The governor of the Bank of England, Mervyn King, has issued a stark warning with regards to the outlook for inflation in the UK, which has already rocketed to way above the government’s 2% target, and is set to continue rising. Mr King recently said that the outlook for inflation had ‘deteriorated markedly’. High food and fuel costs have seen inflation levels rise to their highest in thirteen months.
According to Mr King inflation levels are set to remain above the government target for the next two years, and he added that this would have a serious effect on the economy. Inflation levels are currently at 3%, a full 50% over the target that is set by the government. The rising concerns over inflation may mean that the Bank of England has to be far more careful when it comes to interest rate cuts, and this may reduce the chances of another rate cut in June, which is what many analysts and economists had predicted.

King also added that house prices were set to fall further – a warning backed by the ‘leaked’ document from Housing Minister Caroline Flint, which indicated that the government was expecting house prices to fall by between 5% and 10% this year. Mr King commented on the difficulties that the Bank of England now faces when it comes to setting interest rates, as there will be far more pressure to consider the outlook for inflation as well as the state of the slowing economy.

He went on to state that the Monetary Policy Committee was facing its most challenging time in relation to setting interest rates, and added that the ‘nice decade’ was not behind us, at least for the time being. Officials agreed that interest rate movement would be tricky, stating that failure to cut rates could tip the nation into recession whilst cutting rates could further increase inflation levels.

The governor said that the MPC would need to focus on getting inflation back under control in the medium term, although he also said that in the near term growth would rise sharply.

The Housing Minister Caroline Flint made a blunder at this week’s weekly Cabinet meeting, when she came in carrying notes that clearly showed her prediction with relation to house prices. The notes that Flint carried into the meeting were on top of her pile, and clearly showed her predictions, where she has indicated that ‘at best’ house prices would fall by 5-10% this year.

The prediction was revealed amidst concerns over rising inflation, which has rocketed to 3%, which is way more than the 2% target set by the government. It is thought that the unintentional revelation about house prices could now further damage consumer confidence in the housing market, and has done nothing to help the government’s attempts to talk up the economy.

The paperwork was simply entitled ‘Caroline Flint – speaking notes’ and contained details of information given to the Prime Minister and the Chancellor of the Exchequer at a meeting at 10 Downing Street. The information on the paper suggested that house price indicators were pointing at the first reductions in house prices in recent years, and read: ‘We can’t know how bad it will get. Given present trends, they will clearly show sizeable falls in prices later this year - at best down 5%-10% year on year.’

The information also suggested that house building was on the down, with house builders predicting further falls over the year. There are now concerns that this could interfere with government plans to build three million new homes by 2020. Other information contained in the notes included data on the high level of defaults, and an expression of the Housing Minister’s concerns on how the global credit crunch was affecting consumers’ ability to buy a property even if they wanted to.

Officials from Downing Street have not commented on the document other than to say that the information was no more than public comments already made about the housing market by Alistair Darling and Gordon Brown. However, the Shadow Housing Minister said that Flint must make the findings in her report public rather than discussing them behind closed doors with Cabinet ministers.

According to a recent report some insurance price comparison sites could be misleading for consumers, with a review carried out by the Financial Services Authority showing that some of these sites could contain out of date and inaccurate information. These insurance price comparison websites have become increasingly popular amongst consumers trying to find the most competitive deals on insurance products and services, and figures show that last year 25% of motor insurance policies were generated through these sites.

An increasing number of insurance price comparison websites have sprung up over recent years, and this has prompted a review of the information on these sites by the UK’s financial regulator, the FSA. As part of the review seventeen insurance price comparison sites have been looked at, and officials from the FSA are looking into the accuracy of the information that is contained.

The FSA has stated that whilst some sites did contain information that was out of date or inaccurate other sites were fine and showed information that was accurate. All of the sites were found to be properly authorised. However, the FSA has decided to carry out the review to ensure that there is fairness and consistency in the market, so that consumers can get accurate information that will allow them to make an informed decision when it comes to purchasing insurance products and services.

A number of problems were brought to light with some of the sites looked at by FSA officials, and this included excess levels not being included in the data, incorrect compulsory excess levels, and even prices being different from the quote given on the price comparison site. Around 84% of consumers using these sites have stated that the information on motor insurance policies can be confusing, and therefore the review has been welcomed by the British Insurance Brokers Association.

Officials from BIBA stated that they were pleased that the FSA was carrying out the review in order to provide clarity and improved information to consumers that were looking to take out insurance products and services.

Officials from the British Chambers of Commerce have stated that the economic outlook in the UK is worse than had been predicted, with the economic slowdown set to continue well into 2009. Last week the BCC described the decision by the Bank of England to leave interest rates unchanged at 5% as a mistake, and it has now warned that the central bank will need to act quickly in order to try and ease the expected continued slowdown.

The Bank of England has cut the base rate three times since December, taking it from 5.75% to 5%, but officials from the BCC say that further action is needed to try and improve the nation’s economic outlook. Even a member of the rate setting Monetary Policy Committee has recently said that unless the central bank acts more aggressively in terms of cutting the base rate then the nation is in danger of falling into recession and house prices could plummet by a third.

Officials from the MPC and Bank of England have been stating for many months that the decision on interest rate movement is a difficult one in the current climate, as members have to consider rising inflation as well as a slowing economy. However, the BCC has said that the central bank should not waste time on undue caution due the dangers that are facing the economy over the next year and a half.

The BCC said that the more time the MPC wasted by not lowering rates further the more likely that the economic outlook would continue to deteriorate. It said that further delays would cause unacceptable threats to growth, and has cut its annual growth forecasts for next year from 2% to 1.6%. The BCC said that this cut was due to lower expected spending levels from consumers, who continue to struggle with rising bills and living costs.

However, despite the gloomy economic outlook the BCC has said that it does not think that a recession is likely, although it has urged the government to provide additional support for small businesses, which face a ‘difficult and risky’ eighteen months.

According to a recent report the spending power of the average household in the UK has hit its lowest level in seventeen years, with a range of soaring costs affecting spending power levels in most households. This includes bills such as energy and council tax, rising living costs such as food and petrol, and high mortgage repayments.

The reports shows that over the past six years the proportion of income that households have had to pay out on these sorts of costs has soared, leaving most with very little money to spend on themselves. This has, of course, had a dramatic knock on effect on the economy, which has suffered a significant slowdown over recent months.

The amount of disposable income that the average household now has is at its lowest level since 1991, and according to some industry officials the situation is set to get worse. This is because they expect food costs and energy prices to soar over the course of the year, which will put additional strain on household finances.

Figures from the Daily Mail’s Cost of Living Index recently indicated that the average household needs to find an extra £100 each month simply to cope with all of these rises without having to make any further changes or cutbacks. The Index also showed that taking into account increased mortgage costs some households could be searching for an additional £2000 a year.

The figures have resulted in scathing attacks from the Conservative Party, which is using the information to question the competence of the Labour Party. The Shadow Chief Secretary to the Treasury stated that families were feeling far worse off financially under labour, having to cope with stagnant wages, sky high prices, and stealth taxes. The Conservative Party has also attacked the scrapping of the 10p tax rate, stating that this is placing further financial pressures on already struggling households.

Whilst the outlook for disposable income levels for the rest of the year are bleak according to the report, officials also predicted that interest rates could fall as low as 3.5%, which could help to bring more stability to millions of households.

Following today’s Monetary Policy Committee meeting the Bank of England has announced that interest rates are to remain unchanged at 5%. The decision to keep rates on hold comes as no surprise to most economists and analysts, the majority of whom had already predicted that the central bank was unlikely to reduce rates two months in a row. The Bank of England reduced interest rates last month by 0.25% taking the base rate from 5.25% to 5%.

Whilst the Bank of England and the Monetary Policy Committee are taking the state of the economy and finances into consideration when deciding on the interest rate, they are also having to take into consideration rising inflation, and in order to keep a lid on inflation have to be careful with interest rate cuts. However, David Blanchflower, one member of the MPC, has stated recently that unless the central bank acts aggressively in terms of cutting the base rate then the country is in fear of falling into recession and house prices could fall by a third.

One economist stated that whilst it was apparent that the economy was suffering due to a gradual slowdown it was also apparent that inflation was rising, and is now considerably higher than the government’s 2% target. Inflation is expected to continue rising, but the Bank of England will have a tough job when it comes to prioritising when it comes to inflation or the economy.

Officials from the EEF said that the decision to keep rates on hold was simply putting off an inevitable cut. One official from the EEF said that further rate cuts were vital in order to reduce the chances of the economy falling into recession, but he did add that up until now the Bank of England had been right in taking a more measured approach towards base rate cuts.

The British Chambers of Commerce believes that the decision to keep rates on hold is a mistake, stating that a further rate cut could have boosted both consumer and business confidence. One official from the BCC said that in light of the current threats to the economy the decision to leave rates on hold was a mistake.

Most of us are well aware of how costly a mortgage loan can be in terms of the interest that you have to pay, and it can really pay off to try and take steps to reduce the amount that you have to pay in interest on your mortgage loan. There are a number of things that you can do that may help to reduce the amount of interest that you pay on your mortgage, and you will find 5 top tips on saving on your mortgage interest below.

1. Put down as much as possible by way of a deposit. Many lenders are demanding a higher deposit these days because of the global credit crunch, but even if you do find a lender that accepts a smaller deposit you will still be able to benefit from putting down as large a deposit as possible. This is because the smaller the loan the less interest you will have to pay over the term, so a greater deposit really can pay off.

2. Overpay on your repayments wherever possible. By making overpayments on your monthly mortgage repayments whenever you are able to do so you could help to reduce the term of the mortgage significantly, and you could save a small fortune on the amount of interest that you pay.

3. Opt for a shorter repayment period. The longer the term of your mortgage the more you will pay in interest if you stick to that term. If you opt for a shorter term you could save yourself a significant amount in interest compared to what you would pay over a longer term.

4. Compare interest rates on mortgages. The interest rates charged on mortgages can vary significantly from one lender and mortgage product to another, so make sure that you browse and compare different products to find the most competitive rates of interest.

5. Avoid adding arrangement fees to your mortgage. Arrangement fees on mortgages have gone up over the past year, and most mortgage lenders will allow you to add this fee to the mortgage loan. However, if you do this you will be charged a fortune in interest on the arrangement fee as well as the mortgage loan. Therefore, wherever possible try and pay this fee upfront.

Following a recent Reuters Poll it was shown that only five out of sixty five economists that were polled were expecting the interest rates to fall again this month after the Monetary Policy Committee meeting due later this week. If the majority of economists are correct in their predictions then the Bank of England is set to keep the base rate on hold at 5% after cutting it from 5.25% last month.

The majority of economists that predicted that interest rates would not be cut in May said that it was unlikely that the central bank would cut the base rate for two consecutive months, having already cut it by 0.25% last month. They said that this was due to rising concerns over levels of inflation, adding that it was far more likely that the base rate would now be cut again in June.

Officials state that inflation levels are currently significantly higher than the 2% target set by the government, and have been since October. It is also expected that inflation will continue to rise over the coming months, and in order for the Bank of England to try and keep a lid on inflation the bank will have to be very cautious about cutting the base rate even though the slowing economy is also a concern.

One member of the Monetary Policy Committee who is known for his enthusiasm for cutting interest rates has stated unless interest rates are cut aggressively the nation could be plunged into recession. He also said that this could result in house prices falling by a third.

However, there are also members of the powerful MPC that have voted against interest rate cuts, focusing their concern more on the rate at which inflation has been rising. Whilst most economists have predicted that the next rate cut will be in June, they expect further rate cuts to come more gradually. However, one economist added that whilst the rate cuts may come at a steady pace the Bank of England could eventually end up cutting the rates to as low as 3.5%.

A forthcoming report about repossession levels from the Ministry of Justice is likely to make for gloomy reading, with indications that repossession orders could rocket by around 67% over the course of this year. The report, expected on Friday, will cover repossession orders across England and Wales for the first quarter of the year. The figures will give an indication of how homeowners have managed the effects of the global credit crunch, which continues to maintain its grip on the financial markets in the UK.

Industry officials say that repossession order levels have been rising for some time, with an increase in the number of homeowners failing to keep up with mortgage repayments. Between August 2006 and July 2007 interest rates were hiked up five times, taking the base rate to 5.75% by July last year. This left many people unable to keep up with soaring repayments, and whilst the base rate has now come back down by 0.75% since December of last year, homeowners are still struggling with high repayments as well as rising living costs.

Figures show that in the dark recession-hit days of 1991 repossession orders reached 142,905. In 2003 this figure fell to a low of 41,038, as easier credit conditions and lower interest rates reduced the financial strain for homeowners. However, last year the figure rocketed again to 95,374, and experts state that the figure is likely to continue rising for the foreseeable future.

Whilst the number of repossession orders is on the rise, as indicated by recent figures, not all of these orders will result in actual repossession, as not all of the orders made are enforced, depending on the homeowners’ ability to reach an agreement with the lender over repaying arrears. Often the court will suspend the order and give the homeowner time to make arrangements to clear the arrears.

The number of repossessions in the UK for last year stood at 27,100 according to the Council of Mortgage Lenders, and this was several thousand lower than the 30,000 that had been predicted. However, the CML expects this figure to rise to around 45,000 repossessions over the course of this year.

According to figures from the Insolvency Service the number of insolvencies in England and Wales increased slightly in the first quarter of this year. Many industry experts had predicted towards the end of last year and the start of this year that insolvency numbers would rise, as households continued to struggle to cope with rising living costs, higher bills, and crippling mortgage repayments.

The figures showed that the number of insolvencies rose by 1.7% in the first quarter of this year compared to the previous three months, taking insolvency numbers to 25,264. However, this figure is still considerably lower than the same period last year, when insolvency numbers were 13.2% higher. However, the figures also showed that company liquidations were up by 4% compared to the same period last year, and up by 2% compared to the final quarter of last year.

Out of the insolvencies recorded for the first quarter of this year 15,651 were bankruptcies, which was a rise of 0.1% compared to the previous three months. The number of Individual Voluntary Arrangements was up by 4.3% compared to the previous three months, with the figure standing at 9,614. However, IVA levels were down by 22% compared to the same period last year.

One industry official said that insolvency levels are likely to continue rising over the course of this year, as households continue to battle to try and keep afloat financially. Higher energy prices, bills, petrol costs, and food costs have impacted dramatically on household finances, pushing many people into the red and leaving them unable to keep on top of their financial commitments.

The official also said that unsecured debt levels were starting to rise again, with more and more people having to turn to credit such as credit cards to keep up with payments on bills and cope with higher living expenses. One insolvency specialist said that credit conditions were now much tighter, and with lenders being far more cautious over who they will lend to a greater number of people could find themselves pushed into insolvency towards the end of the year.

He said that a combination of high living costs and tighter credit conditions were taking their toll, and this was making it more difficult for consumers to use traditional ways of easing financial strains, such as extending repayment periods on debts or remortgaging to find a cheaper deal.

In the past scam investment firms have made a fortune by dwindling savers and small shareholders in America out of their hard earned cash with bogus investment opportunities. However, officials in the United States have really cracked down on these scams over recent years, and this has resulted in the focus of boiler room operators being targeted elsewhere. Britain is one of the latest places to become one of the main focuses of these con-artists.

Savers and small shareholders in the UK are being warned to be extremely cautious about buying shares in an investment that sounds a little too good to be true. A number of people have fallen for boiler room scams, where they have been persuaded to purchase thousands of pounds worth of shares known as Regulation S shares. However, investors have then realised to their horror that the shares are practically unsaleable, leaving them with a gaping hole in their bank accounts and very little to show for it.

One doctor explained how he was contacted by a firm, and a friendly but persuasive salesman called him to tell him about an exciting investment opportunity. The doctor invested a small amount and when share prices rose he continued to invest to the tune of £60,000. It was only after he had invested tens of thousands of pounds that he realised that these Regulation S shares were virtually impossible to sell on. To make matters worse the share prices then plummeted and his £60,000 is now worth just £5000.

Authorities in Britain are now warning that small shareholders and savers should be aware that they are being targeted by these boiler room operators, and should be extremely cautious when they receive calls from unknown companies telling them about a winning investment opportunity. Investors should remember that Regulation S shares are practically impossible to sell on, and that swindlers are extorting huge sums of money from investors who allow themselves to be talked into buying these shares.

The Financial Services Authority said that savers and shareholders need to recognise boiler room scams and hang up the phone when they find themselves engaged in talks with a persuasive salesperson that is offering them what appears to be a dream investment. The FSA said that this is the only way that Britain can start to reduce the effects of this scam. In the meantime, the City of London Police has set up a specialist operation to try and tackle boiler room fraud.

Earlier this week the Bank of England warned that many homeowners are set to face a payment shock with repayment set to rise by around £230 per month for some homeowners. With lenders hiking up the cost of mortgage lending, and with around 1.8 million people due to come off cheap fixed rate deals over the course of this year, the central bank warned that many could be facing unmanageable payments, as they will be forced to pay around 2.5% more than on their current cheap fixed rate deal.

The higher rate of interest will come as a result of increased rates on mortgages from lenders, as well as a reduction in mortgage deals over recent months. Many homeowners whose cheap fixed rate deals come to an end will find that they have access to far fewer products than in the past, and the ones that they do have access to are far more expensive. Someone with a £150,000 mortgage could face an annual repayment rise of £2,748 based on a 2.5% hike in their interest rate.

The Bank of England report states that some homeowners that come off these cheap fixed rates may be able to find another competitive deal if they have good credit and meet the increasingly stringent eligibility criteria of the lender. However, many others – particularly those who have damaged credit – will find it very difficult to get another affordable deal, with many officials predicting that the cost of mortgages is set to continue rising over the coming months despite the government’s £50 billion rescue plan.

Lenders are also asking for far higher deposits from borrowers seeking to remortgage, which means that younger homeowners and low income homeowners will also face crippling interest rate rises if they cannot stump up the required deposit level, as they will not be able to access the most competitive deals from lenders.

In its report the Bank of England said that the repayment shock had come at the same time as falling house prices, with a recent report showing that house prices are now 1% lower than they were this time last year. An industry professional has added that house prices could continue falling by another third, and the Bank of England has warned that if the downturn continues around 1.7 million homeowners could find themselves in negative equity.

There are all sorts of loans available these days, and despite the global credit crunch, which has affected availability and affordability for many, you can still find a range of different loan products to suit different needs. One of the loan types that can prove invaluable to those looking to make a major purchase is a multi-purpose or any-purpose loan, which is basically a loan that you can use for any purpose.

These loans are popular amongst those that are looking to make a major purchase and wish to spread the repayments on their purchase. Of course, it would be great to have the money saved up front before making a major purchase, but many people do not have spare cash lying around in savings, and at the same time do not want to have to wait around for months or years before making their major purchase. This is where a multi-purpose loan can really help.

If you have good credit you can still get competitive rates of interest on a multi-purpose loan, and you will find that these loans are available on both a secured and unsecured basis depending on your circumstances. If you have damaged credit you may still be able to get a multi-purpose loan, but you are more likely to have to take it out on a secured basis, which means that you will have to be a homeowner.

There are many different types of major purchases that people decide to make each year, and this includes furniture or gadgets for the home, holidays, a car, perhaps even a boat. A multi-purpose loan means that we can make this purchase right away and then make gradual repayments for the purchase until the loan has been paid off. This can save having to wait around to get your hands on what you want, whilst enabling you to pay for your purchase in small, affordable repayments.

In order to get the best out of your multi-purpose loan you should make sure that you shop around in order to find the most competitive rate of interest, as this will help to keep your repayments down, making your purchase all the more affordable. Also, compare repayment periods, as you may find that a longer repayment period can further help you to keep your monthly repayments down.

Most people are now aware of the various adverse effects that the global credit crunch has had on the UK’s financial markets, such as decreased liquidity, tight credit conditions, and increased interest rates for borrowers. However, a recent report has shown that another problem has also emerged from the global credit squeeze, and this is an increase in the number of people committing financial fraud.

The UK’s fraud prevention service, Cifas, has stated that since the onset of the credit crunch an increased number of people have been providing false information on applications for finance in a bid to try and increase their chances of getting the finance that they need, as most are aware that the tighter lending conditions in place could affect their ability to get a loan or credit card. Some applicants seem to think that by providing false information or omitting certain details from the application in order to make them look like a low risk applicant will help them to get the credit that they are after.

However, officials are warning that all consumers are doing is further scuppering their own chances of getting finance in the future, as all lenders share information about applicants, and therefore it is not difficult for a lender to see where applicants have falsified information, told lies, or left important details off their applications. One of the most common details to be left off applications, according to officials, is a former address where the applicant had a bad credit record.

Figures show that in the first quarter of this year the number of people telling lies on applications for credit rose to 21,780 compared to the same period last year, when the figure was 19,239. This reflects a rise of 13% over the course of a year – a year where credit conditions have become more difficult and the chances of being able to get affordable finance have become more remote.

Watchdog groups in the UK have been calling for increased action against this type of fraud in the UK. With another recent report claiming that some lenders are still not carrying out adequate checks into information provided on application forms there are concerns that some consumers could end up getting finance that they cannot possibly afford to repay.

Balance transfer credit cards have become very popular over recent years, and many borrowers have used them to transfer balances from high interest credit cards and therefore cut back on the cost of borrowing. Balance transfer cards can help you to avoid paying as much – or in some cases any – interest on your credit card borrowing providing you adhere to the terms and conditions, and you repay your balance within the specified period.

If you are thinking of transferring balances from high interest credit cards onto a balance transfer card there are a few things that you should bear in mind. Below are five top things to remember with regards to balance transfer credit cards:

1. There are two types of balance transfer cards. You can select a 0% balance transfer card, which offers interest free credit on your transferred balance for a limited period. There is also a life of balance transfer card, which offers a very low rate of interest for the life of your transferred balance. You should base your decision on how quickly you think you will be able to pay the transferred debt off.

2. The interest free periods offered on 0% balance transfer cards can vary from one provider to another, so it is important to compare different deals from different providers to find the one that best suits your needs – the more generous the interest free period the longer you will have to repay the balance.

3. There is a transfer fee that is charged on 0% balance transfer cards in the vast majority of cases, and these can work out to 2-3% of the total amount being transferred onto the card. Therefore you should work out whether it is worth transferring to a 0% card and paying what could be a very high price, or whether you could save more by opting for a fee free life of balance transfer card.

4. Look for a card that offers capped transfer fees. Over the past year the number of cards that cap transfer fees has fallen considerably, but there are still some available. Make sure that you look for a card that still caps the transfer fee so you will not be paying a fortune to transfer your balance.

5. Remember – credit conditions are still tight. The global credit crunch means that credit conditions are still tight at the moment, and you may find that your choice of balance transfer cards is limited. Start searching early on, as it could take time to find a suitable card, and in some cases you may find that you are not even eligible for a balancer transfer card.

The Archbishop of Canterbury has expressed concern over the high levels of consumer debt in the UK, and over how the global credit crunch is affecting the most vulnerable, poorest people more than anyone else. He said that the level of personal debt in the UK was crippling, and added that he wanted to see greater scrutiny when it came to doorstep lenders, which are often relied upon by poorer people that cannot get credit through standard channels.

The Archbishop, Rowan Williams, also went on to attack the higher rates of interest that are being charged to the most vulnerable consumers. He said that the economy was based on spiralling credit that was out of control. The Archbishop also added that he felt that poorer consumers had found themselves trapped in a cycle of unsecured borrowing. Amongst his concerns are how the global credit crunch is most affecting the disadvantaged and poor.

Since the onset of the global credit crunch last year the cost of borrowing has rocketed, and getting finance of any sort has become increasingly difficult with lenders really tightening up on their lending criteria. Amongst the hardest hit by the effects of the credit crunch have been those on low incomes and those with damaged credit, which means that the more vulnerable have had to bear the brunt of the credit crunch.

The Archbishop has expressed particular concern about doorstep lenders, as these lenders are often used by low income households, who then end up paying a fortune in interest in order to stay afloat financially. Mr Williams said that he wanted to see an urgent review of interest rates charged by doorstep lenders in a bid to try and protect poorer households from the additional financial strain of paying a fortune in order to get finance.

He added that increased education in financial matters was needed, stating that many consumers simply had no idea of how much interest they would be charged. The Archbishop stated: “There is the need for the teaching of financial literacy.”

Most people that have high levels of debt will know that the easiest thing to do is simply ignore them and leave them to build up. However, whilst burying your head in the sand and ignoring your debts may seem like the perfect short term solution, as it means that you don’t have to sit and stress about your finances, in the medium to long term you could end up in a real financial mess.

Unless you take steps to tackle and deal with your debts they will simply fester and build up, and this could result in you losing control of your finances altogether. It is vital that anyone with high debt levels is proactive in trying to get these debts cleared up, and believe it or not you will feel far less stressed about your finances when you have an effective plan in place – this will enable you to look to the future and see the light at the end of the tunnel when it comes to your debts.

There are a number of solutions available that could help you to more effectively tackle your debts. One of the simplest ways is to go through your income and outgoings and see whether there is any scope for allocating additional funds towards your debts to get them cleared more quickly – you will be amazed at how much quicker you can clear things like credit cards and store cards simply by paying an extra £20 or £30 a month.

If there is no scope for allocating additional funds to your debt payments, or if you are looking to cut down on your outgoings and the number of debts that you have to deal with, then you may find that consolidation is an effective solution. This will enable you to repay your existing debts in full, leaving you with just one loan repayment to deal with. Also, if you find a low rate consolidation loan you could see a significant fall in monthly repayments compared to the amount that you are paying out now.

Of course, there are many people that really struggle when it comes to sorting out their debts and finances, and in cases such as these it may be worth seeking debt advice or counselling. There are a number of charities and firms – even the Citizen’s Advice Bureau – that can offer sound, professional advice that will help you to tackle your debts more effectively, and this could make it far easier and far less stressful to handle your finances.

A leading economic consultant has warned that the level of repossessions could soar over the course of this year as a result of the ever tightening grip of the credit crunch, which has affected household finances and access to finance deals. With many homeowners unable to get their hands on cheaper mortgage deals because of tight credit conditions an increasing number could find themselves falling behind on mortgage repayments.

The Centre for Economics and Business Research has stated that repossession levels could rise by almost 25% over the course of this year. It has been estimated that over the course of 2008 around 33,400 homeowners could lose their homes through repossession, which reflects a 23% rise on the level of repossessions for last year.

Official from the group also said that mortgage deals will also be set at high rates until the situation with the money markets eases off, making things even more difficult for homeowners. Money markets are still in turmoil despite intervention by the Bank of England, which recently announced a plan that would enable banks to swap mortgage assets for government bonds.

One member of the group said that until the money markets start moving again mortgages will remain expensive and repossession levels will continue to climb. He said that the forecast showed why the Bank of England and the Chancellor were so keen to try and take steps to ease the financial markets.

Whilst the prediction for repossession levels looks bleak, the group did add that repossession levels will stay well below the levels seen in the 1990s, when sky high interest rates saw repossessions rise to around 75,000 a year. However, the lack of access to funding and the slow housing markets means that industry sectors such as estate agents are likely to face a slow year.

The level of mortgage approvals has also plummeted as a result of the credit crunch, and according to figures from the British Banker’s Association the level of mortgage approvals for March fell by a massive 46% over the space of one year.

According to a recent report the number of banks applying to courts for charging orders against consumers with high levels of debt has rocketed. Charging orders are orders that convert unsecured debts into secured debts that are secured against the home, which gives the lenders greater security as it means that at some point in the future they will be able to reclaim the money that they are owed by the borrower, even if this is when the borrower eventually sells their home.

Last year over 131,000 applications for charging orders were made by banks, and this reflected an annual rise of 42%. However, officials stated that based on the past two years the figure reflected a rise of close to 100%. With more and more consumers struggling to keep up with their unsecured debt repayments, such as loans and credit cards, this figure could continue to rise, as lenders take steps to ensure that they do not end up losing out as a result of borrowers’ inability to make repayments.

The charging order is basically classed as a second mortgage on the home, and means that lenders can reclaim the money that they are owed when the home is sold, although the homeowner is not required to sell their home right away if the charging order is successful. However, officials state that whilst these orders provide increased security for lenders, there are difficulties in following on with repossession proceedings, with repossessions resulting from charging orders being described as ‘extremely rare’.

One official said that in the current financial climate many banks and lenders are worried about the ability of borrowers to repay their unsecured loans and debts, and applying for a charging order gives the lender a greater chance of recouping the money that is owed. He said that lenders were now looking at all of the possible options to try and cut back on growing bad debt levels.

Homeowners with unsecured debt, who then fall into arrears with those debts, may find themselves taken to court by the lenders, and if they are still unable to repay the debts after court action has been taken they may find that they have a charging order imposed against their property.

Managing finances can be a daunting task at the best of times, but in the current financial climate, where costs are rising, taxes are rising, and credit conditions are tighter than ever, it has become a necessity for households to be able to manage their finances more effectively in order to avoid running into an array of problems.

Some households have found that their finances are so overstretched that the slightest change in financial circumstances, such as a rising bill or even a slight reduction in income, could tip them over the financial edge, leaving them unable to meet all of their financial obligations. However, this is a dangerous way to manage your finances, as it means that you are constantly on edge and always at risk of finding yourself in hot water in terms of your finances.

One way forward for those in this situation is to review your finances and manage your money more effectively. With some simple changes you could find that you are able to manage your money far more easily and arrange your budget far more effectively. Firstly, it is important that you make sure that your financial obligations such as bills, debts, rent or mortgage, and other essential costs are all accounted for before you start allocating funds to other non-essential areas such as shopping, clothes, going out, etc.

If you are dealing with a range of expensive debts then it may be worth considering consolidation, as this can mean that you are able to reduce the number of debts that you have and reduce the amount that you have to pay out on your debts each month. You will be surprised at how much easier money management becomes if you have a little extra disposable income each month, so it is well worth looking for a low rate consolidation loan and getting rid of your higher interest, expensive debts.

Also, see if you can make savings by switching some of your products and services, such as your utility suppliers, insurance providers and policies, broadband service, etc. You could find that there are much cheaper deals on the market, and by switching you could save yourself a small fortune over the course of the month, which again will help enormously when it comes to managing your finances.

By managing your money more effectively, and reducing your outgoings as much as possible, you can reduce the risk of your funds running dry before you have managed to make your essential payments, and this in turn can help to reduce major risks such as damaged credit or even the loss of your home if you miss mortgage repayments.

After months of waiting the Office of Fair Trading has received the news that it was hoping for from the judge that presided over the High Court test case into bank charges earlier this year. Justice Andrew Smith has decided that the Office of Fair Trading can assess the fairness of charges applied by banks when customers go overdrawn, bounce cheques, or have returned direct debits. The news is, of course, very bad for the UK’s major banks, which could now have to repay billions of pounds in refunded charges to consumers.

The High Court test case took place in January of this year, but Justice Andrew Smith said that he needed time to evaluate the evidence before giving a verdict. A recent report suggested that the verdict may not be available until July. However, earlier this week the Office of Fair Trading reported that the judge was likely to deliver his verdict at the end of the week, which he did.

The judge said that his verdict did not necessarily mean that he saw the charges as unfair. However, his decision means that unless banks lodge a successful appeal against the decision, the Office of Fair Trading will now be able to rule on the fairness of banks charges – a move that could see the maximum charge slashed in the same way as credit card penalty fees were cut a couple of years ago.

The banks now have until 22nd May to decide whether they are going to lodge an appeal against the decision. Any cases still pending for bank charge refunds will remain on hold until this time. The banks have always claimed that their charges are fair, but the Office of Fair Trading had branded them unlawful and unfair, stating that the charges applied to customers’ accounts were way higher than the costs incurred by the banks.

Campaign groups that have been fighting against these bank charges were delighted with the decision. One campaign official said that it was now time for the banks to accept the verdict, comply with the Office of Fair Trading with regards to what can be considered a fair charge, and provide refunds to their customers as soon as possible.

It can be very difficult for those that get caught in the debt trap to try and escape from debt, and many people that get themselves into huge levels of debt spend many years – sometimes most of their adult lives – trying to get themselves back out of debt. Being in debt can have a profound impact on your life, and can affect your ability to enjoy the quality of life that you would like. For some people the debt trap can even result in being unable to keep up with repayments on bills, debts, and even mortgage repayments, which can lead to anything from damaged credit to the loss of your home.

Getting out of debt can be notoriously difficult, but it is important that people who are in debt focus on trying to clear their debts rather than thinking about getting in to even more debt to tide them over in the short term. So many people that have debts continue to take out loans and credit in order to try and ease their finances, and whilst this may work in the short term it can make life very difficult in the long term.

One mistake that many people in debt make is to consolidate their existing loans, and then rather than focusing on trying to pay off their consolidation loan they simply run up more additional debts, and then consolidate them all again some time down the line – this process may continue for many years, and means that it could take years or decades for the borrower to get out of debt, as they are constantly running up debts and taking out larger and larger Consolidation loans.

Whilst it is difficult to live your life without any form of credit – most of us take out a loan or credit card at some point – the main thing to remember is that you should not become reliant on credit. You need to exercise willpower, determination, and caution when it comes to taking out finance, and you should always make sure that you do not overstretch yourself and take out finance for the sake of it rather than because you really need to.

Another way in which many people become caught in the debt trap is through the use of credit cards and store cards. Whilst these cards can be useful for funding purchases and provide increased convenience, it is important that you do not make minimum repayments on the cards each month, as you will find yourself lumbered with this debt for years otherwise. By all means use the card when you need to, but make sure that you pay off large chunks of the balance each month to clear the debt as quickly as possible, or better still repay the balance in full each month and avoid paying any interest on your debt.

According to a recent report both house and mortgage markets have slumped by around 50% in the space of a year as a result of the global credit crunch, which has managed to maintain its grip on the UK’s financial markets. The number of properties sold through estate agents has fallen by 50% compared to last March, according to figures. The number of Brits taking out a mortgage has also plummeted by around 46% according to these figures.

Officials from the National Association of Estate Agents said that on average its members sold fourteen properties in March of last year, but in March of this year the figure had fallen to an average of seven properties sold. Some estate agent officials have described the situation as being similar to that in the late 1980s, when the property market crashed spectacularly.

The Association also confirmed that the number of Brits taking out a mortgage this March plummeted to the lowest level since records began, with just 35,417 Brits taking out a mortgage. With many households struggling with finances due to increased costs many cannot afford to consider a mortgage, and the situation has not been helped by the credit squeeze, as this means that many others are unable to get a mortgage even if they wanted to.

The Bank of England also revealed that there had been a sharp rise in the number of people that were pulling out of purchasing a property because they got cold feet or because they were unable to secure the finance that they needed in the current difficult financial climate. Lenders have hiked up mortgage interest rates for new borrowers despite the three recent base rate cuts, and many have tightened their lending criteria to the point where a large proportion of new borrowers are unable to get an affordable mortgage.

One leading economist said that the slump in the housing and mortgage markets was down to a combination of stretched affordability amongst consumers and tight lending conditions from mortgage providers. The Bank of England added that in order to sell their homes in the current climate many homeowners were having to accept huge cuts on their asking prices.

Although the base rate has been cut by the Bank of England three times over the past four months, taking the base rate from 5.75% to 5% during this time, not all homeowners have felt the benefits of the rate cuts reflected in their mortgage repayments. Unfortunately some lenders have failed to pass on all or any of the rate cuts each time the base rate has been lowered, and therefore some homeowners are continuing to struggle with repayments.

One solution for those that are unhappy with their mortgage interest rate – or indeed any other aspect of their mortgage – is to remortgage to another more suitable and affordable deal. Whilst the range of mortgage and remortgage products has fallen over recent months there are still some deals available that could suit your needs and pocket. However, there are some things to look out for when it comes to remortgaging:

1. What sorts of interest rates are available? One of the main reasons for switching your mortgage is to get a better rate of interest in order to enjoy more affordable repayments. Make sure that you compare different deals to find a mortgage that offers a more competitive rate of interest.

2. What sort of deposit is required? Many lenders have now raised the minimum deposit required on mortgage products in order to access the most competitive deals. You should check and see what sort of deposit is required on the mortgage product that you are interested in, and whether the higher deposit is worth the decreased interest rate.

3. What will the arrangement fee be? According to recent reports the arrangement fees on mortgages have rocketed and in some cases doubled over the past year. You should make sure that you know how much you will be charged for the mortgage, and again determine whether it is worth switching given the arrangement fee that you have to pay.

4. Will you have to pay any penalties for paying off your existing mortgage early? In some cases you may find that you have to pay an early redemption fee for paying off your existing mortgage early. Make sure you are aware of exactly how much this is, and add it to the other costs, such as arrangement fees and deposit in order to get a better idea of your remortgaging costs.

5. What sort of repayment periods will you be able to choose from with your new mortgage? Find out what sort of repayment periods are on offer from any new provider you are considering, so that you can be sure that there are repayment periods available to suit you and your pocket.

Government ministers and officials from consumer groups are to meet today in order to discuss ways of dealing with fuel poverty amongst more vulnerable consumers, and how to target funds allocated to combat fuel poverty within these groups. The aim of the meeting is to discuss how the elderly and those on low income can be pulled out of fuel poverty, which is where 10% or more of the total household income is being spent on paying fuel bills.

At the beginning of this year the major energy firms in the UK hiked up their gas and electricity prices by a significant amount, blaming rises in wholesale energy prices for the price hikes. This caused financial problems for many households, who were already battling with high mortgage repayments, higher food costs, and soaring petrol prices.

However, whilst many households were undoubtedly pushed into fuel poverty by the price hikes, major suppliers have now promised to increase the funds that they put aside for helping the poor and vulnerable to keep on top of bill payments, thus helping to tackle fuel poverty. On the other hand, the government has received criticism from charity officials for failing to take adequate action to help more vulnerable households.

The meeting has been arranged by the energy regulator, Ofgem, and will be attended by Energy Minister Malcolm Wicks and Environment Secretary Hilary Benn, who expect to face some tough questions. The government already had targets in place to try and deal with fuel poverty over the next eight years, but some charity officials have described the government’s plans as being in a state of ‘disarray’.

It was claimed by some industry officials that the average consumer aged between 65 and 74 is paying annual energy bills of around £1010. This equates to around 15% of the average single person in this age group and around 10% of the average income of a couple in this age group – either way, the household would be classed as being in fuel poverty. Campaign officials want the government to promise further action at the meeting.

Like most other people you probably want to do all that you can to make your money work harder for you when it comes to savings, and it is therefore important that you choose a savings account that is both suitable and enables you to get a good return on your deposits. There are many different types of savings accounts available these days, and choosing the right account can be something of a minefield.

Like any other financial product it is important to compare different savings accounts in order to try and find the most suitable and competitive account. You should never be apathetic or naïve enough to assume that the best deal you are going to get is through your own bank, as this is usually not the case. You should also remember that interest rates and terms of savings accounts can vary significantly from one financial institution to another, so taking the time to compare can make a big difference.

Over the past couple of years some savers have enjoyed seeing better returns on their savings, as the Bank of England base rate hikes between August 2006 and July 2007 resulted in the interest rate on many savings accounts going up. However, interest rates have now fallen three times between December 2007 and April 2008, and sadly many financial institutions are all too quick to drop the interest rate on savings in line with the base rate.

Some financial institutions, however, have continued to pay a highly competitive rate of interest on savings accounts, such as the Icelandic bank Kaupthing Edge, which has ignored the last two rate cuts when it comes to savings accounts, continuing to offer 6.5% to savers. However, whilst the interest rate is a very important factor to consider when looking into the best savings accounts, there are also other areas that you need to consider in order to determine which account is best suited to your needs.

One of the things that you need to look out for is the withdrawal periods offered on savings accounts, as some accounts may charge you penalties in terms of interest if you make withdrawals without giving a certain amount of notice, or if you make more than a specified number of withdrawals a year. If you feel that you need ready and available access to your savings then you should look for an instant access account. However, if you can afford to leave your savings be for longer periods of time then you can afford to go for a notice account that pays a higher rate of interest.

Also, be mindful of the tricks of the trade that banks sometimes use in order to entice customers. Some may offer an impressive rate of interest, but this may be for a limited period, after which the interest rate may plummet. Make sure that you read the terms and conditions carefully so that you know exactly what sort of account you are putting your money into.

Following the High Court test case into bank charges, which took place in January of this year, banks, consumers, and even officials from the Office of Fair Trading, which brought the case in the first place, have been eagerly awaiting a decision from the presiding judge, who stated that he needed time to consider the evidence and facts before reaching a decision.

It was initially believed that the verdict relating to the case would be delivered in April once the January case had finished. However, a recent report suggested that the verdict had been delayed by a further three months, and consumers, as well as involved parties, braced themselves for another three month wait.

However, in a turnaround on these recent reports the Office of Fair Trading has announced that the verdict will be delivered this coming Thursday. The verdict will determine whether the terms and conditions of banks, including the charges that they apply for unauthorised overdrafts and bounced cheques, will come under the jurisdiction of the Office of Fair Trading. The purpose is to verify whether these terms and conditions should come under the Unfair Terms in Consumer Contracts Regulations.

Since the announcement of this court case last summer many claims for refunds on these bank charges were suspended and are still awaiting action in the court system. Depending on the ruling, and the action taken as a result of the ruling, banks could be forced to pay back billions of pounds to claimants who have been charged hefty fees over the past six years. The UK’s major banks have already paid back a fortune to customers over the past couple of years, ever since the OFT branded the charges unfair and unlawful, because they were way higher than the actual cost incurred by the banks.

Officials from the Office of Fair Trading have said that once the verdict has been delivered, and if it is decided that the terms and conditions can be assessed by the OFT for fairness, the watchdog will then decide what the next step should be.

With the financial situation getting more and more difficult for many households in light of rising costs and the effects of the credit crunch, it has become increasingly important for those with debts to try and find an effective and suitable solution to minimise in the impact that these debts have on their overall financial situation. Some people have a range of expensive debts that can prove to be a real drain on their finances, and when so many other costs are rising this can make things very difficult and stressful.

It is a good ideal for anyone that has a number of debts to deal with to take stock of their financial situation and try and come up with a structured plan to enable them to clear their debts as effectively as possible. There are a number of solutions that are available to those with high levels of debt, and the most suitable solution will depend on a number of factors, such as your circumstances and the level of debt that you are in.

If you have a wide range of debts with different creditors and you wish to reduce the number of debts that you are dealing with as well as reduce the amount that you are paying out each month then you may wish to consider debt consolidation. This is where you find one low rate consolidation loan to repay your existing debts, and then make monthly repayments on your new loan for the specified term until you have cleared the debt. This will enable you to enjoy a more structured way of repaying your debts, with only one creditor and debt to deal with. It can also help you to reduce the amount that you are paying out on your borrowing each month.

There are also those that are in so much debt that they cannot afford to keep up with repayments, and people in this situation can quickly find themselves in a financial mess. Another solution that can help to bring structure to your finances and ease your financial situation is a debt management plan. This is where you enlist the help of a debt management agency, who will then take a set monthly amount from you, which will be distributed amongst your various creditors on a pro-rata basis depending on how much you owe each creditor. The amount that you pay each month as part of this plan will be calculated based on your income, outgoings, and debt levels.

You can, of course, try and structure your own finances in order to try and ease the debt repayment process. With finance such as loans the amount that you pay tends to already be structured to a degree, as you are paying a set amount on your loan every month over the agreed term. However, you may find that the amount that you are paying on credit and store cards can vary from month to month. You may find that setting up a monthly standing order for a set amount – ensuring that it is always going to be above the minimum repayment requirement – for your cards can help you to enjoy greater stability as well as helping you to repay your card debts more quickly – and minimise on the chances of missed or late repayments.

The mortgage situation in the UK has reached crisis point in the eyes of many officials, and this has been further reflected by the decision of the government to take unprecedented steps with what is thought to be the biggest ever special initiative by financial authorities to increase liquidity. The problems arose as a result of the global credit crunch, which made its way over from the United States last year. Since this time lenders have been finding it increasingly difficult and expensive to secure funding on the money markets, with the high cost of inter-bank lending resulting in decreased liquidity in the mortgage market.

The government has now come up with a plan that will enable mortgage based assets to be exchanged for government bonds, which the government says should help to get the wheels of the mortgage market moving again through increasing liquidity. The plans have met with the approval of the Conservative Party, although Tory officials are keen for action to be taken as soon as possible. It is thought that plans could be announced later this week.

There are, however, concerns from other officials, including officials from the Liberal Democrats, who feel that the plans put forward by the government could result in greater financial liabilities for the taxpayer. The shadow chancellor from the Conservative Party has said, however, that finding a way to unblock the financial system is vital because of the problems and hardship that many consumers are facing as a result of the problems in the mortgage sector.

Since the problems began the mortgage market has been affected in many different ways. The lending criteria in place has been significantly tightened by lenders, making it more difficult for many people to get the mortgage and finance that they need. The number of mortgage products on the market has been vastly reduced, and many expect the range of mortgages available to fall further over the course of this year. Lenders have also pushed up the cost of borrowing, with mortgage rates rising despite three base rate cuts since December.

Whilst the intentions to put these plans into place have now been confirmed by government officials, there are reports of tension between the Bank of England and other financial authorities including the Treasury and the Financial Services Authority, with the latter two expressing concern over how long it has taken the central bank to take action over this growing issue.

Do you have plans to make a major purchase this year? You may be thinking of purchasing some high tech equipment and gadgets for your home, buying a new vehicle, kitting out your home with some new furniture, or even treating yourself to an expensive holiday. However, with household finances tighter than ever for many people you may find that the chances of being able to save the money that you need upfront are slim.

The good news is that there are still ways of financing that major purchase even if you do not have the money upfront, and if you do your research you could find that it costs very little – or even nothing – for the privilege of being able to spread your repayments. There are a number of solutions available for those that want to make a major purchase but do not have the cash available upfront, and you will find that your needs and circumstances will help to determine the most suitable solution for your needs.

One of the ways in which you can finance your next major purchase is with a 0% purchase credit card. These cards enable you to enjoy an extended period of interest free credit, such as twelve months, and this means that you will have plenty of time within which to repay the money that you spend on your purchase. Providing you clear the balance in full within the interest free period you will pay nothing for your borrowing. If, however, you do not clear your balance within the interest free period, any remaining balance will be charged at the standard variable rate.

If you prefer a more structured way to finance your purchases then you may find that a personal unsecured loan is the right solution. You can borrow the money that you need and choose a repayment term to suit you. You can then make monthly repayments for the agreed term. In the current financial climate getting unsecured loans may be difficult, however, particularly if you have damaged credit. Therefore you may find that a secured loan is the more suitable option, although you will need to be a homeowner to take one of these out. Again, you can choose your repayment term and then make monthly repayments on the loan until it has been repaid.

In addition to credit cards and loans you may also find that you can get other forms of finance. For example, if you are purchasing a car you can look at dealership finance, or if you are purchasing furniture or gadgets you may find that the retailer offers finance. The important thing is that you work out which financial solutions you are eligible for and which are likely to offer both affordability and suitability before you make a decision.