Adverse Mortgages UK

The number of people being approved for a mortgage dropped in May, according to new figures produced by the British Bankers' Association (BBA).

During the month, 27,968 such approvals were witnessed, which equates to a 56.1 per cent drop year-on-year, reports Reuters.

And the credit crunch has had a dramatic impact on the housing sector as a whole, claimed director of statistics at the BBA David Dooks.

"Measures of mortgage activity were lower in May as a result of tighter lending criteria and economic pressures on households," he commented.

In May, mortgage lending increased by £4 billion in total, lower than a £5.2 billion hike the month beforehand, the organisation added.

The yearly decrease is the lowest ever seen since the firm began its publications in 1997.

A survey from the Building Societies Association found that most people do not want to invest in homes at the moment due to a tumultuous economy.

 

Despite the ongoing credit crunch, many consumers in the UK are still planning on using their credit cards to spend a great deal of cash, it has been claimed.

According to the Sainsbury's Credit Cards, an average of £305.90 will be spent by 25.78 million people this summer via plastic loans, with some looking to spend over £800.

Head of cards at Sainsbury's Finance Donald MacLoed urged consumers to ensure that the incentives for using cards are good enough.

"If you are going to use a credit card in the summer sales, it pays to use one that gives you attractive rewards that are not only easy to collect but also redeem so that you really are earning whilst you spend and getting a little back," he commented.

But 20 per cent of those polled remarked that they will not spend as much as last summer in the sales this year thanks to the impact of the credit crunch.

The chief executive of Moneynet.co.uk recently suggested that credit card debts should be repaid by consumers first.

 

UK homeowners believe that the current climate in the property market will last for one to two years, according to new research.

A poll conducted by findaproperty.com found that mortgage customers are hopeful that the downturn will only be short-lived, with one third of property buyers claiming that it will only last a year.

Figures from the property search portal showed that over half of homeowners believe that a significant recovery will occur in the market within five years.

"Buyers are confident about the medium to long-term picture. Most think prices will be more expensive five years from now, which suggests people still have faith in the housing market and view it as a good investment," claimed Michael O'Flynn, content editor for findaproperty.com.

Respondents to the poll suggested that interest rate cuts, price falls and an abolition of stamp duty could speed up recovery in the market.

According to a recent poll of Society of Business Economists members, the UK housing market will take four years to recover from its current slump, the Guardian reported.


 

The so-called "mortgage famine" is having an adverse affect on house sellers, a new report has suggested.

The Rightmove House Price Index has shown that the ratio of buyers to available property has increased since last year to now stand at a ratio of 15 to one.

However, the slowdown in the mortgage market as a result of the credit crunch and the looming prospect of a recession has meant that lenders have reduced the number of products available, as well as the amount of money they are willing to give borrowers.

As such, while there are more buyers to available property than in 2007, they can afford to spend less. This means, as noted by Rightmove, that sellers will have to drop their prices if they don't want their property to "stagnate".

Miles Shipside, commercial director of Rightmove, said: "Lenders are trying not to lend right now and are just cherry-picking for profit.

"With approximately half the mortgage funds available, homes have to stand out to attract the half of buyers that can still buy. For most sellers that will mean whatever they thought of asking for their property at the peak of the boom, they need to take at least ten per cent off."

According to Zoopla.co.uk, the collective value of UK homes has fallen by approximately £300 billion in the last two years.

 

The majority of people surveyed in a recent poll do not think that now is a good time for them to invest in property.

The first quarterly Property Tracker survey from the Building Societies Association (BSA) has indicated that the factor putting most buyers off purchasing was considered to be the affordability of monthly mortgage repayments.

Almost half of respondents also claimed that other obstacles included getting a large enough mortgage or being able to get a mortgage at all.

"The finding that monthly mortgage payments are currently seen as the main barrier to house purchase demonstrates the extent to which household finances are being stretched," commented Adrian Coles, director general of the BSA.

He went on to say that the results of the report will be able to track and inform how the barriers to property purchase change over the next three months.

Earlier this month Nationwide announced that it would be implementing increases to its fixed-rate and remortgage products of between 0.25 and 0.5 per cent.

 

The rates on credit cards have risen since the last time the Bank of England base rate was at five per cent, it has been claimed.

Defaqto.com said that the average interest on these cards, along with balance transfer fees, are more expensive in comparison with December 2006.

As a result, stated principal consultant of banking at the organisation David Black, service providers are likely to be the overall winners of the loans trend.

"Credit card rates generally have increased to the detriment of the consumer but it remains the case that the industry offers its best deals to new customers," he commented.

He added that fees on balance transfers have gone up "relentlessly" and that there is no cap on what banks can charge consumers.

Furthermore, he noted, most service providers have adopted a set of more stringent lending criteria in the wake of the credit crunch.

This week, uSwitch.com argued that firms are giving credit to people without checking their salaries.

 

The British obsession with debt needs to be solved if the country is to move forward in the future, it has been claimed.

According to the Conservative Party, there is a large problem and the credit climate is leading to more woes in a greater number of households, reports the Daily Express.

Shadow Chancellor George Osborne suggested that UK consumers are "addicted to debt" on loans and via credit.


"While many people borrow responsibly, there are a growing minority who struggle to pay their loan bills. With the cost of living rising, that is likely to get worse," he commented at a recent event.

And he said that a fair amount of responsibility should be seen by consumers themselves to ensure their debts are minimised.

Debt in the Midlands area has grown in recent times, Birmingham and West Midlands Society of Chartered Accountants president Andeep Mangal has said, with the credit crunch exacerbating this.

 

Consumers need to prioritise repayments in order to avoid increasing levels of debt, according to a leading financial services website.

As the UK's credit card debt continues to rise, the chief executive of Moneynet.co.uk has said that common sense should be used in deciding what to pay off first, advising those in debt to concentrate on their most expensive loan obligations.

Comparing student loans to high interest credit cards, Richard Brown said that graduates should not be "cavalier", since there is a "long windowfor such repayments.

He added: "Some people graduate with substantial student debt but it is a fact of life unfortunately, whereas carrying big wads of debt on a high interest credit card isn't."

Recent statistics from Credit Action showed that the UK's personal debt at the end of April totalled £1,436 billion, of which £54.9 billion was credit card debt, while interest repayments have "soared" to £94.3 billion over the last year.

 

Consumers should ensure that they have a strong credit rating, according to Richard Brown, the chief executive of Moneynet.co.uk.

In the present economic conditions, most lenders will be largely unwilling to give out loans and money to individuals with poorer ratings, he noted.

He suggested that the "ground rules" have altered dramatically and that caution is being witnessed on the part of lenders as they are finding it hard to get hold of finances.

"You need to really address your credit score because everything is governed by the credit score. You can find out quite easily," he asserted.

He added that those just out of university ought to try and do everything in their power to see that their rating is credible.

There are simple measures that can be adopted to ensure that this is done quickly, he said, such as via Equifax.

In the past year, interest repayments in the UK hit £94.3 billion, Credit Action has revealed.

 

A high number of people believe that more could be done to try and prevent flooding similar to that seen on a large scale last year, according to a new survey.

The Association of British Insurers (ABI) found that 75 per cent of homeowners are worried that the government's measures against floods are not strong enough.

And of those polled, 98 per cent asserted that enhanced drainage facilities would help to negate the impact of such episodes, something that may interest mortgage holders.

Director of general insurance and health at the ABI Nick Starling said that more long term plans could be devised to give those with homes peace of mind.

He observed: "In particular we must tackle the problem of surface water drainage. Planning for the future is essential if we are to minimise a repeat of last year's terrible floods and to ensure that flood insurance protection remains widely available."

The UK and its local authorities will be better equipped to deal with future flooding thanks to new powers the Environment Agency can exert if waters rise, environment minister Phil Woolas has said.