While the signs are that the UK housing market is under pressure, house prices have not yet shown the marked fall which many experts had been predicting, so what can we expect in the short to medium term?

The situation we are seeing in the UK property market is very much similar to that in the early days of the credit crunch, whereby many so called experts are breathing a sigh of relief that we have not seen a collapse. However, as we all know now the credit crunch has come back to haunt the worldwide economy with a substantial slowdown in worldwide industry expected in the short to medium term. The situation with the UK housing market will be similar because of a number of factors which include :-

Lack Of Funding

Many banks and other financial institutions have been forced to curtail the agreement of new mortgages after experiencing funding difficulties in the wake of the credit crunch. There is no short term solution to the problem because central to the problem is the fall in the value of core investments held by many institutions, which historically they had used as collateral for extended finance.

Economic Slowdown

As corporate UK continues to struggle from the slowdown in the worldwide economy, more and more companies will be looking to reduce their costs as profit expectations are slashed for the short to medium term. At some stage cost savings will mean job cuts which will mean less money in the pocket of consumers, which will again filter through into the economy and depress corporate profits yet further.

Inflation

While the Bank of England has full control over the future direction of bank interest rates there is great concern over the recent rise in inflation. The government’s upper band will be breached over the next 12 months with many expecting inflation to rise to more than 3%, which seriously undermines the ability of the Bank of England to slash interest rates as they have done in the US.

Consumer Confidence

Even though historically the UK consumer has been fairly upbeat we are starting to see signs of concern as the taxation policy of the current UK government starts to bite and people are actually beginning to feel the pinch. The impact of higher petrol prices has also had a knock on the affect to the UK economy where extra transport costs have been passed onto the consumer through the higher price of goods, eating away at the income of the UK consumer even more.

Unfortunately for the UK consumer there is no quick fix solution to the problems which we are experiencing now and set to encounter in the short to medium term because a sharp reduction in interest rates has the potential to push inflation higher, thereby affecting the long term performance of the economy. This lack of consumer financial strength will see less demand for houses and more home owners experiencing financial difficulties. Cut price sales will appear in time which will further reduce the strength of the overall market with the potential to see a serious sell off in due course. Buyers who have or can arrange funding are most certainly in a position of great strength, but probably in no rush to buy!

If your monthly salary is not covering the extra burden created by the increased food costs, gas and electricity bills, council taxes and water rates then what are the other options? For many UK families it is time to find that extra money to overcome the present difficult situation. Credit card providers are also using the ostensible ‘zero percent rate tarts’ to lure their customers to spend more through their credit cards. But, you should be aware of the rate charged by the credit card provider after the initial zero percent rate phase as the company will try to recover the money that they have lost earlier by charging higher interest rates.

The standard credit card rates these days are at 17.01 percent and the average unsecured personal loans are offered at 8.44 percent. So, the consumers should make a wise decision if they need extra money. If the credit history is good, then they can take personal loans than meeting the expenses with their credit cards. On the other hand, this is not a permanent solution to your tough financial situation and hence you need to work out some new methods to balance the income and expenditure graph.

Most of the borrowers are also embarrassed by the non-availability of cheaper mortgage deals. It is estimated that as many as 1.4 million people wanted to remortgage their loans which have higher rate of interest this year. But, the financial crunch has made the building societies and banks to pick their customers with caution. These institutions are carefully evaluating the customer’s credit record and equity before lending any mortgage loan. So, many householders are finding it difficult to switch over to another cheap deal. Also, those who are paying variable rates for their mortgages have to pay more from their pocket as the rates are hovering around 7.5 percent at this time.

The UK consumers are also facing increased car insurance premiums due to the raised petrol prices which had increased the cost of motoring. It is estimated that the premiums have gone up by 5% and you should think of some other cheaper deal if your insurance company is increasing the premium every now and then. Many insurance providers also charge for providing the monthly direct debit payment facility. So, you should add up the costs to your premium to calculate the exact amount that you are paying and then only you should sign up the car insurance deal from some other company.

To find a solution to the financial crunch you need to make a budget of the expenses that you have to meet and also try to note every penny that you spend. This will help in reducing frivolous spending and you can cut on the unnecessary expenditure. But, never take some hasty decision on a panic mode as this will further worsen the situation. Don’t get lured by the attractive offers that the financial institutions are offering; think twice prior to borrowing and calculate your repayment capacity before signing up the loan.

With high apprehensions of a global credit crunch, Bank of England has been approached by many high street banks for emergency loans to the tune of 23 billion pounds. This has resulted in the loss of 14 billion pounds by the shares in the banks pushing FTSE 100 index to close at its lowest level in the past two and half years. It is said that the urgent rescue of Bear Stearns, the fifth biggest bank of US competitor which was earlier broken up by JP Morgan for 240 million dollars is the main reason behind the falling of shares in the banks. Bear Stearns sell-off had raised fear among investors that the exposed US recession could also bring down any British bank and this has worsened the situation further.

The credit crunch has resulted in bitter relationship between banks that are very reluctant to lend each other and this has largely affected the mortgage industry. Banks heavily depend on cash transfer to finance the loans of their customers. With the drying up of these types of loans, mortgage deals have become impracticable in the recent years. The Bear Stearns bailout has further cautioned global banks and they are indisposed to lend each other fearing an imminent collapse. The US dollar crisis has also damaged the confidence in property industry showing signals of further price falls. The problems may turn from bad to worse and lenders would cut back their offer of loan size if the price reduction takes place.

Now the situation forces the public to depend on their savings or a deposit of 25% of property value would make them eligible for a first time mortgage. The non-availability of mortgages may make purchasing a house impractical and this may also force the sellers to accept lower prices or withdraw their property from the market during the last minute. People who want to buy even a one bedroom apartment for the first time will feel the crunch as getting their accommodation may go beyond their reach.

Many economists suggest that people should avoid unnecessary selling and if they have to sell then the property can be marked at 10% less than its original value to get more interest. First time buyers can restrain themselves from buying till the situation improves and they can indulge in hard negotiations and cheap bargains of property auctions. The home buyers who want to remortgage their property may not also find an affordable home loan deal due to the credit crunch. Though the housing market usually springs at the time of Easter weekend, today only fearless investors who are able to take calculated risks are investing their money in the market. Many feel that only when the banks stop worrying about the cost of bread and focus on the banking system the situation will improve.

Bank policymakers of UK are concerned about the expected high inflation levels and the consequences the industry will face. It is feared that the inflation will increase over the period. Bank of England is struggling with the rising price pressures and slow growth rates and the soaring inflation expectations will also affect the interest rates as it will come down more slowly than expected. Bank of England in its February survey stated that the public expect the inflation to be around 3.3 percent in the coming year and also the current inflation levels have jumped to a record level of 3.9 percent.

Bank of England setters have also warned that the impending inflation originated by the rising and falling cost of worldwide commodities will worsen the situation further and the actual threat to UK’s economy will be further price hikes and more expectations of the public which may lead to higher inflation levels.

BoE has reserved the rates at 5.25 percent during the first week of this month however shareholders are making a bet that the rates will fall as low as 4.5 percent within this year. This kind of predictions also makes the position of the Monetary Policy Committee more difficult as this dampens the interest rate cut in the near-term. It is believed that the workers may demand higher wages to meet the rising prices of commodities and the industry will be forced to increase the wages to retain them.

Many economists feel that the consumer’s inflation expectations are overly influenced by the increased price of essential commodities such as petrol and bread. According to the economists, because of the latest price hikes and the increased rates of food price the public tend to expect the inflation to grow at a higher rate and the fact that this piece of information is widely exposed further supplements the belief.

The CPI inflation as per the last reading was 2.2 percent in January. The retail price index which also comprises of mortgage payments was 4.1 percent during this period and the news has created much concern for BoE as the high inflation expectations will reduce the chances of quick cut in interest rates. Since December, Bank of England has undertaken two quarter-point cuts and has kept the standard rate at 5.25 percent. So, for the moment the economists feel that the Bank’s apprehension about inflation has balanced its growth fears.

The prime factors that affected the CPI had also affected the RPI and the mortgage interest payments had a downhill effect on the RPI during this month. Also, the RPIX inflation on all the items excluding mortgage interest payments had risen to 3.4 percent in January from the 3.1 percent mark in December. Moreover, the largest growing pressure on RPI is due to the raise in the price of fuels. With oil prices at 110 dollars, the inflation rate may further rise to record prices and economists are also voicing their fears to the Government.

Although online banking was introduced to make things easier and more convenient there is still a lot of controversy whether it actually solves or creates problems. One of the main issues was people’s security, being online there could potentially be numerous scams out there trying to gain sensitive information and used against you.

With this being said you can easily avoid the scams and receive the full benefit from online banking as it can truly make your life much easier if done with caution. Ensure that you look out for anything suspicious such as emails containing a link stating that you need to log into your account, these can often have software that obtains your log in details and sends them to the creator.

With online banking you be able to manage everything in your account in the comfort of your own home. This automatically cuts out any phone calls or trips to the closest bank therefore saving you time.

Once you have signed up for online banking you will be able view your latest transactions and monthly statements to keep a record of your finances. Many people are even helping the environment and opting out to receive a paper statement each month which cuts down the waste of paper.

You can send or make payments to other people or any credit cards so not only will it save time, it will ensure that you don’t miss any credit card payments resulting in additional bank charges. This isn’t just limited to the UK either, you can send money overseas with the click of a button.

If you have forgotten your PIN number for your cash or credit card you can request it to be sent out to you immediately to the address on file, be sure to update your details if they change as you would hate for your personal details to be sent out to an old address.

Not only will it allow you to manage your future finances online but you can check your existing direct debits and standing orders so that you are aware of what you have connected to your account. You will be able to view how much the amount is for, the last date is was taken out and the next date the payment is due to come out. If you see anything out of the ordinary then you can amend or cancel any of your direct debits to avoid paying for anything you’re not wanting to. If you use cheques often then you can also monitor those online, you can view, amend of cancel pending cheques linked to your account.

As you can see online banking offers a huge list of benefits that will make your life easier, as well as being able to manage your bank account you can apply for further products such as mortgages, loans, insurance and many more. This will also be made easier as they already have your details and credit history on file so you can often get an instant quote.

Today, personal loans are offered by various financial institutions and banks. But, these loans cannot be used for business purposes as the risk involved is more. Also, most of the people are not aware of the fact that when they repay their debt before the end of the fixed term, the lenders levy heavy penalties. Nowadays, the interest rates of different personal loans are lower than what it was in the past. For instance, one can borrow 10,000 pounds at a modest interest rate of about 7%. However, most borrowers are fortunate enough to repay their debt before time and hence pay the heavy penalties levied by the lenders.

A personal loan comes under the unsecured loan category as these loans don’t require collateral. On the other hand, due to the risk involved the lender may levy high rate of interest on the loans and also the term of repayment may be less than what you get in a secured loan. You can borrow anything between 500 pounds to 25,000 pounds for a period of 6 months to 5 years. But, this will vary between different lenders and products. The rate of interest which is generally known as Annual Percentage Rate (A.P.R) is levied on the amount borrowed and before taking a personal loan you should compare the different products and their APRs.

Many lenders bury the penalty clause in the terms and conditions by printing them in small letters. Almost 75% of personal loans levy penalties for premature closures and you should analyze whether the loans carries a penalty before signing up the papers. Also, the lenders never provide the details of the penalties exactly and the way of calculating them also differs. Department of Trade and Industry (DTI) recently proclaimed that they are into reforming the Consumer Credit Act and they will also focus on the penalty clause.

The financial institutions like building societies and banks calculate the amount that you pay over the entire term using a format called Rule 78. This method distributes the interest rates unevenly and so the early part of the loan installments are used to cover up more interest and hence it will leave a bigger amount of capital outstanding. Also, the penalties for premature closure are also calculated in the same way and hence the consumers cannot never clearly understand how the settlement amount is arrived at.

In addition, the consumers should be aware of the way in which the interest rates are calculated on the personal loans. If the interest rate is fixed, then it will remain the same all through the year. But, if the rate presented is a variable rate then it may fall or rise in line with the base rate changes throughout the term. So, the borrower should know the type of interest rate and the redemption penalties before going for the loan. Otherwise, they may end up paying more than what the other reliable financial institutions charge and it may also guzzle a major part of their hard earned money.

Insurers of UK are facing insurance claims worth millions of pounds from householders affected by this week’s storms as the damage is heavy. The storm that started a few days back had damaged many homes and cars in West Country and Wales. So, the affected people are making claims on their motor and home insurance policies which normally cover storm damages. Last Year, when Hurricane Kyrill hit the UK, the claims made by the affected householders were around 350 million pounds. So, it is estimated that this year’s storm insurance claims can cost the insurance companies millions of pounds.

The wind damage which is habitually referred as storm-surge damage is covered under a householder’s insurance policy and the flood damage is generally covered by the government issued insurance. Weather forecasters have already warned insurance companies about the storm and hence many insurers have prepared themselves to face the situation. It is said that some insurers have started communicating with their policy holders living in the worst affected areas and providing them assistance with their claim.

But, the question is whether the claims made by every householder will be granted as the amount of damage caused by the storms are not clearly estimated so far. Also, the insurance companies never mention wind damage in their offers and hence they may not pay to those who claim for wind damages. However, many insurance companies are hiring additional work force to handle the large number of incoming calls they are receiving day to day. Norwich Union Legal & General stated that they have also employed extra people at call centres to tackle the huge volume of incoming calls. The company also said that they are getting more calls from policyholders of West Country as the area is severely affected.

Some other insurance companies like Direct Line are also offering aid to their customers through their representatives. The emergency home response team has started offering help to clients whose property were affected by the storm. The company is also offering advice on how to get claims processed quickly. Halifax Home Insurance claims that they had received more calls from the south-east part of the country and they have prepared themselves fully for the storm claims. Many people are calling insurance agents to buy cover for their home and cars as they have witnessed the damages done by the storm.

Last year Gloucestershire and Yorkshire had seen a 300 percent rise in applications from householders after the worst floods that damaged several properties. It is said that a particular affected area received more than 1700 percent applications for home and car insurance as only one fourth of the total population of UK have home and car insurance cover. The bad weather is a natural phenomenon that affects almost every part of the world at some time or the other. But, the insurance companies state that the bad weather is a more powerful tool of advertising than the pricey advertisement campaigns as more and more people are taking insurance covers to protect them from damages caused by natural disasters.

Of late consumers in UK are facing financial crunch due to the escalated fuel and food costs and falling global economy. Also, they are very much concerned about the current employment situation and economic development and are willing to spend more than what their income permits. With raising claimant count, the lenders have fixed up more stringent borrowing conditions for giving credit. As a result, consumers are seeking expensive credit and are facing tough terms and conditions. Though people tend to spend less, there has been a marked increase in high cost credit. With rising inflation, people quickly use their salaries and are forced to make purchases with their credit cards to meet their routine monthly expenses. As credit card companies in UK are unable to check and verify applicants’ income meticulously due to the large number of credit card users, the number of unscrupulous people holding credit cards is increasing alarmingly.

It is said that London is the hotspot of credit card fraud in UK and incidents of plastic fraud are on the rise due to the large number of credit card holders in London. However, recently, there has been increasing awareness amid people about the credit card frauds and they have started following some precautions while using credit cards. Also, with the introduction of debit cards which contains many of the features of credit cards, most people have switched over to debit card and use them extensively for their daily requirements. The unique difference between credit card and debit card is that in a debit card the cash is debited from the current account of the user and hence there is no debt to face and also there are no processing charges. Thus, people are increasingly tempted to use debit card more than credit card as they are unable to afford high cost borrowings anymore.

On the other hand, internet commerce expects web users to key in credit card information when they make purchase online. But, the consumers are worried about the safety and security of the financial data they provide when they do online shopping. At the same time, the industry has been trying hard to boost confidence and trustworthiness of the online shopper through numerous security systems. Intelligence sharing initiatives between banks and the police supported by sophisticated database is giving better results. The Home Office of UK firmly supports these data sharing measures to prevent online frauds and also made provisions to legalize the data sharing between private and public sectors. Several initiatives have proved very useful in reducing fraud which includes the squashing of chip and pin and wide promotion of secure payment methods. The Fraud Intelligence Bureau formed by the banking industry which is a combination of law enforcement agency, banking industry and intelligence sector unit dedicated for Cheque and Plastic Crime is working hard to improve information sharing between these agencies.

Awareness amongst consumers about the simple security procedures involved in online shopping is very low and only when they know how to figure out the secured sites, the credit card fraud will decrease. A golden padlock on the bottom of the page of the site can be used to check the authenticity of the site and when they right click the lock, they can find out whether the website owner and the certification match each other.

Chancellor of the Exchequer Alistair Darling while delivering his maiden budget speech stated that the Government would consult with industry on fixed rate mortgages for 10 years, 20 years or 25 years period. However, more details are required on the plans, after his last month commitment of grading the mortgage system by giving ‘gold standard’ kite mark to least risky loans. He stated that the support of the Government for shared equity schemes have helped 95,000 homeowners across the country, to acquire their property, especially after Labour took office. He also announced that the stamp duty will be scrapped to 80 percent of the equity value and 8 billion stg would be spent for social housing over the next three years.

The chancellor said that these measures would help to boost the secondary markets which were now facing a difficult situation and also would keep mortgages stable and low. He also promised more support through the cutback of stamp duty on shared equity schemes for the first-time home buyers and key workers. He also added that in the existing weak market, this measure is expected to diminish tax revenues and encourage house buying activity.

Further, land remediation relief has been extended in the Budget to help the brownfield land development. He stated that for supporting existing land redevelopment, new measures are adopted to deliver 200,000 homes by 2016 on the additional land owned by public sector and this will result in increase of supply in housing without using the green field sites. Conversely, the market observers stated that with the identification of more public land sites, the Government’s plan cannot be expanded further as the land availability becomes limited.

On the other hand, the Council of Mortgage Lenders (CML) said that the budget measures may be beneficial for the mortgage and housing market in the long term; however this will not bring relief to the immediate problems faced by the people. But, CML welcomed the move by the Government to help the secondary market and non-commitment of ‘gold standard’ kitemark for mortgage backed securities and covered bonds.

Council of Mortgage Lenders condemned that there is no fixed timescale on providing relief measures and hence this will stiffen up requirements on sale and leaseback schemes. It also said that there was little immediate help for the mortgage or housing market through this budget. It also said that the new announcements on scrapping stamp duty to 80 pct of the equity value on the shared equity schemes would not provide any short-term relief to the first-time buyers as the entry costs will remain the same and hence the buyers may not find them affordable. CML also stated that only a stamp duty reprieve can bring immediate relief to the first-time buyers as this will reduce the entry costs.

New Homes Marketing Board Chairman David Pretty reacting on the budget told that these measures would benefit only a limited number of homebuyers while the raise in stamp duty would affect everyone.

Are you trapped in the nasty circle of debts and want to get rid of the different type of debts? Then, debt consolidation is the economical and easy way to dispose of your existing debts that have high interest rates. Even bad credit borrowers can avail debt consolidation to pay off the loans and also to build their credit score.

With debt consolidation you can unify your numerous weekly payments into a fixed one. One of the main reasons behind the mounting debts of many is the excessive use of credit cards. Many people use credit card frequently as they are unaware of the huge interest rates they charge and hence fall into debt trap. These unmanaged debts piles up into a big heap thus creating chaos in the normal life of an individual. Falling credit scores and assaulted social status disrupts their day to day life and the only easy solution available to them is debt consolidation.

Debt consolidation is offered in two ways – Secured and Unsecured. Secured debt consolidation can be taken only with collateral; however you can get debt consolidation at lower interest rates for a longer repayment period. On the other hand, unsecured debt consolidation does not need any collateral, but the borrower has to pay higher rate of interest as the risk involved for the lender is more in an unsecured loan. People suffering from bankruptcy, CCJ, bad credit score and late payment can make use of debt consolidation to re-build their credit rating.

When you are opting for secured debt consolidation, one of your personal assets should be put forward as collateral and the loan amount that you get depends on your monthly income, repayment ability and credit rating. You can get up to 125% of the value of your collateral and the loan period can be anything between 3 to 25 years. Conversely, unsecured debt consolidation comes with higher rate of interest and the sanctioned amount will be less and also you may have to repay the amount within a shorter period.

You have to pay only one monthly installment when you opt for debt consolidation and also the variation in interest rates and fee structure will save you a lot of money. If you have too many unsecured loans, then you may end up repaying more towards interest than principal. So, it is always better to consolidate all your loans into a single loan as you have to make only one monthly installment and hence you can manage it in a better way. Also, there is absolutely no need to answer all those harassing calls from debt collectors and you can lead your life with immense peace of mind. You can also apply for debt consolidation online by visiting the lender’s site. You have to fill up the online form and the documentary works can also be done through the internet itself. Normally, the financial company processes your application and sanctions the loan within two weeks duration. But, beware of the fraudulent companies that lure the customers with attractive schemes, you have to check the fidelity and service of the lender before signing up the papers.