:: News Archive 1

13th December 2004
Bank of England’s Financial Stability Review states that near-term credit, market and liquidity risks to UK financial stability have remained subdued and the immediate prospects for both the UK and international financial systems appear encouraging. The latest Review acknowledges that the near-term risks are low but also sounds a note of caution about heightened long-term vulnerabilities.

Referring to household debt, the BoE said that annual growth of debt at 15% has raised households’ debt to 140% of aggregate income. Since this is above the levels in the US and most large European countries, this may leave UK households more vulnerable than elsewhere. Bank losses from unsecured lending have increased marginally since the last Review.

Sir Andrew Large, the Bank's Deputy Governor for Financial Stability, commented:
"In the present benign environment, there is a possibility that lenders, borrowers and investors may be inclined to under-estimate long-run vulnerabilities and take on too much risk. Nevertheless, the main firms and sectors within the UK financial system - and the internationally active financial institutions to which they are exposed - appear well placed to withstand any unexpected deterioration in economic conditions in the near term.

9th December 2004
CML forecasts 4% price growth in 2005

The Council of Mortgage Lenders is predicting 4% growth in house prices in 2005 in its new forecasts for 2005-2007 published today. The CML expects gross lending to total £271 billion in 2005 compared with £293 billion this year. And net lending is likely to be around £94 billion, down from £103 billion this year. These lending volumes mark a return to the more normal levels similar to those of 2002.

The CML continues to expect a slowdown in the housing market, but believes this will be felt mostly through lower numbers of transactions rather than in any widespread price reductions. Transactions are likely to total around 1.23 million next year, compared with an estimated 1.64 million this year.

Looking beyond next year, the CML expects a continued slower market in 2006 and 2007. The likelihood is that the housing market is set for stable but slower levels of activity for some time, as the market adjusts from its recent exuberance.

29th October 2004
Bank of England reports weaker lending to individuals in September. Total lending to individuals grew by £9.4 billion or 0.9% in September, seasonally adjusted, £0.9 billion weaker than the increase in August. The three-month (annualised) growth rate fell to 12.5% from 13.5% in August while the twelve-month growth rate fell to 14.0% from 14.5%.

Secured lending grew by £7.7 billion or 0.9% in September, seasonally adjusted, £0.6 billion weaker than the increase in August. The three-month (annualised) growth rate fell to 12.5% from 13.5% in August, while the twelve-month growth rate fell to 14.5% from 15.0% in August. Gross advances were £0.7 billion weaker at £24.2 billion. The value of all loans approved was £21.8 billion, £1.6 billion weaker than in August and £2.5 billion weaker than the average in the three months to August. The number of loans approved for house purchase in September was 89,000, seasonally adjusted, compared with the average of 102,000 in the three months to August.

Consumer credit grew by £1.6 billion or 0.9% in September, seasonally adjusted, £0.3 billion weaker than the increase in August. The three-month (annualised) growth rate fell to 12.4% from 14.0% in August while the twelve-month growth rate fell to 11.9% from 12.0% in August. Gross advances were £18.6 billion, slightly above the average of £18.5 billion in the three months to August.

28th October 2004
Nationwide Building Society said that house prices fell by 0.4% in October – the first decline for three years. Consequently, the annual rate of house price inflation slowed sharply from 17.8% last month to 15.3% in October. The price of a typical house now stands at £152,159, down from the peak of £154,299 in July 2004.

20th October 2004
Council of Mortgage Lenders reports a weakening in the housing market with the first year-on-year fall in lending for four years.

There was a drop in mortgage lending in September for the second consecutive month. The CML survey, which covers both banks and building societies, recorded a 4% drop in gross lending between August and September. And at £25.4 billion, gross lending in September showed the first year-on-year drop since October 2000, at nearly 2% lower than the £25.9 billion advanced in September 2003.

As in August, September's fall in lending reflected a sharp reduction in loans for house purchase. House purchase loans totalled £11.2 billion, compared with £12.8 billion in August. Lending for house purchase was 23% lower in September than the record £14.6 billion recorded two months earlier in July. Just 44% of total lending was for house purchase in September, down from 48% the previous month and from last September's figure of 47%.

22nd September 2004
The Competition Commission’s market enquiry into store cards will extend to other forms of consumer credit, including credit cards. The CC published an issues statement as part of the consultation process and is considering whether there are any features that prevent, restrict or distort competition in the relevant market or markets.

The CC is examining the relationships between store card credit providers, retailers and store card holders; the benefits that are derived from store cards; the pricing of store cards and the profitability of both store card credit providers and retailers in respect of their store card operations; whether sufficient competitive pressures are being brought to bear; whether retailers have any incentive to reduce APRs on their store cards; whether store card holders are sufficiently aware of the costs of using store cards as a source of credit.

20th September 2004
Lending slows in August according to the Council of Mortgage Lenders.

Gross mortgage lending slowed to £25 billion in August, according to the latest monthly survey from the CML. This was 13% lower than in July and just 3% higher than in August 2003. This is in contrast to last month, when lending was 3% up on the previous month and 13% up on the previous year.

6th August 2004
Personal bankruptcies in England and Wales soared by 29% in the second quarter of 2004 compared with the same period last year, according to government figures. 8,740 people declared themselves bankrupt. This figure is higher than was reached during the recession in the early 1990s.

5th August 2004
The Bank of England increased the base-rate by 0.25% to 4.75% - the fifth rise since November 2003. Each quarter-point rise adds about £21 per month to the cost of a £100,000 interest-only mortgage.

The Bank of England's Monetary Policy Committee said that: “Output growth has been robust and business surveys point to continued expansion. Although the housing market remains buoyant, there are now signs that it is starting to ease, and the growth of consumption may be moderating.

CPI inflation reached 1.6% in June. It is likely to fall back in the near term, but underlying cost pressures have risen. With demand already high relative to the supply capacity of the economy, continued strong growth is likely to lead to rising inflationary pressures. Against that background, the Committee judged that an increase of 0.25 percentage points in the repo rate to 4.75% was necessary to keep CPI inflation on track to meet the 2% target in the medium term.”

5th July 2004
Thousands of borrowers with interest-only mortgages could face financial disaster because they have no way of paying back the loan, the mortgage regulator has warned. A survey from the Council of Mortgage Lenders shows that more than 250,000 households have interest-only loans that are not linked to investment policies designed to repay the loans, although 94% say they will repay the debt by using other savings, selling properties, or switching to repayment mortgages. About 14,000 households or 6% of them do not know how they will repay the loans.

The Mortgage Code Compliance Board said rising interest rates could stretch borrowers with interest-only mortgages. Some of these borrowers will be forced to sell their properties at the end of the mortgage to repay the debt.

2nd July 2004
Annual house price inflation hits 21.5% in June according to the Halifax but the monthly increase of 1.2% was the slowest since November 2003. “This suggests that the recent increases in the cost of borrowing are beginning to curb housing demand,” said Martin Ellis, Halifax’s chief economist. Last month, Halifax doubled its estimate of house price inflation this year to 16%. The average house in the UK now costs £159,735.

9th June 2004
Government announces new rules for lenders in consumer credit shake-up. Consumers will get information about their credit agreements from lenders before they sign up. Excessive charges for settling an agreement early will be replaced by a new fairer system.

The new regulations will:

tighten up advertising so that consumers will be better able to compare products
introduce a standard way of calculating the annual percentage rate (APR) for credit cards
make the APR in adverts more prominent
introduce a new signature box for consumers to sign if they are purchasing additional insurance products

The changes will apply to credit advertising from 31st October 2004 and to all new credit agreements from 31st May 2005.

9th June 2004
The Bank of England raised interest rates by 0.25 percentage points to 4.5% - the highest they have been since November 2001. Rates have now risen by 1% point after reaching a low of 3.5% in July 2003.

4th June 2004
Credit Card Debt "Overstated, Over Reported And Largely A Myth” according to MORI. The majority of credit card holders in the UK use their credit cards wisely and have sufficient assets to service credit card debt — even if the economy deteriorates — according to a new report by MORI Market Dynamics.

It is widely assumed that the credit card is the scourge of the nation — official figures suggesting there are some 61 million cards with an average household debt of £2,100 — with consumers spending over £130 billion on their cards in 2003 resulting in £50 billion of arrears. However, MORI Market Dynamics believe these official figures are often misunderstood and generally misinterpreted.

10th May 2004
UK house price growth cooling, says government. The annual pace of house price inflation slowed markedly in March, according to government figures published which apparently contradict lenders' numbers.

The Office of the Deputy Prime Minister said house prices rose 7.8 per cent in the year to March, slower than the 9.8 per cent rate of annual growth recorded the previous month. ODPM prices have risen consistently slower than the mortgage lenders' indices for most of the last year. Halifax, Britain's largest mortgage lender, reported annual house price growth of 19 per cent in March. The ODPM said March's weakness was mainly caused by a slight rise of 0.2 per cent in prices between February and March, compared with a much larger increase of 2.1 per cent over the same period

7th May 2004
Personal bankruptcies surged in the first quarter of 2004! There were 10,294 individual insolvencies in England and Wales in the first quarter of 2004 on a seasonally adjusted basis. This was a decrease of 0.5% on the previous quarter but an increase of 26.8% on the same period a year ago. Figures from Department of Trade and Industry.

6th May 2004
Interest rates rise again! The Monetary Policy Committee of the Bank of England raised interest rates by 0.25 percentage points to 4.25%. The reasons given were as follows:
“The global economic upswing has been maintained. In the United Kingdom, output growth has been at or above trend and business surveys are consistent with further strengthening. Retail spending continues to be robust, underpinned by income growth and unexpectedly strong house price inflation. Investment prospects have improved.

CPI inflation has been below the 2% target and is likely to remain so in the near term. But earnings growth has picked up and commodity prices have risen sharply. With a small and diminishing margin of spare capacity, inflationary pressures are likely to build despite a higher level of sterling than at the beginning of the year. Against that background, the Committee judged that an increase of 0.25 percentage points in the repo rate to 4.25% was necessary to keep CPI inflation on track to meet the target in the medium term”

22nd April 2004
Consumer watchdog warns on 'credit binge'. Deidre Hutton, Chairman of the National Consumer Council (NCC) said: "Britain is in the grip of a credit binge". It has been reported that 6 million families have been caught in the debt trap and are having difficulties meeting re-payments. The average man or woman now owes £1,140 on credit cards alone. Nearly one third of adults hold a store card, and just over half have a credit card. Many thirty and forty somethings have embraced debt as part of their lifestyle, and debt has become part and parcel of young people’s lives. Students are already leaving university with debts of approximately £9,000, and the situation is likely to worsen once variable fees kick in.

Stories about people getting themselves into serious debt difficulties are becoming too commonplace. Only last week, we heard about how Aqua credit card offered a nine-year-old girl a £1,000 credit limit. Then there was the story of the man with a £30,000 salary who managed to rack up debts of £80,000 – and as a result will now spend the rest of his life paying off his debts. There was also the case of the 84 year old blind pensioner, with a weekly disposable income of £3.12 who managed to run up debts of £30,000 on 20 credit cards.

There is no doubt that consumers have their part to play in managing how they borrow. But banks need to act responsibly too. They should not be offering unsolicited automatic credit increases, and cheques on credit card accounts if they haven’t properly assessed borrowers’ circumstances. They must fully explain the terms and conditions to customers, otherwise, how are borrowers able to make sensible choices?

The NCC is therefore asking banks and other lenders to put their house in order ahead of legislation and stop pushing credit, by adopting NCC’s four point plan for fair credit:

Better assessment of the financial situation of borrowers, based on consumers’ ability to re-pay. Lenders should base their decision on income and credit commitments rather than just on payment history.
The implementation of one single method of calculating APRs and a standard method of calculating interest to help facilitate comparison of products by consumers.
The provision of an Honesty Box on all marketing materials that provides clear important information for customers. This should include advantages and drawbacks of the financial product offered and a straightforward explanation of charges.
Treating customers fairly if they get into difficulties, eg. rescheduling payments where feasible and co-operating with money advisors.
back to top

21st April 2004
Prudential says that one in four (over 12.5 million people) are set to have a mortgage in retirement. Prudential, a leading UK life and savings company, predicts the luxury of owning your home outright before retirement is going to be a thing of the past. Attitudes are changing and only 53% of homeowners today feel it’s very important to own their home outright.

The research also revealed that 42% of first time buyers are over 35 years old and 21% are over 45 years old.

Prudential research shows property is increasingly viewed as an asset to be leveraged throughout life, also evident in the recent Bank of England figures which show an explosion in mortgage equity release (up 20% in the last quarter of 2003). Almost half of homeowners (46%) are actively using or planning to use their home for retirement funding.

30th March 2004
Nationwide Building Society reported strong growth in UK house prices in March of 1.4% producing 5% in the first three months of 2004 or 16.7% over the past year. Nationwide increased its forecast for house price inflation in 2004 from 9% to 15%. “The strength of house price growth over the first quarter has been widespread with most regions experiencing a pick up in growth compared to the fourth quarter of last year,” said Alex Bannister, Nationwide economist.

30th March 2004
The Bank of England reported that unsecured lending to individuals increased by a seasonally adjusted 1% in February or £1.7 billion (net). The 12 month growth rate was +12.5%. Unsecured debt outstanding totalled £172 billion, comprising £53 billion for credit cards and £119 billion for overdrafts and personal loans.

25th March 2004
British Bankers Association (BBA) reported relatively subdued gross mortgage lending in February of £13.5 billion which was 5% lower than January. However, net mortgage lending of £5.5 billion was flat with a high level of redemptions reflecting people switching between lenders.

Growth in net consumer lending was very similar to that of recent months, rising by £0.7 billion seasonally adjusted. Whilst credit card lending was strong this was offset by reduced demand for personal loans and bank overdrafts.

12th March 2004
Professor David Miles today published his final report setting out recommendations to improve the UK mortgage market.

The recommendations fall broadly into two groups, firstly those that are aimed at improving the advice and information that borrowers receive and at creating a fairer and more transparent pricing structure. Secondly those that are aimed at helping lenders fund mortgages and handle risk in the most cost-effective way. The recommendations include:

that lenders make their full range of mortgage products available to all borrowers.
that mortgage advisors help people assess risk by presenting “what if” scenarios, giving an indication of the scale of variability in interest rates.
that lenders include, with Annual Statements, a leaflet setting out the current mortgage rates on all their products.
that if products are offered which give interest rate protection for mortgage borrowers the Government treat these as insurance for tax purposes.
that Government consider lowering the funding limit by members from the current 50 per cent. 25 or 30 per cent of building societies' funds from members would still represent a substantial source of funding.
that covered bonds issued by UK lenders are treated in the same way for regulatory purposes as those issued in countries where specific legislation governing issuance has been necessary.

Professor Miles said:

“If implemented the recommendations would improve the UK mortgage market by getting better information and advice to customers, making the pricing of mortgages more transparent, removing potential obstacles to the emergence of new products and improving the ways in which fixed-rate mortgages can be funded.

“In many ways the UK mortgage market works well. It is a dynamic and innovative market. This report makes recommendations to address problems that exist in the information and advice that borrowers receive, in the structure of pricing of mortgages and in the funding of fixed-rate mortgages.

“How mortgages are made commercially viable should not rely on price discrimination and cross-subsidisation. It is wrong to believe that the only way that new borrowers can have a profile of payments that matches their likely income is one that also exposes them to substantial interest rate risk. This is why the notion that any shift away from the type of lending that has been common in the past few years will be bad for new borrowers is mistaken. In fact the advantages of the insurance given by fixing the interest rate on borrowing for several years are likely to be greatest for those that borrow a great deal and for whom income risks are large – a group likely to contain a high proportion of first time buyers.”

11 th March 2004
The Office of Fair Trading (OFT) has published a study on debt consolidation, concluding that better financial awareness among consumers, and clear, accurate and relevant information from credit providers are required to make the use of debt consolidation fairer and more transparent. The OFT estimates that, in 2002, £32 billion of unsecured lending and £8.8 billion of secured personal lending were used for debt consolidation.

Debt consolidation occurs where a consumer takes out a loan or other credit agreement in order to pay off two or more existing debts.

The OFT found that most borrowers do not shop around for credit for debt consolidation; many borrowers, particularly those in financial distress, are unaware of other alternatives, such as negotiating with creditors themselves or getting help from free debt counselling services; borrowers do not, in the main, give due weight to factors such as the length of the term of the loan and the total cost of repayments when deciding whether debt consolidation makes financial sense for them.

26th February 2004
UK house prices surged by an astonishing 3.1% in February, according to the Nationwide Building Society. This was the fastest rate for almost two years and represents a rapid acceleration from the 0.7% recorded in January. The annual rate of house inflation was 17.1% meaning that the average house price has risen by more than £20,000 in the last year to £138,730. “Confidence in the outlook for housing is once again improving,” said Alex Bannister, Nationwide's economist.

21st February 2004
One in three (29%) first time buyers is concerned that mounting pressure to get on the property ladder will lead them to purchase an unsuitable property, according to Alliance & Leicester's new First Time Buyer research.

12th February 2004
Barclaycard increased its operating profit in 2003 by 17% to £722m. Bad debt provisions increased by 15% to £462m. Credit outstanding grew by 14% to £7.4 billion.

6h February 2004
Personal bankruptcies in England and Wales have hit the highest level for 11 years, according to the Department of Trade and Industry. There were 10,271 individual insolvencies in the final three months of 2003, a 28.9% jump from the same period of 2002. Personal insolvency legislation comes into place on April 1, cutting the bankruptcy period from three years to as little as 14 months.

5th February 2004
Bank of England raises interest rates by 0.25% to 4.0% - the second increase in three months. The increase was widely expected after recent official and survey data showed the economy was gathering momentum. Many economists expect interest rates to end the year at either 4.5% or 4.75% following comments from the Monetary Policy Committee that it wanted to moderate the growth of consumer demand. House price growth is still well above earnings growth and even manufacturing appears to have recovered from its prolonged slump, according to the CBI, the employers' body, and purchasing managers.

30th January 2004
UK consumer borrowing slowed sharply in December 2003 said the Bank of England. Consumer credit – mainly borrowing on credit and store cards – grew by only £834m in December to leave £169 billion outstanding. This was the smallest increase since December 2000.

28th January 2004
Demand surges for debt advice according to Britain's leading debt charity. The Foundation for Credit Counselling (FCC) reported a 25% jump in the number of advice calls received in the first fortnight of 2004, compared with the same period last year. This represents a considerable increase over the charity's natural growth forecast of 15%. The FCC's chairman, Malcolm Hurlston, said: “What we are seeing is people reacting more quickly than normal to the danger signals and that can only be good. I doubt if there is any upsurge in overindebtedness as such.”

24th January 2004
High levels of graduate debt is delaying entry into the housing market while graduates focus on clearing some of the debt, according to an article commissioned by the Council of Mortgage Lenders. The average age of a first-time buyer graduate is 27-28 years; that is likely to rise to 29-31 years.

24th January 2004
The British Medical Association claimed today that students could emerge from medical training with debts of up to £64,000 – more than 40% higher than current medical graduate debts.

21st January 2004
The British Bankers' Association, which comprises Britain 's major banking groups, reported that total net lending to the UK private sector increased by £10.6 billion in December 2003 (+1.1%) to £961.9 billion. This increase was not as strong as November but was still above the recent monthly trend.

In December 2003, lending to individuals increased by £6.1 billion, comprising mortgage lending of £5.4 billion and unsecured personal lending of £0.7 billion. Whilst mortgage lending was back in line with recent positive trends, unsecured lending growth was disappointing, reflecting particularly weak credit card borrowing.

21st January 2004
New lending figures confirm that 2003 was driven by remortgaging according to the Council of Mortgage Lenders. The gross value of remortgaging during the year was 50% higher than in 2002 (£120.8 billion compared with £80.6 billion), while gross lending for house purchase was only 3% up on the previous year (£121.8 billion compared with £118.2 billion).

However, lending for house purchase appeared to show some recovery in the final quarter of the year. In the month of December it accounted for 51% of the total whilst remortgaging declined to 39% of the total.

As the pricing of fixed rate mortgage products continues to rise in relation to variable rate products, their popularity has seen a marked drop-off.

Commenting on the figures, CML Director General Michael Coogan said:
“The December figure completes the picture of a truly extraordinary mortgage market in 2003. Total lending managed to increase by nearly a quarter….but the bulk of this growth has come from the remortgage market, as lending for house purchase has suffered from affordability constraints created by rising house prices.”

9th January 2004
UK real household wealth surges on equity gains. According to Citigroup, real household wealth, excluding inflation, increased by +10% in 2003, compared with +1.1% in 2002 and a decline of -4.5% in 2001. The driver to last year's growth was the 15% rise in house prices; housing accounts for 47% of household wealth. About a fifth of household wealth is in equities, which saw gains of around 15% after a savage three year bear market. The ratio of household wealth to income rose from a low of about 600% in 2001-02 to about 660% at the end of 2003.

8th January 2004
The Council of Mortgage Lenders (CML) forecasts house price growth of 8% in 2004 and 6% in 2005. The number of property transactions is forecast to remain below the long-run trend. First-time buyers will continue to be scarce, accounting for just a predicted 29% of the market. The CML expected gross lending in 2004 to rise by 6% in 2004 to £285bn and to £286.5bn in 2005. Remortgaging is expected to fall back from 41% of gross lending in 2004 to 35% in 2005. Lending net of remortgaging is therefore expected to grow more strongly than gross lending. CML Director General Michael Coogan said: “We are positive about the prospects for the housing market in 2004. We think the risks of a “boom and bust” are receding, as the market is beginning to show signs of moderating gently.”

Fact: there are more than 11.42 million mortgages in the UK , with loans worth more than £739 billion.

9th January 2004
Unsecured personal debt has jumped by 30% over the last year to £4,426 per adult according to Datamonitor. This represents nearly 25% of people's average salary of £25,000. Nearly 30 million people in Britain have at least one credit card and there are around 63 million in issue. Nearly £170 billion is currently outstanding on UK credit cards

3rd January 2004
The Nationwide Building Society expects UK house prices to rise by 9% in 2004. Last year, house prices increased by 1.5% in December and 15.6% during 2003, meaning that the price of a typical house rose by more than £18,000 to just under £135,500. 2003 was another strong year for the North of England and Wales where prices rose by 30% and 26% respectively.

Unsecured Loans - click here to apply Online Now!!

Secured Loans - click here to apply Online Now!!