Banks forced to write off £40m a day in family debt

By Becky BarrowLast updated at 1:27 AM on 1st September 2010

Money worries: Many face more hardship as the impact of the economic downturn hits hardest

Cash-strapped families are being overwhelmed by debts they can never afford to repay, figures revealed yesterday.
Between April and June banks and building societies were forced to ‘write off ‘ £3.5billion, around £40million every day, the largest amount since records began.
The alarming Bank of England figures highlight the nightmare facing millions who borrowed money before the credit crunch to fund a lifestyle they could not afford.
The largest chunk of write-offs - a record £2.1billion - was credit card debt, with many spending more on the High Street in a day than they earn in a month.
A further £1.2billion came from overdrafts, personal loans and hire purchase agreements. Just £184million was from ‘bad’ mortgages.
Before the credit crunch struck in 2007 the bill for write-offs, where lenders accept they will never be repayed, came to just £1.9billion
Yesterday debt experts insisted the figures prove that although the recession is over, its impact is only now emerging as unemployment rises and pay remains frozen.
Mark Sands, director of personal insolvency at the accountants RSM Tenon, said: ‘We are seeing the impact of the downturn really starting to hit now.
‘It is not necessarily that people have lost their job, but they have lost their overtime, an extra shift or have had a pay cut.
‘They can survive for a while, but suddenly they are tipped over the edge and they cannot cope with their debts.’
 

He predicted the number being plunged into insolvency would hit 140,000 this year, the highest ever.
Michael Saunders, an economist from the investment bank Citigroup, said: ‘The reason is simply - we borrowed too much money and people are losing their jobs.’
Over the past two years, nearly 800,000 have become unemployed, with many more set to follow as the Government’s austerity measures start to bite. To make matters worse banks and building societies have also been increasing the interest rates they charge on loans, credit cards and overdrafts.
This is despite the Bank of England keeping the base rate at 0.5 per cent, the lowest in history, since March last year.
Since then the average rate on a £5,000 personal loan has jumped from 12.15 per cent to 13.14 per cent. Average rates on credit cards are up from 15.7 to 16.7 per cent and overdrafts are up from 18.6 to 18.9 per cent.
Meanwhile, a report from online debt forum iva.co.uk has revealed the ’shocking depth of despair’ among many who have been plunged into debt.

Read more

Housing market ‘double dip’ fears as mortgage lending crashes to new low

By Daily Mail ReporterLast updated at 3:54 PM on 31st August 2010

Net lending second lowest figure ever recorded
Prices could fall 3% during the second half of this year
House prices to drop around 5 per cent next year
Confirmation housing market is heading for ‘double dip’
There were new fears for the state of the UK housing market today after mortgage lending dived to the second lowest figure ever recorded.
Lending fell sharply in July as activity in the housing market remained subdued, new figures showed.
Net lending, which strips out redemptions and repayments, totalled just £86 million during the month - a steep fall from June’s £518 million, according to the Bank of England.
The figure was the second lowest since the Bank’s records began in 1993, although there have also been two months when net lending was negative.

Double dip fear: Experts say house prices could to fall by around 3 per cent during the second half of this year, followed by a drop of around 5 per cent in 2011.

The number of mortgages approved for house purchase edged ahead only slightly during the month, rising to 48,722, well down on the levels of more than 100,000 a month seen during the housing boom.
The figure was also down on November’s recent high of just over 59,000, as the housing market failed to benefit from its traditional summer bounce.
The subdued lending figures have added to concerns among economists that the housing market is heading for a fresh round of price falls.
 

Read more

UK mortgage approval rise but total lending weakest since March

Mortgage approvals numbered 48,722 in July, up from an upwardly revised 48,562 in June. Analysts had forecast a reading of 46,500.
Economists were sceptical about reading too much into the rise in approvals.
Vicky Redwood, of Capital Economics, said: “The news on the UK housing market doesn’t get any better … The best that can be said is that approvals didn’t fall further.”
Alan Clarke, economist at LBNP Paribas, said: “Mortgage approvals moved sideways on the month, which is essentially what has been happening all year … It suggests housing is going nowhere fast.”
Separate figures showed the BoE’s preferred money supply gauge - M4 excluding intermediate other financial corporations - was unchanged on the month, the weakest reading since January.
Ms Redwood said: “With money growth still weak, more QE might still be needed.”
Consumer credit rose by £173m on the month after a fall of £59m the month before.
Analysts had forecast that there would be no net change in consumer credit lending, while mortgage lending was forecast to rise by £700m.
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read our FAQ page at fivefilters.org/content-only/faq.phpFive Filters featured article: “Peace Envoy” Blair Gets an Easy Ride in the Independent.

UK economy grows at fastest pace in nine years

Construction output leaped 8.6pc in the three months to June – the strongest since the second quarter of 1963 – up from an initial estimate of 6.6pc.
On the year, the economy expanded 1.7pc.
Recovery hopes were given a further boost this week from corporate Britain, as a slew of strong results from Britain’s big companies appeared to contradict the gloomy outlook of many economists.
However, experts remained cautious on Friday, warning the second quarter would represent a peak in the rate of recovery and any further gains of this magnitude were unlikely.
“After such a large gain in Q2, and with the Government cancelling some spending on public infrastructure, it would be foolhardy to expect another large gain in the next quarter,” Malcom Barr, economist with JP Morgan, told PA.
Philip Shaw, economist at Investec, said the revision made “little difference” to the conclusion that the economy expanded “very rapidly” over the quarter.
He added: “Recent indicators suggest the third quarter got off to a good start, so although the pace of expansion in the quarter as a whole seems highly unlikely to match that in Q2, it is possible nonetheless that the UK notches up a very respectable pace of output.”
The pound fell more than 0.2pc against the dollar after the report, which showed slower services growth than previously estimated and a drop in fixed investment. The currency traded at $1.5508 as of 9:34am in London.
The yield on the benchmark two-year government bond was down 2 basis points on Friday at 0.618pc.
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read our FAQ page at fivefilters.org/content-only/faq.phpFive Filters featured article: “Peace Envoy” Blair Gets an Easy Ride in the Independent.

Banks only handing out 1,000 mortgages a day as number halves during recession

By Becky BarrowLast updated at 5:23 PM on 24th August 2010

Banks are handing out just 1,000 mortgages every day, and the situation is getting worse, not better, figures revealed today.
The slump in the number of home loans handed out to buy a new home highlights a toxic combination - the banks‘ tough mortgage rules and the crisis in millions of people’s personal finances.
Many simply cannot afford to buy a property at a time when banks are insisting on super-size deposits of 25 per cent to get the cheapest deals.

Slump: Just 33,698 mortgages were handed out to buy a property in July as banks continue to enforce super-tight lending criteria

In a further blow, many families and young couples are too scared about the future, particularly the threat of redundancy, to dare to buy a property.
The figures, from the British Bankers’ Association, show just 33,698 mortgages were handed out to buy a property in July.
This is more than half the amount handed out during the ‘normal’ times before the credit crunch and the recession.
Despite the official end of the recession, the situation has got even worse over the last year.
The number of mortgages for house purchase, which excludes anybody who is remortgaging, is 18.5 per cent lower than the same month last year.
Ed Stansfield, chief property economist at the consultancy Capital Economics, said: ‘It suggests growing pressure on household finances, rising fears about job security and still-tight lending criteria.’

Read more

Interest rates ‘may reach 8% by 2012′ adding £900 to the average mortgage

By Karl West
Last updated at 9:43 AM on 23rd August 2010

Interest rates could increase 16-fold within two years to 8 per cent – adding £900 to the average monthly home loan bill, it was claimed last night.
An economist at an influential think tank has warned that the base rate may spiral ‘rapidly’ as the Bank of England will need to curb runaway inflation.
Andrew Lilico, of the Policy Exchange think tank, said: ‘To keep inflation (as measured by the retail prices index) down to only 10 per cent for one year, the economy will have to be able to tolerate interest rates of perhaps 8 per cent.’

An economist at an influential think-tank has warned that the base rate may spiral ‘rapidly’ as the Bank of England (pictured) will need to curb runaway inflation

His warning echoes that of former Bank of England deputy governor Sir John Gieve, who last month said he expects rates to start rising ‘faster than the market currently expects’.
Sir John believes the base rate will rise to 2.5 per cent within a year, from its current historic low of 0.5 per cent.
This would mean a huge rise in the monthly mortgage payments of most ordinary Britons, forcing many families into financial difficulties.
 

Read more

UK mortgage lending hits year high

Paul Samter, an economist at the CML, said: “It is difficult to see anything other than a slow market for the rest of this year as underlying activity remains subdued.”
He said that for most home owners, the situation is not that bleak.
“The vast majority of households continue to pay their mortgages in full every month, and many have benefited from the record low interest rates. This looks set to continue for some time yet,” Mr Sater said.
The CML forecasts total lending this year of £140bn.
Halifax reported that prices fell for the third consecutive month during June, as the market failed to pick up momentum following a subdued start to the year.
Other surveys have also shown that demand from new buyers is failing to keep pace with the number of properties now being put up for sale, relieving much of the upward pressure on prices.
Economists now generally expect house prices to be either flat for the rest of the year, or to lose the gains they made during the first half.
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read our FAQ page at fivefilters.org/content-only/faq.phpFive Filters featured article: “Peace Envoy” Blair Gets an Easy Ride in the Independent.

Bank of England’s King forced to write another letter to Osborne as prices stay high

Mervyn King, the Bank‘s Governor, acknowleged last week that inflation is higher than he expected and will remain so throughtout next year. But these price pressures are driven by temporary influences such as the price of oil, he insists.
“It’s reassuring that services inflation has moderated somewhat,” said Philip Shaw, an economist at Investec. “But against that, food price inflation has moved up strongly… and that’s perhaps a trend that’s going to continue over the next 12 months.”
Inflation’s persistently high level has already prompted Andrew Sentance, one of the nine people who set interest rates at the Bank, to start voting for higher interest rates. The minutes of the Bank’s latest meeting are due tomorrow and traders will be keen to see if anyone has joined Mr Sentance.
However, today’s figures do provide some ammunition for Mr King’s claim that the loftier level of inflation will pass. Core inflation, which excludes more volatile elements such as the cost of energy, fell from 3.1pc to 2.6pc, its lowest level since the end of last year.
The Governor will “be relieved that those forces that they have long argued will bring inflation back down appear finally to be asserting themselves,” said Jonathan Loynes from Capital Economics.
During July, inflation slowed thanks to a dip in the cost of transport, clothing and footwear, and miscellaneous items such as financial services. That, however, was offsetr because transport and food costs remained more elevated than a year earlier.
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read our FAQ page at fivefilters.org/content-only/faq.phpFive Filters featured article: “Peace Envoy” Blair Gets an Easy Ride in the Independent.

Construction sector could boost second quarter growth

The ONS is scheduled to publish its first revision of second quarter growth on August 27.
Activity in the construction sector - which accounts for about 6pc of the economy - rebounded sharply between April and June, following the disruption caused by the snow in the early part of the year.
However, there are fears that the construction industry, which was badly hit during the recession, could be in for fresh pain when the Coalition announces details of where the axe will fall on public sector spending in the Comprehensive Spending Review on October 20. Government spending on infrastructure and public buildings is expected to be sharply reined in as the Coalition cuts Whitehall budgets by up to 40pc.
“After such a large gain in Q2, and with the Government cancelling some spending on public infrastructure, it would be foolhardy to expect another large gain in the next quarter,” said Malcolm Barr, economist at JP Morgan.
In the second quarter, new private housing work was 22pc higher compared with the first quarter, taking it back to the same level as at the end of 2008.
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read our FAQ page at fivefilters.org/content-only/faq.phpFive Filters featured article: “Peace Envoy” Blair Gets an Easy Ride in the Independent.

JUmp in exports sees UK trade gap narrow in June

Last updated at 1:22 PM on 10th August 2010

A rise in exports during June saw Britain’s trade deficit narrow more than expected to a four-month low.
The Office for National Statistics has revealed that the goods gap shrank to £7.401bn from £8.028bn in May, after analysts had forecast a drop to £7.8bn.
The total trade deficit, which includes services, narrowed to £3.260bn from a 22-month high of 3.818bn in May.

Export drive: Hopes rise that a re-balancing of the economy could still happen

Britain’s trade performance has been disappointing of late, with sterling’s slide since 2007 having failed to offset weaker demand from Britain’s trading partners.
Tuesday’s figures have rekindled hopes that a long-awaited re-balancing of the economy could still happen, although analysts were reluctant to read too much into one month’s release of what is often a volatile series.
Peter Dixon, an economist at Commerzbank, said: ‘It’s certainly a major improvement on what we’ve seen in recent months.
‘I guess it’s an indication that the UK economy is getting a bit of an uplift from exports, but also as the economy slows a bit, there’s a bit less imports.’
Stronger oil and chemical exports and the reduced imports of cars drove the improvement in the global goods trade deficit.
Overall, the value of UK goods exports rose 4.3 per cent on the month, while the value of goods imported into Britain rose 1.0 per cent.

Read more

Next Page »