Abacus Daily Debt News

The Bank of England has been accused of "burying its head in the sand" over the global economic turbulence.

Michael Baxter, an economist at Defaqto, said that the Bank may not have "correctly diagnosed" what is happening in the financial markets.

He also criticised the European Central Bank, saying that it must do more in order for organisations such as the Bank of England to take action over the slowdown.

And he claimed that the chances of interest rates falling to zero - which could be beneficial for borrowers, particularly those on base rate tracker products - in the UK are "more likely than not".

"I think the speed at which we get to zero is as much down to what the European Central Bank does," Mr Baxter added.

The Bank of England’s monetary policy committee is due to announce a further decision on interest rates - which currently stand at one per cent - next Thursday following its monthly meeting.

By Jamie Price

Abbey has revealed that it is set to launch new mortgage offers on a range of fixed-rate products.

From Friday February 27th, the lender will introduce two new homeowner loans that have no fee attached.

Both are fixed for a period of three years and borrowers can choose from either the ‘homebuyer solution’ option – which includes £250 cashback and free valuation – or the ‘remortgage solution’, which features no charge for valuation or legal costs.

In addition, the bank is cutting the rate on its two and three-year remortgage products that have a maximum loan-to-value of 60 per cent.

"Fixed rates continue to be most popular amongst borrowers looking to guarantee their monthly payments. At Abbey, we continue to offer a highly competitive range to meet borrowers’ needs," commented head of mortgages Nici Audhlam-Gardiner.

It comes after Nationwide lowered rates on its two, three and five-year fixes by up to 0.2 per cent.

By Jamie Price

The introduction of chip and pin technology has pushed fraudsters to use the ‘card not present’ method to carry out illegal transactions, it has been noted.

Frances Tuke, a spokesperson for ABTA - The Travel Association, noted that this process - where fraudsters pose as customers and use fake identities - is often used to book holidays.

The thieves can also pose as employees, she revealed, calling up customers to obtain bank details from them.

"Although we’re always vigilant and we always try and stay one step ahead, we can’t say it will never happen again … we are trying to do as much as we can," commented Ms Tuke.

ABTA has joined forces with the Metropolitan Police to launch PROFiT (Prevent Fraud in Travel), a scheme aimed at tackling this type of fraud within the travel industry.

Over £10 million is stolen by criminals in this manner each year, the organisation revealed.

By Jamie Price

There is "no doubt" that first-time buyers are returning to the London property market, it has been stated.

Many people looking to get onto the ladder have noted that price drops have been greater in the capital than elsewhere, according to Ed Mead, director of sales at Douglas & Gordon.

He said that many first-time buyers will realise that now is a good time to buy a home, adding: "Not everyone wants to wait for the bottom of the market."

The city of London has "undergone slightly bigger falls than the national average so it’s not entirely surprising that the first-time buyers should be targeting that," Mr Mead remarked.

He went on to describe this development as "encouraging" and commented that the number of enquiries from this group has improved recently.

Meanwhile, the Rightmove House Price Index from February 2009 has revealed that the average asking price for a home stands at £216,163, showing a 9.1 per cent drop compared to the same period of last year.

The current events in the economy present a "once in a lifetime" chance to enter the property market, it has been claimed.

Ed Mead, director of sales at estate agency Douglas & Gordon, advised those looking to move up the housing ladder that now is a "fabulous" time to take action.

Purchasers will get "more for their money" if they buy in the present conditions, he noted, adding that these falls in prices only "come around every 20 to 25 years".

Mr Mead also recommended that vendors face the reality of the recession and accept that the value of their home may have dropped.

But there is a "macho" culture within the UK that means some people are reluctant to sell at a lower price, he remarked, saying: "It doesn’t make any sense."

House prices have fallen by 16.6 per cent over a 12-month period, Nationwide reported in January.

By Jamie Price

The Royal Bank of Scotland and Lloyds Banking Group have been declared as public sector bodies by the Office for National Statistics (ONS), following their government bailouts.

Although Lloyds was not in fact directly aided by taxpayers’ money, it has acquired bailed-out organisation HBOS and, therefore, its debts.

The move was decided upon by the ONS as it felt the government should have control over the lenders’ corporate policies.

It could have implications for borrowers of products from the banks, as well as the UK’s economic situation.

Liberal Democrat shadow chancellor Vince Cable commented that the government "has in effect nationalised RBS and has a substantial stake in Lloyds".

He argued that the measure could now provide an opportunity for lending conditions in Britian to be improved.

Mr Cable remarked that ministers must "accept the reality" that they own two large banks and "use them to ensure the flow of much-needed credit into the economy".

By Jamie Price

Around half of British people have had to dip into their savings in order to cope in the wake of the credit crunch, it has been stated.

A survey of 2,000 Brits carried out by OnePoll for Fairinvestment.co.uk has discovered that 47 per cent of those questioned have been forced to use some of their savings to cover costs.

In addition, 14 per cent have had to reduce the amount of money they stash away or cease saving altogether.

Chartered financial planner for Fairinvestment.co.uk Sharon Bratley said that the figures are "hardly surprising".

She added: "The cost of living is going up and so is the number of job losses, leaving Brits vulnerable and dependent on back-up like savings."

Meanwhile, a poll carried out by Virgin Money has found that approximately a third of Brits expect their disposable income to be restricted over the coming year by salary cuts or increasing costs.

By Jamie Price

Despite the official rate of inflation declining, elderly people still face a higher level than other age groups, research has shown.

Inflation for over-75s stood at 5.4 per cent in January, 80 per cent higher than the government’s figure that was released yesterday, according to the Alliance Trust Research Centre.

Gas and electricity price hikes have hit older people the hardest throughout the winter and contributed to this discrepancy, the firm noted.

The elderly spend over seven per cent of their budget on energy bills, while under-30s pay out just three per cent, it added.

"We are concerned that inflation facing the older age groups remains high. The elderly are not seeing the same benefits of falling prices as the young," remarked spokesperson Shona Dobbie.

The Office for National Statistics revealed that the official rate of consumer prices index inflation stood at three per cent in January, with falling petrol prices named as a downward pressure.

By Jamie Price

There has been a "considerable improvement" in the property sector over the past few weeks, it has been stated.

Sales have been higher since the start of 2009 than were seen in preceding months, according to Richard Hair, past president of the National Association of Estate Agents.

He commented: "There is always a renewal in the market in January because it’s a new year, it’s a new market and things are always that bit more positive."

This could be good news for those looking to get onto the next rung of the property ladder.

And there has been increased demand from people looking to buy their first home, Mr Hair revealed, adding that this group may have found it harder to enter the market last year.

Recently, the Royal Institution of Chartered Surveyors’ UK housing market survey for January 2009 showed that interest in the sector has picked up, with 16 per cent more chartered surveyors reporting a rise than a fall in new buyer enquiries.

By Jamie Price

Britain will be in recession throughout the whole of 2009, it has been forecast.

The Confederation of British Industry has predicted that the slump will continue until early 2010, with unemployment reaching approximately 2.9 million by the end of this year.

Director general of the body Richard Lambert warned that the future of the economy remains "extremely uncertain", making it difficult to estimate what may happen over the coming months.

"Ultimately the severity of this recession will depend on the speedy implementation of the government’s measures to unblock the credit markets and the success of various global stimuli packages," he stated.

Mr Lambert added that interest rate cuts, fiscal policies and falling inflation should help to stabilise conditions towards the second half of 2009.

Recently, figures released by the Office for National Statistics showed that unemployment rose to 1.97 million in the final three months of last year.

By Jamie Price