Russell Cavanagh ... on the money!
Money Journalist
No Money News Round-Up next week .. More in a fortnight ... .
Brief History of Credit/Debt and How it Works
"Writing Worth Reading" – The Scotsman
"Russell's copy is always right on the money" - Mature Times
"Cavanagh has a knack for making sense of the pound" - ChooseMoney.co.uk
"Russell's copy is always right on the money" - Mature Times
"Cavanagh has a knack for making sense of the pound" - ChooseMoney.co.uk
PERSONAL FINANCE, CREDIT AND DEBT SPECIALIST
I write about finance, credit, debt and social welfare matters. MONEY! Stories, reviews, features, etc, based on personal. national and international aspects of money - or lack of it!.
Check out "Mean Business", my "Samples" page, other items listed on the right hand side of this page and my regular "Money News Round-Up" (below). You can also sign up - free of charge - for RSS site updates using the buttons on the left of this page.
Check out "Mean Business", my "Samples" page, other items listed on the right hand side of this page and my regular "Money News Round-Up" (below). You can also sign up - free of charge - for RSS site updates using the buttons on the left of this page.
Contact +44 (0)750 670 0393 to share your money-related stories, commission me to write for you or hire me as a consultant on your money/debt idea
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Money News Round-Up – 19th November 2008
IVA Treatment Scandal
The Insolvency Service – a Government agency overseeing bankruptcy in England and Wales – has rolled over to credit industry pressure against the interests of the public. The IS quietly announced this week that it will no longer organise Simple Individual Voluntary Arrangements designed to help individuals just after they are declared bankrupt.
Unlike SIVAs, normal Individual Voluntary Arrangements require 75% (by value owed) of a debtor’s creditors to agree and ratify through the county courts a reduced recovery of outstanding debts - usually repaid over a period of up to five years. The SIVA relaxed the 75% rule and the Official Receiver – effectively the legal head of the Insolvency Service – would have a greater say in forcing creditors to accept SIVA repayment proposals in simpler, non-contentious bankruptcy cases. IVAs and, until now, SIVAs are considered a last-resort alternative to full-blown bankruptcy for many for whom losing a house, business or other asset would be just too disastrous.
The IVA industry was always very badly regulated and built up a notoriously impressive record for getting debtors further into financial difficulty after they had actually sought help. It did this mainly by using debtors’ money to cover exorbitant fees before making any repayments at all to creditors. Authorised firms of solicitors or accountants – whose quality and integrity still vary wildly - usually carry out IVA arrangements that are rarely far from being unaffordable.
Eventually, fee-capping regulation in 2007 led to a substantial fall in the number of IVAs being arranged – particularly by the cattle rustling elements of the industry. However, the Official Receiver rarely carried out SIVAs in any event, due mainly to workload pressure on the IS in the continuing aftermath of the Enterprise Act 2002 that made bankruptcy an easier option for “entrepreneurial risk-takers” (and subsequently invited endless floods of bankruptcy petitions by debtors themselves).
The Enterprise Act 2002 was as unpopular with the credit industry as the SIVAs that came alongside it. Credit sector lobbying on SIVAs now pulls sufficient strings that the IS says the (still largely discredited) Individual Voluntary Arrangement industry is set to retain effective control of deciding how and when debtors can avoid bankruptcy and set up alternatives for dealing with insolvency. The credit sector and “more streamlined” - or should that be “lean and very hungry”? - IVA industry haven’t always seen eye-to-eye but neither of them want the Government involved in facilitating protective measures for individuals whose lives have come unstuck due to debt.
Add to all of this that if an IVA fails, the Supervisor of the IVA or any creditor (owed at least £750) can then petition for the debtor’s bankruptcy ……
Currently in the UK, one person is declared insolvent or bankrupt every five minutes.
Wait Off Your mind – More Help for Home Borrowers in Difficulty
Most home-owners currently have to wait 39 weeks before they can get social security payments to help cover interest charges on their mortgage or essential secured loan borrowing. This waiting period is about to change to 13 weeks as of January 2009.
To qualify, you must receive either income support, income-based jobseekers allowance, guaranteed pension credit or have a sufficiently low income – from work or other state benefits – that you would qualify for the additional assistance if you applied.
It pays to check your benefits entitlement and your local authority should provide a service to advise on all benefits and housing issues. Alternatively, you could phone 0845 345 4 345 to speak to Community Legal Advice (see my “Links” page for further contact information).
Still on the Home Front
Despite the Bank of England’s cut in base-rate borrowing interest to 3% last week, Abbey, Lloyds TSB and Alliance & Leicester are reintroducing tracker mortgages (where repayment rates are pegged to the fluctuating base rate) that will not reflect the 1.5% reduction from the previous 4.5% level.
With an anticipated further reduction in the Bank of England base rate to below 2%, such mortgage lenders will surely be set to profit more from the Bank of England’s attempts to rescue us from recession.
And the mortgage industry generally cannot see that the above behaviour relates in any way 70% plummet in mortgage arrangements notified by Nationwide Building Society this week. The estimate is a downturn figure of 80% by the end of this year.
Nor does this week’s research findings of the Royal Institute of Chartered Surveyors that estate agents have sold on average less than one property a week in the 12 weeks up to the start of November indicate to mortgage lenders that just as the taxpayer is having to bail out their entire monetary system, so the lenders need also to sacrifice some of their thirst for profit …
House of Cards
Indeed, the 16 credit card companies who have hiked their own APR rates on purchase transactions since August show no signs of making reductions in response to the shrinking Bank of England base rate.
The card companies cite an increasing risk of repayment defaults by borrowers as justification for their high purchase APR figures – averaging 17.2% at the moment.
Apparently, Gordon Brown PM is “appalled” at the credit companies.
Fuel Me Once
The Consumer Price Index is down from 5.2% to 4.5%. The drop in oil prices is apparently the main contributor to this reduction in inflation. For those worried about the environmental implications … remember Homer Simpson when he asked: “What’s future generations ever done for us?”
Won’t Get Fuelled Again
It seems domestic energy prices are set to freeze and perhaps even fall from January 2009. This will be welcome news, especially after the unjustifiably huge charges increases in August this year.
Pity those who were panicked into signing up for “capped deals” where they will be stuck with the higher rates of payment unless they pay a penalty fee to transfer to another provider when prices drop.
I was personally alarmed when a trainee doorstep salesman from an energy provider – that shall remain nameless but who spent what seemed like an eon at the gates to my impressive driveway – tried to get me to sign up a few weeks ago for a “capped deal”. He seemed a genuinely nice chap but when he asked my usual quarterly bill figure – “£75” I told him – worked out an entirely incorrect annual equivalent of £250! Indeed, when he showed me his impressive A4 handheld computer spreadsheet, the various computation results always amounted to a projected saving for me – inexplicably as some had a minus sign in from of the numbers and others didn’t. Add to this the lug of a supervisor who accompanied him and who became annoyed with me when I gently made light of the arithmetical inaccuracies of his ward, the indecipherable and unbelievable explanations of the spreadsheet “savings” figures and my stated decision to consult U-Switch for competitive quotes instead …..
IVA Treatment Scandal
The Insolvency Service – a Government agency overseeing bankruptcy in England and Wales – has rolled over to credit industry pressure against the interests of the public. The IS quietly announced this week that it will no longer organise Simple Individual Voluntary Arrangements designed to help individuals just after they are declared bankrupt.
Unlike SIVAs, normal Individual Voluntary Arrangements require 75% (by value owed) of a debtor’s creditors to agree and ratify through the county courts a reduced recovery of outstanding debts - usually repaid over a period of up to five years. The SIVA relaxed the 75% rule and the Official Receiver – effectively the legal head of the Insolvency Service – would have a greater say in forcing creditors to accept SIVA repayment proposals in simpler, non-contentious bankruptcy cases. IVAs and, until now, SIVAs are considered a last-resort alternative to full-blown bankruptcy for many for whom losing a house, business or other asset would be just too disastrous.
The IVA industry was always very badly regulated and built up a notoriously impressive record for getting debtors further into financial difficulty after they had actually sought help. It did this mainly by using debtors’ money to cover exorbitant fees before making any repayments at all to creditors. Authorised firms of solicitors or accountants – whose quality and integrity still vary wildly - usually carry out IVA arrangements that are rarely far from being unaffordable.
Eventually, fee-capping regulation in 2007 led to a substantial fall in the number of IVAs being arranged – particularly by the cattle rustling elements of the industry. However, the Official Receiver rarely carried out SIVAs in any event, due mainly to workload pressure on the IS in the continuing aftermath of the Enterprise Act 2002 that made bankruptcy an easier option for “entrepreneurial risk-takers” (and subsequently invited endless floods of bankruptcy petitions by debtors themselves).
The Enterprise Act 2002 was as unpopular with the credit industry as the SIVAs that came alongside it. Credit sector lobbying on SIVAs now pulls sufficient strings that the IS says the (still largely discredited) Individual Voluntary Arrangement industry is set to retain effective control of deciding how and when debtors can avoid bankruptcy and set up alternatives for dealing with insolvency. The credit sector and “more streamlined” - or should that be “lean and very hungry”? - IVA industry haven’t always seen eye-to-eye but neither of them want the Government involved in facilitating protective measures for individuals whose lives have come unstuck due to debt.
Add to all of this that if an IVA fails, the Supervisor of the IVA or any creditor (owed at least £750) can then petition for the debtor’s bankruptcy ……
Currently in the UK, one person is declared insolvent or bankrupt every five minutes.
Wait Off Your mind – More Help for Home Borrowers in Difficulty
Most home-owners currently have to wait 39 weeks before they can get social security payments to help cover interest charges on their mortgage or essential secured loan borrowing. This waiting period is about to change to 13 weeks as of January 2009.
To qualify, you must receive either income support, income-based jobseekers allowance, guaranteed pension credit or have a sufficiently low income – from work or other state benefits – that you would qualify for the additional assistance if you applied.
It pays to check your benefits entitlement and your local authority should provide a service to advise on all benefits and housing issues. Alternatively, you could phone 0845 345 4 345 to speak to Community Legal Advice (see my “Links” page for further contact information).
Still on the Home Front
Despite the Bank of England’s cut in base-rate borrowing interest to 3% last week, Abbey, Lloyds TSB and Alliance & Leicester are reintroducing tracker mortgages (where repayment rates are pegged to the fluctuating base rate) that will not reflect the 1.5% reduction from the previous 4.5% level.
With an anticipated further reduction in the Bank of England base rate to below 2%, such mortgage lenders will surely be set to profit more from the Bank of England’s attempts to rescue us from recession.
And the mortgage industry generally cannot see that the above behaviour relates in any way 70% plummet in mortgage arrangements notified by Nationwide Building Society this week. The estimate is a downturn figure of 80% by the end of this year.
Nor does this week’s research findings of the Royal Institute of Chartered Surveyors that estate agents have sold on average less than one property a week in the 12 weeks up to the start of November indicate to mortgage lenders that just as the taxpayer is having to bail out their entire monetary system, so the lenders need also to sacrifice some of their thirst for profit …
House of Cards
Indeed, the 16 credit card companies who have hiked their own APR rates on purchase transactions since August show no signs of making reductions in response to the shrinking Bank of England base rate.
The card companies cite an increasing risk of repayment defaults by borrowers as justification for their high purchase APR figures – averaging 17.2% at the moment.
Apparently, Gordon Brown PM is “appalled” at the credit companies.
Fuel Me Once
The Consumer Price Index is down from 5.2% to 4.5%. The drop in oil prices is apparently the main contributor to this reduction in inflation. For those worried about the environmental implications … remember Homer Simpson when he asked: “What’s future generations ever done for us?”
Won’t Get Fuelled Again
It seems domestic energy prices are set to freeze and perhaps even fall from January 2009. This will be welcome news, especially after the unjustifiably huge charges increases in August this year.
Pity those who were panicked into signing up for “capped deals” where they will be stuck with the higher rates of payment unless they pay a penalty fee to transfer to another provider when prices drop.
I was personally alarmed when a trainee doorstep salesman from an energy provider – that shall remain nameless but who spent what seemed like an eon at the gates to my impressive driveway – tried to get me to sign up a few weeks ago for a “capped deal”. He seemed a genuinely nice chap but when he asked my usual quarterly bill figure – “£75” I told him – worked out an entirely incorrect annual equivalent of £250! Indeed, when he showed me his impressive A4 handheld computer spreadsheet, the various computation results always amounted to a projected saving for me – inexplicably as some had a minus sign in from of the numbers and others didn’t. Add to this the lug of a supervisor who accompanied him and who became annoyed with me when I gently made light of the arithmetical inaccuracies of his ward, the indecipherable and unbelievable explanations of the spreadsheet “savings” figures and my stated decision to consult U-Switch for competitive quotes instead …..
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Money News Round-Up – 12th November 2008
One Tax Cut We May Never Hear About
Now the Bank of England base interest rate of 3% is well below the official 4.8% inflation figure, should taxation of savings not be abolished or at least suspended?
Further Issues of Interest …
The recent 1.5% cut in the Bank of England’s base rate to 3% still isn’t being passed on to borrowers by all the banks and mortgage lenders. However, those with tracker mortgages must be laughing just now … No?
The small print in most tracker mortgage agreements – that automatically pin borrowers’ interest repayment rates to the fluctuations of the Bank of England figure – contains a protection clause (“collar”) for lenders. Nationwide Building Society has a 2.75% collar beyond which it will not reduce mortgagors’ repayment rates even if the Bank of England cuts interest below that level. Darlington Building Society sold trackers until recently with 4.5% collars.
This means that many home-owners will not benefit from the anticipated fall in base rates to below 2% in 2009. Indeed, the Darlington Building Society tracker deals mentioned above did not pass on to customers any of the recent 1.5% cut down to 3% at all.
Land & Property Act 1925 Scare …
GMAC-RFC is a mortgage lender arguably of the second division. It is generally relied upon by borrowers who have little or no access to high street banks or building societies. GMAC is part of the General Motors International Group of Companies. In my years on the mortgage possession duty desk in Sheffield County Court, GMAC featured regularly in the court lists. They are regarded by housing advisers as mainly sub-prime or non-status lenders.
There is a GMAC story currently in the news where buy-to-let borrowers apparently stayed in their mortgaged property and fell into arrears. Instead of using normal possession proceedings through the County Court, GMAC employed legal provisions contained in the Land & Property Act 1925 that allow evictions to take place without proceedings. Everyone - supposedly including Gordon Brown - is up in arms about the lender's tactic.
GMAC says it will use standard possession proceedings involving the courts in most cases. However, this one was different as the buy-to-let borrowers allegedly breached their contractual agreement by staying in a property they were supposed to let out to cover the mortgage and - presumably – at the same time realise an additional marginal (usually around 25%) income in order to safeguard what is essentially a business contract.
So, I think this is a far from typical scenario and one that's likely to be rare - especially as private renting is very buoyant in this time of restricted residential mortgage lending to aspiring home-owners.
Damned Fuels …
Consultancy firm Energy Advice says UK electricity bills increased eight times faster than in a number of other European countries during the 12 months to October 2008. Through this period, our gas and electricity prices rose 15% and 27% respectively.
In Germany, electricity went up 1.7% but gas 20%. With a more regulated energy sector, France saw 5.5% and 9% rises.
Moneysupermarket.com says UK energy suppliers currently hold £225m of overpaid direct debits from their customers.
Conversely, two million UK households are in fuel debt to the total tune of £224m (£125 per household).
Damned Statistics …
Credit Action figures released this week need (as usual) no comment:
Personal debt in Britain equaled £1,475bn at the end of September 2008 and is increasing by £1m every eight minutes. The total now exceeds the UK Gross Domestic Product figure of £1,410bn.
£238bn is owed by britishers just now – a six per cent increase over the past 12 months
Average household debt today is £9,740 excluding mortgages, £22,190 where the household also has some form of secured loan and £59,715 if mortgages are added to the equation.
Total secured lending on dwellings was £1,219bn at the end of September 2008. 11.7m households owe an average of £103,860 each.
121 properties are repossessed each day.
One person is declared bankrupt or insolvent every five minutes.
One Tax Cut We May Never Hear About
Now the Bank of England base interest rate of 3% is well below the official 4.8% inflation figure, should taxation of savings not be abolished or at least suspended?
Further Issues of Interest …
The recent 1.5% cut in the Bank of England’s base rate to 3% still isn’t being passed on to borrowers by all the banks and mortgage lenders. However, those with tracker mortgages must be laughing just now … No?
The small print in most tracker mortgage agreements – that automatically pin borrowers’ interest repayment rates to the fluctuations of the Bank of England figure – contains a protection clause (“collar”) for lenders. Nationwide Building Society has a 2.75% collar beyond which it will not reduce mortgagors’ repayment rates even if the Bank of England cuts interest below that level. Darlington Building Society sold trackers until recently with 4.5% collars.
This means that many home-owners will not benefit from the anticipated fall in base rates to below 2% in 2009. Indeed, the Darlington Building Society tracker deals mentioned above did not pass on to customers any of the recent 1.5% cut down to 3% at all.
Land & Property Act 1925 Scare …
GMAC-RFC is a mortgage lender arguably of the second division. It is generally relied upon by borrowers who have little or no access to high street banks or building societies. GMAC is part of the General Motors International Group of Companies. In my years on the mortgage possession duty desk in Sheffield County Court, GMAC featured regularly in the court lists. They are regarded by housing advisers as mainly sub-prime or non-status lenders.
There is a GMAC story currently in the news where buy-to-let borrowers apparently stayed in their mortgaged property and fell into arrears. Instead of using normal possession proceedings through the County Court, GMAC employed legal provisions contained in the Land & Property Act 1925 that allow evictions to take place without proceedings. Everyone - supposedly including Gordon Brown - is up in arms about the lender's tactic.
GMAC says it will use standard possession proceedings involving the courts in most cases. However, this one was different as the buy-to-let borrowers allegedly breached their contractual agreement by staying in a property they were supposed to let out to cover the mortgage and - presumably – at the same time realise an additional marginal (usually around 25%) income in order to safeguard what is essentially a business contract.
So, I think this is a far from typical scenario and one that's likely to be rare - especially as private renting is very buoyant in this time of restricted residential mortgage lending to aspiring home-owners.
Damned Fuels …
Consultancy firm Energy Advice says UK electricity bills increased eight times faster than in a number of other European countries during the 12 months to October 2008. Through this period, our gas and electricity prices rose 15% and 27% respectively.
In Germany, electricity went up 1.7% but gas 20%. With a more regulated energy sector, France saw 5.5% and 9% rises.
Moneysupermarket.com says UK energy suppliers currently hold £225m of overpaid direct debits from their customers.
Conversely, two million UK households are in fuel debt to the total tune of £224m (£125 per household).
Damned Statistics …
Credit Action figures released this week need (as usual) no comment:
Personal debt in Britain equaled £1,475bn at the end of September 2008 and is increasing by £1m every eight minutes. The total now exceeds the UK Gross Domestic Product figure of £1,410bn.
£238bn is owed by britishers just now – a six per cent increase over the past 12 months
Average household debt today is £9,740 excluding mortgages, £22,190 where the household also has some form of secured loan and £59,715 if mortgages are added to the equation.
Total secured lending on dwellings was £1,219bn at the end of September 2008. 11.7m households owe an average of £103,860 each.
121 properties are repossessed each day.
One person is declared bankrupt or insolvent every five minutes.
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Money News Round-Up - 29th October 2008
Things Can Only Get Better …
According to Reform research, 60% of 18-34 year olds in the UK either have savings under £1,000 or nothing in the bank at all. The mean debt of the same age group is £6,000 and one in five owes over £10,000.
Meanwhile, American Express research finds nearly nine out of every 10 UK adults paying more each month on household costs such as supermarket shopping, motoring costs and general bills.
Government figures released show official unemployment figure to be 1,800,000 currently – up 100,000 from the previous month.
Taking the Greatest Interest
As the big banks take the overdraft charges issue through the Court of Appeal, new research from MoneyExpert.com finds these charges have increased by 13% since June.
Elsewhere, the Argos payment card, aka “Easy Shop Card”, is issued in partnership with doorstep lender Provident Personal Credit. The applicable interest of 222.7% is, according to a Provvie spokesperson, “no different from home loans”.
Check out much cheaper credit card deals here.
Gone Home
120 mortgage borrowers evicted every day currently – a 71% increase on this time last year according to the Financial Services Authority.
The FSA also says 312,332 people failed to pay their mortgage between April and June – up 16% n the same period last year.
Numerous reports over recent months have indicated people increasingly borrowing on credit cards to cover mortgage, rent, utilities and council tax payments. My own experience as a Legal Aid debt adviser also confirmed this increasingly to be the case.
Web of Deceit
One in seven online shoppers in the UK has fallen victim to identity theft according to Paypal.
Check out these articles on ID theft and fraud:
Credit card fraud article
ID theft article.
Things Can Only Get Better …
According to Reform research, 60% of 18-34 year olds in the UK either have savings under £1,000 or nothing in the bank at all. The mean debt of the same age group is £6,000 and one in five owes over £10,000.
Meanwhile, American Express research finds nearly nine out of every 10 UK adults paying more each month on household costs such as supermarket shopping, motoring costs and general bills.
Government figures released show official unemployment figure to be 1,800,000 currently – up 100,000 from the previous month.
Taking the Greatest Interest
As the big banks take the overdraft charges issue through the Court of Appeal, new research from MoneyExpert.com finds these charges have increased by 13% since June.
Elsewhere, the Argos payment card, aka “Easy Shop Card”, is issued in partnership with doorstep lender Provident Personal Credit. The applicable interest of 222.7% is, according to a Provvie spokesperson, “no different from home loans”.
Check out much cheaper credit card deals here.
Gone Home
120 mortgage borrowers evicted every day currently – a 71% increase on this time last year according to the Financial Services Authority.
The FSA also says 312,332 people failed to pay their mortgage between April and June – up 16% n the same period last year.
Numerous reports over recent months have indicated people increasingly borrowing on credit cards to cover mortgage, rent, utilities and council tax payments. My own experience as a Legal Aid debt adviser also confirmed this increasingly to be the case.
Web of Deceit
One in seven online shoppers in the UK has fallen victim to identity theft according to Paypal.
Check out these articles on ID theft and fraud:
Credit card fraud article
ID theft article.
No Money News Round-Up next week .. More in a fortnight ... .
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Pre-Xmas Budgeting Advice
A preview of my Pre-Xmas Budgeting Advice article for Mature Times is available to view. Recommended for those of us worrying about the cost of Christmas this year.
A preview of my Pre-Xmas Budgeting Advice article for Mature Times is available to view. Recommended for those of us worrying about the cost of Christmas this year.
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Brief History of Credit/Debt and How it Works
This great 47 minute "Money as Debt" cartoon by Paul Grignon explains exactly how credit works and clarifies why cyclical recessions and depressions happen. Recommended to everyone - young and old - interested in how the world actually works. Factual and free of political dogma.
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Money News Round-Up - 22nd October 2008
Mortgage Possession Relief in the Courts
The Civil Justice Council has announced that new guidance to District Judges in court mortgage repossession cases will come into effect as of 19th November 2008.
The new rule will be in the form of a "pre-action protocol" attached to the Civil Procedure Rules that inform judges, lawyers and lenders on what steps should be taken by mortgage lenders before issuing possession proceedings at court. Measures include extending the period of repayment of mortgages (thus reducing the monthly payment, hopefully to a level affordable by borrowers) and other remedies.
The pre-action protocol incorporates much of the Financial Services Authority's guidance to mortgage lenders that were published in December 2006 (but until November 19th not actually incorporated into law).
This is great news - as is the recent decision to reduce the waiting period for housing payments covering mortgage interest under social security legislation for home borrowers on means-tested state benefits down from 39 to 13 weeks.
Mortgage lenders will be forced to work more cooperatively with mortgage borrowers to try to resolve arrears difficulties before issuing legal proceedings. And if they don't, such cases could be struck out entirely and legal costs claimed by lenders denied.
STOP PRESS ...... Speaking to Steve Wilcox, Honorary Fellow of the Institute of Money Advisers and Debt Advice Consultant for the Sheffield Citizens Advice Debt Support Unit, it seems the new protocol is still short of ideal.
Steve said to me today (24th October) that the protocol "doesn't really tie lenders to anything."
"Lenders only have to consider reasonable steps and show they have done this - for example, they could devise a tick-box checklist to comply with the changes," he added. Steve rightly pointed out that the protocol just "codifies existing requirements found in the Civil Procedure Rules."
We did agree, however, that it does provide a slightly more substantial platform for housing advisers and lawyers at court to draw unreasonable behaviour by lenders to the District Judge's attention. Steve also pointed to the guidance to lenders set out by the Council of Mortgage Lenders drawn up along similar lines.
Another issue is that extending the period of the mortgage or secured loan to reduce monthly payments to an affordable level is subject to Alternative Dispute Resolution ("ADR"). The problem is that nobody is aware of any appropriate ADR schemes that deal with mortgage arrears situations ... !!!
We'll just have to wait and see what the net implications are for mortgage and secured loan borrowers with arrears.
Optimism of Youth
A BUPA survey shows three out of every four people in the UK fear the credit crunch will affect not just their wallet but also their general well-being.
Meanwhile, American Express Insurance research finds that 25% of children believe money is the primary cause of their parents' stress in life. 87% of the children polled by American Express say they will live life differently from their financially-stressed – ah, the optimism of youth!
However, the new “My Money” financial education programme funded by Government and to be carried out in primary and secondary schools across England (Scotland will follow) may facilitate their optimistic aspirations ... hopefully along with better credit scoring by the financial sector in future.
Who else could usefully sit in on these lessons?
In the Kingdom of the Blind, the Four-Eyed Man is Not King
So Sir Mervyn King, Governor of the Bank of England, used the word “recession” for the first time in describing the UK economy to business leaders at a dinner function last night. Given his influence on monetary policy, should he not have noticed much sooner ... ?
Ain't No Stopping Us
U-Switch research says credit card fees have rocketed over the past few years. For example, 29% of balance transfer cards carried a fee in 2005 yet today the figure is 91%. 7,900,000 balance transfers now cost consumers £412,000,000 each year.
However, the hike in interest on high street loans – Black Horse (if they can really be deemed “high street”) personal loans carry interest as high as 37% currently – has meant an increased use of credit cards. The amount of issued loans from the banks dropped by £132,000,000 last month whereas credit card spending increased by £130,000,000.
Ad Value to Your Car
Petrol prices at the larger forecourts are returning to early 2007 prices thanks to less expensive barrels of crude oil. Unfortunately, a recent report by AA insurance shows motor insurance premiums have climbed relentlessly for many years and this is effectively negating any gains from discount petrol.
A firm in Nottingham, "Lion Media UK", is brokering deals where motorists get up to £1,500 a year for carrying advertising on their cars. The artwork is professionally applied to the body of the car and remains there for the duration of the advertising campaign. That's worth nearly £30 a week to help keep your increasingly expensive car on the road. Good idea?
I wonder what they can do with my 1974 Morris Marina ... ?
Until next week ...
Mortgage Possession Relief in the Courts
The Civil Justice Council has announced that new guidance to District Judges in court mortgage repossession cases will come into effect as of 19th November 2008.
The new rule will be in the form of a "pre-action protocol" attached to the Civil Procedure Rules that inform judges, lawyers and lenders on what steps should be taken by mortgage lenders before issuing possession proceedings at court. Measures include extending the period of repayment of mortgages (thus reducing the monthly payment, hopefully to a level affordable by borrowers) and other remedies.
The pre-action protocol incorporates much of the Financial Services Authority's guidance to mortgage lenders that were published in December 2006 (but until November 19th not actually incorporated into law).
This is great news - as is the recent decision to reduce the waiting period for housing payments covering mortgage interest under social security legislation for home borrowers on means-tested state benefits down from 39 to 13 weeks.
Mortgage lenders will be forced to work more cooperatively with mortgage borrowers to try to resolve arrears difficulties before issuing legal proceedings. And if they don't, such cases could be struck out entirely and legal costs claimed by lenders denied.
STOP PRESS ...... Speaking to Steve Wilcox, Honorary Fellow of the Institute of Money Advisers and Debt Advice Consultant for the Sheffield Citizens Advice Debt Support Unit, it seems the new protocol is still short of ideal.
Steve said to me today (24th October) that the protocol "doesn't really tie lenders to anything."
"Lenders only have to consider reasonable steps and show they have done this - for example, they could devise a tick-box checklist to comply with the changes," he added. Steve rightly pointed out that the protocol just "codifies existing requirements found in the Civil Procedure Rules."
We did agree, however, that it does provide a slightly more substantial platform for housing advisers and lawyers at court to draw unreasonable behaviour by lenders to the District Judge's attention. Steve also pointed to the guidance to lenders set out by the Council of Mortgage Lenders drawn up along similar lines.
Another issue is that extending the period of the mortgage or secured loan to reduce monthly payments to an affordable level is subject to Alternative Dispute Resolution ("ADR"). The problem is that nobody is aware of any appropriate ADR schemes that deal with mortgage arrears situations ... !!!
We'll just have to wait and see what the net implications are for mortgage and secured loan borrowers with arrears.
Optimism of Youth
A BUPA survey shows three out of every four people in the UK fear the credit crunch will affect not just their wallet but also their general well-being.
Meanwhile, American Express Insurance research finds that 25% of children believe money is the primary cause of their parents' stress in life. 87% of the children polled by American Express say they will live life differently from their financially-stressed – ah, the optimism of youth!
However, the new “My Money” financial education programme funded by Government and to be carried out in primary and secondary schools across England (Scotland will follow) may facilitate their optimistic aspirations ... hopefully along with better credit scoring by the financial sector in future.
Who else could usefully sit in on these lessons?
In the Kingdom of the Blind, the Four-Eyed Man is Not King
So Sir Mervyn King, Governor of the Bank of England, used the word “recession” for the first time in describing the UK economy to business leaders at a dinner function last night. Given his influence on monetary policy, should he not have noticed much sooner ... ?
Ain't No Stopping Us
U-Switch research says credit card fees have rocketed over the past few years. For example, 29% of balance transfer cards carried a fee in 2005 yet today the figure is 91%. 7,900,000 balance transfers now cost consumers £412,000,000 each year.
However, the hike in interest on high street loans – Black Horse (if they can really be deemed “high street”) personal loans carry interest as high as 37% currently – has meant an increased use of credit cards. The amount of issued loans from the banks dropped by £132,000,000 last month whereas credit card spending increased by £130,000,000.
Ad Value to Your Car
Petrol prices at the larger forecourts are returning to early 2007 prices thanks to less expensive barrels of crude oil. Unfortunately, a recent report by AA insurance shows motor insurance premiums have climbed relentlessly for many years and this is effectively negating any gains from discount petrol.
A firm in Nottingham, "Lion Media UK", is brokering deals where motorists get up to £1,500 a year for carrying advertising on their cars. The artwork is professionally applied to the body of the car and remains there for the duration of the advertising campaign. That's worth nearly £30 a week to help keep your increasingly expensive car on the road. Good idea?
I wonder what they can do with my 1974 Morris Marina ... ?
Until next week ...
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Money News Round-Up - 15th October 2008
Rays of Sunshine
“Rays of Sunshine” is a children’s charity. Their recent research findings indicate that we are talking to our neighbours and getting to know them more in this credit crunch. Eight out of 10 of us now know our neighbours by name and this is an increase of over a third since last year.
If you like this idea and fancy actively developing your community, visit my web article on campaigning for a better neighbourhood at http://www.socyberty.com/Activism/How-to-Improve-Your-Local-Community.160627 for ideas.
Longer-term Neighbours
The Office of Fair Trading is now set to regulate the notoriously lawless “sale and buy back” financial sector. The OFT is concerned about misleading info being given to struggling mortgage payers considering such schemes to ease their difficulties. These schemes tempt struggling home-loan borrowers to sell their properties to a company then rent it back.
The OFT is particularly worried that many properties are bought for less than 50% of market value. Other issues are companies not maintaining mortgage payments; insecure or short-term tenancies being offered; and massively unaffordable rent hikes designed to eject impoverished tenants. Proper regulation should mean greater security.
For the most vulnerable, there is a Government-backed scheme about to come into operation. For further information, read my article at http://www.choosemoney.co.uk/guide/mortgages/news/mortgage-relief-scheme-for-vulnerable-people.html ...
On the Wagon?
Recent U-Switch research shows 20,000,000 of us have cut down or completely stopped going to the pub. 910 drinking establishments closed permanently in the first six months of 2008.
Despite not living in London, I spent over £13 for two double measures of brandy and whisky on top of two pints of beer last night, I think I may rediscover the delights of my off-licence in line with everyone else. However, I did get a free cheeseburger thanks to taking part in the pub quiz (that I lost dismally).
Doling Out Justice
With unemployment figures released today showing 1,700,000 officially out of work – projected to top 2,000,000 by Christmas – the Ministry of Justice reportedly intends to save £900m on front-line legal services over the next two years.
Predictions are that law courts will merge (i.e., some will disappear), 10,000 public sector workers in the law courts, Department for Work & Pensions and Her Majesty’s Revenue & Customs will be sacked and the Legal Aid budget slashed. The credit crunch is blamed as well as a looming £3bn funding gap caused by April 2009 state benefit and pension welfare payments being linked to last month’s 5.2% inflation figure.
It’s a Gas for some
Statistics from research commissioned by Tesco indicate gas and electricity companies expect additional profits of £5.5bn. Average projected annual household bills rose by an average of £500 over the past six months and £230 of this is pure profiteering as wholesale gas and electricity prices are set to reduce by nearly a fifth next year.
The decrease in the wholesale price is put down to a 44% reduction in the price of crude oil (something pundits predict will further bottom out at $75 a barrel in the coming months). There is no indication that retail prices to consumers – you and me – will fall and so more pensioners will die and poorer families freeze needlessly.
No You Can’t Have Any
According to MoneyExpert.com research, one in 10 borrowers missed payments on their mortgages, credit cards or personal loans in the past six months.
Lenders also rejected 5,000,000 loan and credit card applications. Meanwhile, doorstep creditors charging extortionate interest are reporting a boom in lending to poorer communities. (See also my article at http://russellcavanagh.com/2/?p=55).
Rays of Sunshine
“Rays of Sunshine” is a children’s charity. Their recent research findings indicate that we are talking to our neighbours and getting to know them more in this credit crunch. Eight out of 10 of us now know our neighbours by name and this is an increase of over a third since last year.
If you like this idea and fancy actively developing your community, visit my web article on campaigning for a better neighbourhood at http://www.socyberty.com/Activism/How-to-Improve-Your-Local-Community.160627 for ideas.
Longer-term Neighbours
The Office of Fair Trading is now set to regulate the notoriously lawless “sale and buy back” financial sector. The OFT is concerned about misleading info being given to struggling mortgage payers considering such schemes to ease their difficulties. These schemes tempt struggling home-loan borrowers to sell their properties to a company then rent it back.
The OFT is particularly worried that many properties are bought for less than 50% of market value. Other issues are companies not maintaining mortgage payments; insecure or short-term tenancies being offered; and massively unaffordable rent hikes designed to eject impoverished tenants. Proper regulation should mean greater security.
For the most vulnerable, there is a Government-backed scheme about to come into operation. For further information, read my article at http://www.choosemoney.co.uk/guide/mortgages/news/mortgage-relief-scheme-for-vulnerable-people.html ...
On the Wagon?
Recent U-Switch research shows 20,000,000 of us have cut down or completely stopped going to the pub. 910 drinking establishments closed permanently in the first six months of 2008.
Despite not living in London, I spent over £13 for two double measures of brandy and whisky on top of two pints of beer last night, I think I may rediscover the delights of my off-licence in line with everyone else. However, I did get a free cheeseburger thanks to taking part in the pub quiz (that I lost dismally).
Doling Out Justice
With unemployment figures released today showing 1,700,000 officially out of work – projected to top 2,000,000 by Christmas – the Ministry of Justice reportedly intends to save £900m on front-line legal services over the next two years.
Predictions are that law courts will merge (i.e., some will disappear), 10,000 public sector workers in the law courts, Department for Work & Pensions and Her Majesty’s Revenue & Customs will be sacked and the Legal Aid budget slashed. The credit crunch is blamed as well as a looming £3bn funding gap caused by April 2009 state benefit and pension welfare payments being linked to last month’s 5.2% inflation figure.
It’s a Gas for some
Statistics from research commissioned by Tesco indicate gas and electricity companies expect additional profits of £5.5bn. Average projected annual household bills rose by an average of £500 over the past six months and £230 of this is pure profiteering as wholesale gas and electricity prices are set to reduce by nearly a fifth next year.
The decrease in the wholesale price is put down to a 44% reduction in the price of crude oil (something pundits predict will further bottom out at $75 a barrel in the coming months). There is no indication that retail prices to consumers – you and me – will fall and so more pensioners will die and poorer families freeze needlessly.
No You Can’t Have Any
According to MoneyExpert.com research, one in 10 borrowers missed payments on their mortgages, credit cards or personal loans in the past six months.
Lenders also rejected 5,000,000 loan and credit card applications. Meanwhile, doorstep creditors charging extortionate interest are reporting a boom in lending to poorer communities. (See also my article at http://russellcavanagh.com/2/?p=55).
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