U.K. mortgage lending

fell in March, and demand may decline further in the second quarter as the housing market weakens and consumers brace for a government spending squeeze, the Bank of England said.

Gross home loans issued last month totalled 9 billion pounds, down from 9.2 billion pounds in February, the central bank said in its monthly assessment based on data from six banks. Net lending fell to 600 million pounds from 700 million pounds over the same period.

“In recent discussions, some lenders reported expectations of subdued lending for house purchase in coming months,” the Bank of England said in its quarterly Trends in Lending report.

Recent data have shown a mixed picture of the housing market, with banks curtailing lending and the prospect of the tightest government budget squeeze since World War II casting a shadow over the economic outlook. While policy makers held their key interest rate at a record low this month, three officials have called for higher rates to tame inflation, a move that could put further pressure on the property market.
The number of home loans approved rose to 44,000 in March from 43,000 the previous month, the bank said. That’s only about half the long-term average and below the 51,000 granted in the same month a year ago.

“Household demand for secured lending for house purchase fell in line with expectations” in the first quarter of this year, the central bank said. It’s “expected to fall further over the next three months.”

U.K. house prices fell in March as banks reported weakening demand, Research Company Acadametrics Ltd. and LSL Property Services Plc said on April 8.

Lloyds Banking Group Plc’s Halifax unit earlier this month reported that home values slipped 0.1 percent in March and said uncertainty over the economy is “likely to constrain housing demand, resulting in some modest downward pressure on prices.” It expects home prices to drop 2 percent this year.

The Bank of England held its benchmark interest rate at a record low of 0.5 percent on April 7 and its bond-purchase program at 200 billion pounds as policy makers assessed signs the economic recovery is slowing.

The mortgage-approvals data published today is based on reports from Banco Santander SA, Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc, Nationwide Building Society and Royal Bank of Scotland Group Plc.

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Credit cards have become even more dangerous and even more expensive over the last few months – it’s time to ditch the unsecured debt and consolidate sensibly.

The problem is ‘personal pricing’ in the credit card market is making it very difficult for large numbers of consumers to prejudge what rate they will be offered according to Defaqto.

The company says many credit card providers now use ‘personal pricing’ where the interest rate charged is based on that individual’s details, credit record and repayment history. For those who are actually offered a credit card typically two thirds will get the best rate and up to one third will get offered a higher rate.

It’s those one-third who need to stop using unsecured debt as a means to get by right away. Those higher rates prejudged on credit score will only lead those people further down into more debts, exacerbating their problems.

David Black, banking specialist at Defaqto says: “It always used to be fairly straightforward to get a credit card but providers have become increasingly choosy about who they will lend to and, if they will lend, at what rate. Many consumers don’t even get to that stage because the number of credit card applications being rejected has shot up.”

If you are applying all over the place for expensive credit so as to pay the bills or just get through the month, stop. Talk to a professional adviser about consolidating your debts into one easy payment. It is possible to say no to unsecured debt, but only with the help of some trustworthy, sensible financial help.

SOURCE: Defaqto, 21/04/10

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Brits are stretching their budgets by more than £40bn a year, according to new research – if you are stretching your budget every month it might be time to consider some safe secured finance.

According to GE Home Money Home Lending, 77% of adults have set themselves a monthly spending limit but of these, 60% said they go over their budget every month, with an average over-spend of £154. One in twelve admitted to exceeding their budget by more than £300 per month.

But some people are doing their best to only spend what they can afford – the research found that 29% of people manage to stick to their budget, while 11% spend less than their budget. So it is possible to keep your finances under control but for some it might be harder than others.

Chris Tapp of Moneybasics.co.uk says: “It is heartening that millions of Britons set themselves a monthly budget but the regularity with which they exceed these limits is extremely worrying. Easy access to cheap credit has conditioned many to believe it doesn’t matter if they spend too much as they can always borrow to meet any shortfall. Sadly it is this type of thinking that has trapped thousands in a cycle of misery and debt.”

If you are one of those who can’t keep to the budget, talk to a professional mortgage adviser about using some of your home’s equity to safely and sensibly get your finances under control. The days of easy credit are long gone, but good, well-sourced credit is still a perfectly viable option.

SOURCE: GEMHL, Moneybasics.co.uk, 15/04/10

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People who want to improve their property should consider using some of their home’s equity as a means to fund their dreams – it’s safe, sensible and even if you don’t aim for it, it may make your property more valuable.

In fact, not many people look to invest in their home to increase it’s value – according to Shelter, 74% of people who dream of improving their property want to create the ideal home rather than increase its value.

The charity says just 8% of people were aiming to make their home better to improve its value. This is unsurprising – people want beautiful places to live first and foremost – but it might be likely that property price improvement is an unintended side affect of a good home improvement.

Campbell Robb, chief executive of Shelter, says: “This survey reveals that homeowners are almost ten times more likely to want to create a better home than merely increase its value, showing that home is so much more to people than just a financial asset.”

Shelter says kitchen extensions were the most popular home improvement, closely followed by conservatories and attic conversions. These are expensive, but by unlocking some of your home’s equity they are affordable. And they will increase your home’s value – so, with a bit of planning it might be that your dream home improvement doesn’t cost you a lot in the long run because the increased value will pay for some of the subtracted equity.

To find out whether you can use your home to fund your dream home improvement, talk to a mortgage adviser. And with a good plan, some sensible decisions and some sound advice you may find that your dreams are cheaper than you first thought.

SOURCE: Shelter, 19/04/10

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If you think it is time to plan for your retirement it might be worth talking to a mortgage broker about your largest asset – your home.

None of us are getting any younger, and these tough economic times have just hammered home the fact that we all need to set provisions aside for our later years – and thankfully it is happening. Legal & General says almost one in three people say they’re thinking of saving for retirement.

Claire Evans, L&G unit trusts marketing director says: “It is encouraging to see such a healthy rise this year in the number of people thinking about saving for their long-term retirement income, particularly in the younger age groups.

“We all appreciate the importance of starting saving as early as possible. I can’t stress highly enough that the sooner we start saving the better.”

So if you want to work out what to do with all your assets, talk to a mortgage adviser about your largest asset. While you may need to set aside money for a pension, you need to discuss your options when it comes to your home’s equity.

In years to come it might be necessary to unlock some of that wealth or even downsize your property – but it’s good to get an idea of what could be today.

SOURCE: L&G, 12/04/10

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If you are having problems handling your secured debt then it might be worth doing some homework online to see what you can do yourself to get to grips with your debt.

There are a world of websites out there for those who are indebted – information services, debt management websites, Government help, charities and of course professional financial advisers.

And people are starting to see the benefit of seeking out help online – 150,000 people used the Consumer Credit Counselling Service’s online support, many of whom were under 40. The figures also found that more women than men use CCCS Debt Remedy which could be evidence that women are more open with their problems and more keen to get to grips with them.

Paula Searle, head of e-services at CCCS says: “The higher rates of online debt counselling users in any particular category is likely to be a combination of need for help with their debts and general internet usage.”

Good advisers like The Mortgage Broker pack their websites with information – they understand that people want to do all they can on their own terms to understand their debt problems and work out ways in which they can make life easier for themselves. Only then, when they have their own tools should they seek out some help to take that next step towards managing and reducing their secured debts.

SOURCE: CCCS, 09/04/10

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You might see your home as your pension, and it is true that your equity can be used to help you fund your later years, but you can never bank on your property alone – you need to speak to a financial adviser about your future plans sooner rather than later.

People pinning their retirement dreams on downsizing their property or using their existing equity will be in for a shock. They might find that they do not have as much equity as they think and they will certainly underestimate how much you need to comfortably see yourself through your retirement.

According to Standard Life, a combination of a fall in house prices and annuity rates has dealt a double blow to many, with the average pension pot from downsizing only providing £43.50 a week income. It says banking on downsizing your home or using a secured loan to generate sufficient income is a potential retirement disaster unless you have also made provision elsewhere.

Andrew Tully, senior pensions policy manager at Standard Life says: “Our recent research shows many people are still pinning their hopes on using property to generate their retirement income, favouring this asset class over savings accounts and pensions.

“However, our analysis shows many people need a reality check to get their long-term financial planning back on track. The old adage of not putting all your eggs in one basket has never been more appropriate.”

Talk to a financial adviser about your long-term plans. They will show you that while your home is an important asset, you need to do more – that means increasing savings, making sure to do all you can to reduce debt and thinking about pension provisions. Home equity will play a crucial role in many Brits’ retirement plans, but people have to have more provisions set aside.

SOURCE: Standard Life, 07/04/10

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New figures have revealed that Brits are returning to their borrowing ways – at the end of last year, the UK population was borrowing 62p for every pound that they saved from both their homes and their credit cards.

According to the research by Unbiased.co.uk, by the end of 2008, the public were conscious of their debt levels and working hard to repay what they owed, with £1.68 being repaid for every pound they saved. But these virtuous repayment habits of 2008 failed to continue, with the borrowed amount creeping higher by the start of 2009 and increasing throughout the year.

Overall in 2009, Brits borrowed a staggering £28.2bn worth of non-mortgage debt with only £71.6bn being saved. People are once again turning to short-term solutions to help them get through the month. The rest of the borrowing came from safer equity release, but this is still proof that people are not listening to professional financial advice when it comes to saving and borrowing.

Karen Barrett, chief executive of Unbiased.co.uk says: “While we may be officially out of recession, these latest figures highlight that consumers are back behaving as they did before the onset of the credit crunch, even though the economy is still not back to full strength. This trend of lower savings levels highlight a real concern for the public’s future financial well-being, especially as these falls in savings levels haven’t resulted in the public paying off an increasing amount of their debts.

“While many believe we are over the worst, there is still a lot of consumer confusion out there right now, and it is vital people seek professional advice from a financial adviser to enable them to strike the best balance between borrowing, saving and other aspects of their finances throughout these difficult times.”

SOURCE: Unbiased.co.uk, 01/04/10

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The tough economic environment has meant many people have put off those expensive buys but it might be getting to a point where you need, rather than want, to pay out a big purchase – and it might be time to use your home’s equity to get by.

One such big expense might be a car. You may have gone through the last year or so crossing your fingers each morning, hoping your old car would not die. But sometimes you have to admit defeat and seek out a newer mode of transport. But you are not alone – the latest figures from the Sainsbury’s Finance has found a sharp increase in the number of people planning to buy a car in the six months to August this year.

It has found a 47% increase in the number of people planning to purchase a brand new, used or pre-registration car. 7.56 million people anticipate doing so between March and August this year compared to just 5.14 million people in the six months to February 2010. Sainsbury’s says this is a collective spend £49.1bn in the coming six months.

That’s a lot of money. For most people, finding maybe £5,000 or even £10,000 to buy a car might be a stretch. Steven Baillie, head of loans at Sainsbury’s Finance, says: “There are obviously concerns that continued financial instability as well as uncertainty over the coming election will put people off buying new or used cars.”

But in this day and age a car is a necessity and without it your life would be impossible – getting to work, getting the kids to school, getting to the supermarket – it’s a big spend, but it’s a need more often than not.

If you need to splash out thousands in the next few months, talk to your broker about using some of your home’s equity to fund your new car. It’s a sensible way of raising much-needed money and it needn’t cost you the earth to pay it back.

SOURCE: Sainsbury’s Finance, 30/03/10

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Although we are technically out of the recession, millions of people in the UK are still struggling to handle their day-to-day expenses, so are still cutting back as a result.

According to Santander, 40 million people in this country are still continuing to cut back on their outgoings. It says there is has been a recent emphasis on shopping around for good deal on groceries, switching off lights and electrical items, and starting a culture of ‘make do and mend’.

Many people have had to go through the last two years with no pay rise and probably a pay cut while seeing their bills and financial responsibilities grow. This has led them to tighten their belts as far as they will go. While over half of Brits are looking around for the best grocery deals, one in five have started taking their lunch to work – people are being forced to sacrifice so as to be able to afford to pay their mortgage, their loans and their bills each month.

Helen Bierton, head of Santander current accounts says: “Forty million people are still feeling the pinch and trying to find ways of slashing their outgoings to cut back, including starting a ‘make do and mend’ culture, buying second hand goods on eBay and in charity shops, or cutting reducing household help and their childrens’ pocket money.”

One of the best ways to ease the financial burden is to consolidate existing debts into one manageable secured loan. It would give you a little bit extra each month, which would go a long way in making your life easier during these continuing tough economic times.

SOURCE: Santander, 26/03/10

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