Figures that were recently released by the Bank of England have shown that savings rates on many accounts in the UK have now sunk to a fresh low following the series of dramatic base rate cuts that have been applied over recent months. The figures indicated that the rate of interest paid to savers that wanted to have instant access to their cash was only slightly above zero.
Whilst the base rate cuts, which took place between October and March sending the base rate plummeting from 5% to just 0.5%, came as welcome news for many borrowers who saw their repayments drop the news has been bad for savers, many of whom rely on the interest on their savings as a form of income. However, at the end of the February the average rate of interest paid on instant access accounts was just 0.17% according to the figures from the central bank.
The data also does not take into account the latest base rate cut of 0.5%, which came after the March Monetary Policy Committee meeting, so the situation could become increasingly bleak. The average rate of interest paid to those with notice accounts is also very poor, and at the end of February was at just half the level of a month earlier, standing at an average 0.18%.
One industry expert said that savers were being punished for mistakes that had been made by others, and that many were desperately trying to find alternatives for their savings that could help them to enjoy higher returns. He added that this showed just how badly savers were being affected, as under normal circumstances safety and security of savings would be paramount to consumers in the current financial and economic climate.
A number of industry groups are also concerned about the ongoing interest rate cuts, including the Building Societies Association. The BSA has stated on a number of occasions that the low level of the base rate means that savers are now less likely to put their cash into savings accounts due to the low returns, and this in turn reduces lenders’ access to funds for their mortgage lending operations.
Sunday, May 24, 2009
Tuesday, May 12, 2009
Credit card and loan defaults causing problems for families
Research that was carried out by the Organisation for Economic Co-operation and Development has shown how families across the UK are being driven to financial ruin as a result of soaring credit card and loan defaults that are said to be making the recession even worse. The OECD has stated that the debt levels of families in the UK have reached the highest level of any major economy, largely as a result of easy access to credit over the past ten years.
Between April and June of this year credit card companies have had to write off around £1 billion worth of credit card debt according to figures from the Bank of England, which are due to be released over the coming weeks. This represents the highest figure in sixteen years, which is when the country was last going through a recession. Worse still the situation is set to get worse over the course of this year, and the figure is a massive sixteen times higher than in 1997, when the Labour Party came into power.
Total bank write offs on Personal loans and mortgages is set to reach an astonishing £2.25 billion according to Capital Economics, and this is a figure that is far higher than the £1.96 billion that was seen during the same period a year ago. It is thought that this high level of household debt could result in the banking crisis getting even worse, with an increasing number of people having to file for bankruptcy.
Forecasts from the Association of Business Recovery Professionals have predicted that over the course of this year around 139,200 individuals will become insolvent, and this will reflect an increase of over 30 percent compared to last year. This could then have a knock on effect on the banking industry, which could end up restricting lending even further, hiking up interest rates, and ultimately deepening the recession.
It is also thought that amongst the reasons for the expected increase in debt defaults is the rising level of unemployment, which is set to force an increasing number of households into financial difficulties to the point where many will be unable to keep up with their debt repayments.
Between April and June of this year credit card companies have had to write off around £1 billion worth of credit card debt according to figures from the Bank of England, which are due to be released over the coming weeks. This represents the highest figure in sixteen years, which is when the country was last going through a recession. Worse still the situation is set to get worse over the course of this year, and the figure is a massive sixteen times higher than in 1997, when the Labour Party came into power.
Total bank write offs on Personal loans and mortgages is set to reach an astonishing £2.25 billion according to Capital Economics, and this is a figure that is far higher than the £1.96 billion that was seen during the same period a year ago. It is thought that this high level of household debt could result in the banking crisis getting even worse, with an increasing number of people having to file for bankruptcy.
Forecasts from the Association of Business Recovery Professionals have predicted that over the course of this year around 139,200 individuals will become insolvent, and this will reflect an increase of over 30 percent compared to last year. This could then have a knock on effect on the banking industry, which could end up restricting lending even further, hiking up interest rates, and ultimately deepening the recession.
It is also thought that amongst the reasons for the expected increase in debt defaults is the rising level of unemployment, which is set to force an increasing number of households into financial difficulties to the point where many will be unable to keep up with their debt repayments.
Monday, May 4, 2009
Cost of renting a home too high
In the current financial climate, and with the restrictions that have been placed on mortgage lending over the past year and a half, a rising number of people have been forced into renting a home rather than buying one. However, officials from one charity have said that many lettings agents across England and Wales are charging those that wish to rent a property excessive fees, and that this is driving up the cost of renting a home.
The Citizen’s Advice Bureau has recently released a report, which claims that many tenants are being hit with ‘unjustified and excessive’ charges from lettings agents across England and Wales, and that these charges could be adding as much as £600 to the cost of renting a property. Amongst the fees that these lettings agents are charging are administrative costs, credit reference check fees, and tenancy renewal costs.
Officials from the CAB have said that many of the charges and fees that the lettings agents are adding to the cost of renting a home actually bear no relation to the cost of the service that they are providing. The figures were partly put together from a survey of tenants that had contacted the charity for assistance, and the report was released just one week after the government announced a shake up of the industry stating that it wants a national register of private landlords in England and wants an independent regulator for lettings agents.
The CAB now wants any new regulations put into place by the government to include a ban on these excessive charges so that renting a home is made more affordable for tenants. The report claimed that many of the charges that were being added to rental costs were actually for services that should be a routine part of letting a property and not for services that were over and above the general work involved in letting a home.
The chief executive of the CAB said that these fees and charges were causing huge problems for people that were on low incomes and could not afford to get a mortgage and buy their own home. He accused some letting agents of just making up charges as they went along, adding that this was causing a huge barrier for many people.
The Citizen’s Advice Bureau has recently released a report, which claims that many tenants are being hit with ‘unjustified and excessive’ charges from lettings agents across England and Wales, and that these charges could be adding as much as £600 to the cost of renting a property. Amongst the fees that these lettings agents are charging are administrative costs, credit reference check fees, and tenancy renewal costs.
Officials from the CAB have said that many of the charges and fees that the lettings agents are adding to the cost of renting a home actually bear no relation to the cost of the service that they are providing. The figures were partly put together from a survey of tenants that had contacted the charity for assistance, and the report was released just one week after the government announced a shake up of the industry stating that it wants a national register of private landlords in England and wants an independent regulator for lettings agents.
The CAB now wants any new regulations put into place by the government to include a ban on these excessive charges so that renting a home is made more affordable for tenants. The report claimed that many of the charges that were being added to rental costs were actually for services that should be a routine part of letting a property and not for services that were over and above the general work involved in letting a home.
The chief executive of the CAB said that these fees and charges were causing huge problems for people that were on low incomes and could not afford to get a mortgage and buy their own home. He accused some letting agents of just making up charges as they went along, adding that this was causing a huge barrier for many people.
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