schemes, and could see some fall back into deficit.

Life Expectancy

Forecasting life expectancy is a problem which has blighted the industry for some time, and if as expected official life expectancy figures rise in the future, the industry may well be caught out again.  Even the smallest error in forecasting the average life expectancy can have a major impact on the liabilities of some of the larger pension funds – possibly increasing individual fund liabilities by hundreds of millions of pounds.

While it is encouraging to see the recent turn around in pension fund liabilities, there is still much work to do.  If the worldwide economy were to take a major downturn then this would reduce the amount of extra funding available from industry.  Fingers crossed we have seen the worst of the situation, but nothing is certain at the moment.

While the US sub prime lending crisis continues to unfold, the effects are now being seen on the European markets with above average demands for cash from those banks who have seen their balance sheets effected over the last few weeks.  Even the European Central Bank (ECB) are playing their part, injecting some $130 million into the system.  So what really is happening?

The concerns about sub prime lending in the US, and the deterioration in worldwide stock markets, have been the main catalyst for the recent money market problems.  While on the surface the problems appears to be confined to the US for the moment, today’s financial markets are very different from years gone by.  Complicated financial instruments are now common place, with many mortgages, loans and other financial investments chopped, split and repackaged for sale to other financial institutions.  As a consequence, many of the worlds largest banks will have substantial exposure to the US market, and many will be suffering at the moment.

The strength of the ECB support has spooked many in the market, as the reaction has been even above and beyond the support for 9/11.  Do the ECB know something which is not public knowledge or are they just trying to calm markets? Until the know sub prime lending situations unravels there will be those sceptical about the level of support, and the fact that the ECB have commented that more funding will be available, as and when required.

In the meantime the short term lull in the fall of worldwide stock markets is over, with both the US and European markets taking a hit over the last few days.  The worst situation for any stock market is one of uncertainty, and until the picture becomes clearer we can expect many more days of wild fluctuations.

While the last couple of years have seen UK base rates gradually rise higher and higher, it seems that recent rises are beginning to bite, and while the worst may not yet be over, we seem to be approaching the top of the interest rate cycle.  Recent comments from the Bank of England have indicted that while inflation is not yet under the 2% limit at which the authorities feel comfortable, it appears that the rate of inflation is starting to drop with a fall from 3.1% to 2.4% between March and June 2007.

While there were some one-off reasons as to why the rate dropped from 3.1% to 2.4%, i.e. a reduction in wholesale gas and electricity prices, there is more behind the fall.  The fact that housing repossessions have increased, and more people are starting to feel the economic pinch suggests that recent base rate rises are hitting home.

However, the property market is still a major headache for the Bank of England with prices still relatively high and showing very few signs of falling too far back.  While there is no doubt that buying pressure has cooled of late, helped by the fact that some houses are going for in excess of 6 times the average annual income, there is still demand in the background.  The housing market is the last major market that the Bank of England need to “crack” before they can take total control of the economy again – but there is a risk of other areas of the economy suffering yet further as we wait for the housing boom to subside.

Many experts are forecasting a rise to 6% base rates between now and March 2008, something which should hopefully mark the end of the base rate up trend.  However, until the trend actually turns, a number of the UK population may suffer further financial hardship in the short to medium term.

Forget the stock market, forget a savings account and get yourself along to the next big baseball game.  That’s what 22 year old Matt Murphy did and he is on the verge of a $1 million payout!

When giants slugger Barry Bonds hit his 756th home run on Tuesday, he started a major brawl as every fan in the stadium tried to pick up the baseball – and take away a momento from the game.  Murphy emerged bloodied, bruised and with the majority of his clothes ripped of his back as “over eager” fans fought for the prize – but he was able to hold the ball aloft. 

Barry Bonds goes into the records books with the most home runs by any player ever in the game, a move which is sure to guarantee him both hero status for the rest of his life, and a massive income from the game, merchandising and commercial activities. 

History shows that while memorabilia can fetch millions of dollars in the after market, it is vital that you “strike while the iron is hot” and sell while the hysteria is at its highest.  When Mark McGwire broke the single season score in 1998 the baseball from that game was auctioned off for $3 million, and Barry Bonds again was involved in another piece of history, hitting 73 home runs in 2001, but the baseball from that day “only” fetched $450,000.

Sports memorabilia has proved to be a very lucrative investment for many, although what is popular today may not be popular tomorrow.  It is a market which has been difficult to read, with many investors left red faced after rushing in to buy over priced memorabilia – on the other hand, some have made massive returns for relatively little investment.

As house prices appear to be stalling at the moment, many experts are forecasting a short period of stability followed by a return to house price rises.  There is no doubt that the rise in UK interest rates is beginning to bite, but the balance of supply and demand is still no where near what it should be.  The UK has for many years ran a policy of building fewer new houses than the number required, due to a mixture of pressure from the house builders and “green” issues, which has resulted in a constant up trend for house prices.  So what does the future hold?

Unless we are able to adjust the balance between new builds and demand, many experts are predicting substantial house price increase over the next 10 years, with some suggesting the average house in London will cost in excess of £300,000, with the average for the country as a whole topping the £200,000 mark.  When you consider that some areas of the country are seeing houses priced at 11 times the average wage, what chance do first time buyer have to get on the property ladder?

In truth there is very little chance of the average first time buyer obtaining there own home in the traditional manner, and we are seeing more and more looking at the social housing option.  Many housing associations have seen a major increase in applications, with many running substantial waiting lists, leading to an increase in the number of social housing projects.  The stark fact that house prices have increased by 156% under the last 10 years of a Labour government, against an increase of just 35% in wages really brings home the obstacles now in the way of the traditional first time buyer.

While there is no doubt that the UK authorities need to act quickly to avoid further problems in the future, there is little sign of a major change in the housing policy – a worrying fact for any future first time buyers!

As if the UK debt situation was not bad enough, with more and more people struggling to cover their monthly mortgage payments, it seems that many of the UK’s gamblers are using debt to fund their habits.  A survey by one of the leading money sites on the internet has unearthed evidence that one in eight of the UK’s gamblers use credit cards, overdrafts or bank loans to fund their habits.  How hs this happened?

It seems that the increase in the number of online gambling sites has led to a new breed of gambler, the home based player.  Twice as many online gamblers are using debt than those who use the more traditional bookmakers shops, a figure which again highlights the potential dangers of uncontrolled online gambling.  If the results of the 2000 people survey were replicated for the overall UK population, this would indicate a hardcore of 1 million plus gamblers, 75% male and 25% ladies.

There is no doubt that online gambling has opened up a whole new market, which is attracting a whole new style of gambler.  Increased credit facilities and more and more adverts about gambling sites are starting to take their toll, with associations such as Gamblers Anonymous and the like experiencing a large increase in problem cases.

The UK has one of the most tightly controlled gambling industries in the world, although it has proved difficult to regulate overseas websites which are out of the control of the UK authorities.  The US have attempted to curb this problem by attacking the online payment companies, a move which while highly controversial has had the desired effect.  Are the UK gambling laws about to turn full circle? Or is it full steam ahead for more casinos and  opportunities to gamble?

For Britons home ownership is a goal that everyone strives to achieve. However, not every Briton is able to purchase a home simply because of the barriers in place. Now, would-be first time homebuyers in the UK will be faced with even more challenges.

Home prices continue to rise, which is great for homeowners and bad news for would-be homebuyers. This results in thousands of individuals realizing the sad truth that home ownership is just out of their reach. Despite a strong economy incomes cannot keep up with the prices of homes. The result is a great deal of would-be homeowners unable to afford the purchase price of a home.

Why has this happened? The answer is because home prices have skyrocketed. In fact, over the past decade home prices have escalated 187% on average, according to the Halifax.

While income growth is stable it in no way compares to the growth of home prices. The result is fewer individuals being able to afford homes. In fact, individuals with great incomes are unable to buy a home simply because the average house price has increased from £62,453 to £179,425 on average from the first quarter of 1996 to the third quarter of 2006. That puts home prices increasing more than 10% each year and income increases have not been increasing similarly.

Regardless, first time homebuyers are determined to own a home of their own. This has resulted in quite a few schemes to buy homes in groups, using guarantors, and the like. Therefore, first time homeowners are finding ways into home ownership. But at what cost? 

Many are stretching their salaries very thin, too thin in some cases. Nevertheless, lenders are becoming creative in their lending to allow first time homebuyers the opportunity to buy a home. This means creative calculations to lend the amount a homeowner needs to buy a home. How all of this will play out in the future remains to be seen but lenders and first time homeowners may both be navigating a very slippery slope.

Numbers do not lie and what the numbers are saying about UK home equity loans is that they are strong and healthy. In fact, UK homeowners are using the equity in their home to access financing for any number of things from health expenses to university for their children, even a vacation or adding on to the home. Paying off high interest credit cards is another popular reason for withdrawing cash from a home equity line of credit.

According to the Bank of England, in the final quarter of 2006 an approximate £14.6bn was withdrawn from mortgage equity loans. That is a significant amount of money to add to the economy regardless of what it is being purchased.

Homeowners are not only borrowing on their home equity but also borrowing more than the year before. In 2005, mortgage equity withdrawal was £36.6bn and in 2006 it shot up significantly to £49.7bn. With the increased withdrawal from mortgage equity it is believed that consumer spending will follow.

Interest rates are on the rise but that does not seem to affect homeowners who need to access the money tied up in their equity. Homeowners are willing to pay the higher interest rates to have the availability of cash from their home equity.

While the housing market is strong and resale values are good consumers will not feel a backlash from borrowing against their equity. However, if the housing market values go down then homeowners may find themselves in a place they would rather not be.

This is only speculation as home prices in the UK are currently strong and there is no prediction in the near future that home prices will plummet. As a result homeowners feel safe borrowing against their equity and this trend will likely continue.

Stocks are spiraling downward, surprisingly since it was only a few days ago that they were improving. The biggest part of the problem is that the issue over defaulted mortgage loans is still fresh and now investors are looking at bonds rather than stocks.

Recently many homes have been foreclosed upon because the free lending methods of the past backfired and all those bad credit home loans banks thought they would cash in on went belly up causing a big stir in the financial world. When things seemed to be settling down somewhat the problem arose again when American Home Mortgage Investment disclosed that it had hired advisors to help guide them. The end result may be that they must sell some of their assets, although this will not happen if the mortgage company is able to access its credit.

Towards the end of last week the Dow Jones tumbled hundreds of points and really scared investors. However, when the new week began it looked as if things might be working out in the world of stocks as the Dow gained almost 100 points. However, Tuesday rolls around and sees a loss of more than 100 points. This left investors a little anxious because it was difficult to tell exactly where the market was going.

Other aspects that are not helping the Dow Jones any include that oil prices reached a price of $78 for the first time ever. Gold had a higher price as well. With the market jumping up and down investors should be prepared for more of the same. Of course, better than expected earnings for any of the big businesses could turn things around for the Dow Jones but while the market is worried over lending and whether or not companies will be able to receive loans the market will be finicky.

It seems strange that the Dow Jones reached a record of 14,000.41 in July and then just a few days later managed to fall an astonishing 5%. Believe it or not but some investors believe the worst has yet to be seen and that it is possible for another 5% drop. That remains to be seen but investors should prepare themselves for a volatile market that may be high one day and tumbling the next.

Of course, long-term investors likely have little to be concerned over because they may sit tight and wait for the storm to pass. It is hard to do however when it appears the market is going straight for the toilet. Nevertheless, long term predictions for the Dow Jones look good so investors may prefer to ride out the bad wave and then be in position when the Dow starts rising again.

This is especially true now that many lending institutions are changing their standards for home loans and subprime lenders are more than likely going to be required to have higher credit to be approved than the borrowers that have recently defaulted on so many loans.

After the big mortgage collapse a couple months back individuals applying for a home loan for the first time or people with less than perfect credit will find that it is not so easy to be approved any more. In fact, getting approved for a home loan just became a lot stricter because banks and lenders are more cautious than ever after the big fall out. So, what are some tips for first time homebuyers or individuals with less than perfect credit to help them with approval? You will find some great suggestions below.

Don’t Charge

The first thing you should do is make sure you hide all of your credit cards and stop charging! The last thing you want to do is to be charging on your credit cards when you apply for a home loan application. So make sure you only buy what you can afford and do not use your credit card. This will show the loan officer that you are responsible with your credit and will help significantly with your loan application.

Improve Your Credit

Another tip is to start working on your credit score. No matter what your credit score is you likely have some room to improve it. There are very few people that have a credit score so high they do not need to work on improving it. A couple of ways you can start improving your credit include paying off high balances, not charging on your credit cards, not applying for additional credit, and more. If you are lowering your overall debt and not accumulating more then this will show lenders that you are prepared for a home loan. Keep in mind that it will take time to reduce your dent and it will take time for your credit score to improve. But if you focus on it you will have no problem taking your credit score up a few points or a few hundred.

Save for a Down payment

Another great suggestion is to save for a down payment. Many home loans are available with no to little money down. If you have a large sum of money, at least $10,000 that you can invest in your home then that will increase the odds that you will be approved for a home loan. Coming up with a large sum of money may seem difficult, but if you are able to save an extra $400 a month then in two years you will have what you need. That is not that big of a sacrifice if you realize you will be getting your own home!

These are just a few suggestions to help first time homeowners receive approval for their home loan. If you begin now and work on your credit then you will be able to receive a home loan to buy the home of your dreams. It may be a little more difficult now than it was in days past but that is just the way it is. Start putting these tips into practice and in no time at all you will be able to buy your own home!