In what is probably a sign of the times catching up with all areas of society, it seem that the number of old age pensioners going bankrupt in the UK has doubled over the last 5 years.  While the figure still only represents 7% of all people declared bankrupt over the last 12 months, it has risen sharply from 3% just 5 years ago.  So why is it happening?

It seems that there are a number of issues coming into play, which include :-

• Longer life expectancy.  This factor is putting a strain on the savings of many pensioners, who are not able to make their savings stretch as far as they used to.
• Increased cost of living.  It seems that all areas of living are getting more and more expensive, the cost of travel is increasing, council tax, general tax and a string of other charges have increased substantially over the last decade.
• Pride.  Many of the old age pensioners who have been declared bankrupt have tried to solve their problems themselves, without looking or asking for assistance.  While there are advice agencies out there for the elderly, it seems that there needs to be more work done promoting these services.

While not totally unexpected, it seems sad that those who have probably worked all of their lives looking forward to retirement are often not able to cope with the rising cost of living.  They are often the forgotten side of society, with more and more new finances and new services targeted at the younger audience. 

Surely it is time to ensure that those who may have served time for their country are looked after in their twilight years?

Over the last few years we have seen a number of property booms across the world, but no more so than the UK which has seen a concerted rise for the last 3 or 4 years.  As the average price of a house in the UK creeps over the £200,000 mark there are many people sitting on massive paper profits on their homes.  How can you take advantage of the rise without putting your house in jeopardy?

Many people are now looking at the potential for re-mortgaging or taking out a second mortgage on their home, in order to realise some money from their investment.  While you still need to very careful that you do not over extend yourself with a new mortgage / second mortgage, there is the potential to take out a significant amount of money without causing too much trouble.

In a perfect world many people would have been looking to remortgage, i.e. pay off their old mortgage and take out a larger one against their home.  Unfortunately, as we have seen interest rates rise it is probably not the best option, as you would effectively be trading in a lower interest rate for a higher one.  This is where many people decide to take out a second mortgage at a higher rate - with the option of remortgaging the two together when rates fall.

However, you do need to be aware of the risks of remortgaging, and the fact that your home may be at risk if you do fall behind with payments, etc.  There is no such thing as a free lunch in the financial world, although if you do not over extend yourself, there is a great opportunity to extract a little of the rise in the value of your property, and treat yourself!

As we approach the Christmas period, many people around the world will be chasing up their Christmas clubs to ensure their vouchers and money are ready for the Christmas rush.  These are people who having been saving up for nearly 12 months in order to give their families a Christmas which they will remember.  But are Christmas savings clubs safe?

Many people will remember the Farepak disaster a couple of years ago, where many many people lost the majority of their Christmas savings when the company went under.  Unknown to the many savers, their money was not ring-fenced from the company, and when the company went under the receivers claimed these funds as assets of the Group.  Many savers lost thousands and thousands of pounds, with Christmas cancelled in a number of households.

While the rules in the UK, and other countries,. have been tightened after the Farepak collapse, it is still essential that you know who is looking after your money, and what degree of protection you have.  There are many legal issues to contend with, whereby unless ring fenced from the company in specific bank accounts, your money can be claimed back by the receivers in the event of collapse.  It is therefore essential that you know how the savings club is set-up, and what would happen in the event of collapse.

It is unfortunate but there are good solid savings clubs out there who have seen their business reduced by the Farepak chapter.  Many people are turning to good old fashioned savings bank accounts, and while they have ready access to the money, many are turning a blind eye until the Christmas period.

The choice is still there, and there are Companies out there who will look after your money properly, and ensure that you get the Christmas you always wanted.

While the old saying “Never mix business with pleasure” can be used too often, in the case of finance it is probably very relevant.  Whether lending money to a friend, helping out with a mortgage application or acting as a loan guarantor, it can get very awkward mixing your personal life, finance and business.  Are you sure you know what it all entails?

Loan guarantors are becoming more popular among close knit families and friends, and with the financial markets ever tighter at the moment, the banks are looking for as much protection as possible.  However, if you are in a position to act as guarantor for an acquaintance or family member, you need to be aware of a number of factors :-

• If the loan goes into default, the banks can chase you for the full outstanding balance.
• If payments are missed or delayed, the bank can chase your for payments.
• You may be in a position to act as guarantor now, but what if your financial situation changes, will it still be as safe for you to act as guarantor.
• You need firm ground rules before setting up such an agreement as there can be no doubts or confusion, as things could get very messy.
• Is your friendship or relationship with the other party strong enough to with stand possible added pressures if the loan goes wrong?
• Can the person taking the loan actually afford it?

What can often start as a favour for a friend has seen many great relationships ruined, and financial losses for both parties.  It is not advisable to mix business and your personal life, but if you have no other option, you need to ensure that you are covered, and there is as little chance of default as possible.

Friendships can soon disappear in the blink of an eye!

While there has been much speculation about the future of Northern Rock, it has today been reported that the emergency loan of £2.9 billion form the Bank of England has now increased to some £8 billion.  How will the loan get repaid? Will it get repaid? Who will takeover the bank now?

While supposed takover talks continue, many are now asking who will actually step in to buy a bank which already owes £8 billion to the Bank of England? Even though the loan is being used to keep the bank afloat, it will need to repaid at some stage as and when the bank is sold / split up.  As the loan increases, so the chances of someone buying the bank outright reduces.

When will the emergency funding stop? How high can the loan go?

These are all questions which are being asked of the Bank of England and the Financial Services Authority who are in charge of administering the banking regulations.  Will the bank say enough if enough very soon as there is no way that this can  continue indefinitely?

While the credit crunch is continuing, all be it at lesser degree than a couple of weeks ago, it now seems that the Northern Rock is damaged goods.  As and when the credit market returns to normal, will anyone ever touch Northern Rock again?

While the saga continues to rumble on, it seems that we are seeing more new questions than answers.  The situation will need to be resolved as soon as possible, because at the moment the Northern Rock is looking more and more like the living dead than the walking wounded.

In a move which has surprised many in the financial sector, the Bank of England have had not one taker for their £10 billion fund to assist the sector through the credit crunch.  Does this mean that things may not be as bad as first thought, or are the institutions looking to hold out for as long as possible?

While there has been no real sign that the money markets are returning to normal, the fact that the £10 billion has not yet been touched is encouraging.  However, with problems in the US, a UK economy which is in danger of slowing down, and a property market which is unpredictable at best,  the signs are not good.  When you add to this the fact that the banks have recently been refusing some of the more risky transactions, it looks more like battening down the hatches for a rocky ride. 

In many ways it seems that the Bank of England are in a no win situation with criticism when they jumped in to bail out Northern Rock, and criticism because of the time they took to arrange the £10 billion funding arrangement - a fund which no one seems willing to utilise.  Quite what else they can do at this moment in time is not clear, but they will no doubt come in for more criticism in due course!

When you consider that the original credit crunch situation sprang up from no where, there are still a number of situations which could happen to heap yet more pressure onto the sector.   The financial industry may be able to see through the clear land, but it is still a long way out of the forest!

A recent report into the UK benefits system has highlighted the fact that many over 60s are not picking up their full benefit entitlement, with a reported £4 billion going unclaimed each year.  While the authorities claim that this is simple lack of application on behalf of the would be claimants, there are those who paint a more sinister picture. There have been numerous reports about the elderly claiming for various benefits only for the process to stall and drag on for months and months.  It seems that many just given up hope and abandoned their claims.

The fact that the authorities have quoted a figure in excess of £4 billion begs the question, if they know the figure, surely they must know the potential claimants? If so, surely it would be better getting in contact with them directly and arrangement payment, rather than financing a large advertising campaign which may well miss their intended target.  When you consider that there are only 60 million people living in the UK, that £4 billion is a fair chunk of money for every man, woman and child, not to mention an even larger share just for the older of society.

The elderly are not the only ones to suffer with the UK benefits system, a system which has under gone more changes over the last 20 years than we care to remember. New computer systems, new claims forms and new claims are just a selection of the changes which although meant to  resolve the confusion, have in many cases just added to it.  Perhaps there is an opening for a new industry which will basically advise the over 60s of what entitlements which they can claim, because with £4 billion a year at stake there is big money to be paid out.

While there are currently many mortgage holders n the UK who are at breaking point, would you be able to cope with another rise in mortgage rates? As the financial crisis continues across the world, we may soon be in the strange situation of seeing base rates fall and mortgage rates increase.  Would you be able to cope?

There are obvious concerns about the financial stability of some mortgage holders in the UK, many of whom will see the value of their homes fall in value over the next 12 months.  While the majority may have sold up and down sized in the event of any major problems, this may not actually be enough for some.  So what can you do?

Rather than sit back and wait for any changes to happen, you should really be carrying out your own “stress” tests to see what your finances could cope with, and where you could possibly make future savings.  While savings will be hard to come by, bearing in mind the ever increasing cost of living, you may be able to trim some fat off the edges, although it will not be easy.  However, would you not rather be ready for a worst case scenario, than wait for the mortgage increases to fall through your letter box, then panic?

Unfortunately, there are forecast to be thousands of mortgage holders coming off their introductory fixed rates over the next few months, with some set to see their payment more than double.  Saving a few pound here and there is possible, but getting your head around a doubling of your payments, well that is something else!

When you consider the current turmoil in the financial markets, the Northern Rock saga and the softening housing market, it is no surprise that many people are starting to ask what would happen if their mortgage provider went out of business. Would they need to sell their home and repay the mortgage? Would they be transferred to another provider? Would their terms change?

These are all sensible questions that any home owner should be asking themselves in the current climate, although things are not as bad as they may seem.  True, we may see more companies get into substantial difficulties over the next few weeks and months, but as an industry the financial sector do pull together in times of trouble. 

Imagine the situation if Northern Rock was to go under over the next few weeks - a situation which could well happen - there are potentially thousands of mortgage holders who would need assistance.  In this situation, there is no way that the banking sector would either (or could afford to) force home owners to repay their mortgages early, causing a major financial crisis and a flood of property onto the market.  In this situation, a company or companies would come forward and transfer the Northern Rock mortgages onto their business books.

There is some debate whether they would actually be able to amend terms in this situation, but they still need to be competitive and any major changes would be unlikely.  While the UK banking sector is one of the most cut throat in the world, they all appreciate that they have a part to play in the well being of the sector.  If one major bank were to fall, without making arrangements for the transfer of viable client business, then the whole sector would be badly effected, not only on a profit level, but on a trust level (which can be more important that the short term profit outlook).

Whether we actually get that far down the line remains to be seen, but the position of Northern Rock is still very precarious.

In an investigation which has not only shocked the Financial Service Authority (FSA), but the industry as a whole, a recent BBC report has shown that a significant number of UK sub-prime mortgage brokers have willingly encouraged customers to overstate their wages.  By overstating their income the customers will have been offered larger loans, ones which many just cannot afford to finance.  This is yet another element to the financial market which has many experts worried.

Apart from the fact that the housing market has turned down (confirmed by today’s announcement from Barratt Developments), there seem to be many home owners out there who may never have been in a  position to fulfil their mortgage obligations, even prior to the fall back in prices.  While these customers will take a while to work their way through the system, there are again real concerns about the UK sub-prime mortgage market.

When you consider that the credit lines for the sub-prime sector have all but dried up, it is a little surprising that there have been no major collapses as yet.  However, this can surely only be a matter of time, especially in the light of the BBC report.  If the sector were to collapse, it also begs the question “Would the authorities intervene as they did with Northern Rock?”.  Highly unlikely, but then who would have thought the Northern Rock would be on their knees in such a short space of time.

Thankfully the FSA have acted swiftly on the report findings and a number of mortgage licenses have been revoked, but were the BBC lucky enough to catch all of the rogue mortgage brokers - very very unlikely!