Abacus Daily Debt News

A growing number of adults are choosing to live with friends or family in a bid to avoid debt management issues, research has indicated.

According to a study by Abbey Mortgages, 1.6 million people between the ages of 18 and 34 are doing so and not paying rent.

The bank explained that difficulties in raising enough money for a deposit to put down on a house of their own has prompted the shift, as many plan to seek competitive rates for secured loans.

"Living rent-free is a great opportunity for potential first-time buyers to save money that can be put towards a deposit for a property of their own," said Abbey mortgage director Nici Audhlam-Gardiner.

She added that the debt management tactic has increased significantly since last year, when less than half a million people were found to be living without having to pay rent.

Last week, head of mortgages at Bestinvest Peter O’Donovan noted that borrowers are benefiting from an increase in deals requiring smaller deposits.

By Andy Mackay

Around half of Britons cannot afford to make home improvements this Easter weekend, with many running the risk of falling into debt by carrying out work themselves, it has been noted.

A survey by moneysupermarket.com has found that 43 per cent of homeowners do not have the money to make additions to their properties at a time when it is traditional to do DIY.

In addition, it discovered that 14 per cent of those questioned will try to complete projects personally rather than calling in a tradesman, something that spokesperson Steve Sweeney said could incur extra costs.

He stated that "DIY disasters" can occur, which may amount to an expensive mistake if a house does not have adequate insurance cover.

Meanwhile, the average UK household with a mortgage is £59,765 in the red, figures unveiled recently by Credit Action have shown.

The report revealed that that a typical British borrower owes £30,470 on products such as home loans.

By Jamie Price

It is "far too early" to tell whether the flow of credit to British consumers has improved or not, it has been claimed.

Vicky Redwood, a UK economist at Capital Economics, said that there is still a "big risk" that banks will become less willing to supply loans to borrowers as their "losses continue to mount".

She was commenting on recent Bank of England data that suggested lending had picked up earlier in the year.

Ms Redwood argued that people should not take this as a sign that there is a recovery underway, remarking: "We have only had a month or so of stronger borrowing figures."

However, she noted that it is "crucial" that credit becomes more freely available, both to homeowners and businesses.

The latest statistics from the Bank of England showed that in February, the net increase in lending to individuals rose to £1.3 billion.

By Jamie Price

There have been some "tentative signs" that the situation in the mortgage market is improving, an industry analyst has said.

Charles Davis, a senior economist at the centre for economics and business research, noted recent Bank of England figures that showed the flow of home loans rose by 19 per cent in February.

Commenting on this, he remarked that it "also comes at a time when we have seen some pick up in interest and enquiries in the housing market".

However, Mr Davis stated that there are still several "fundamental" issues to be overcome, such as businesses going into bankruptcy, unemployment rising and weak levels of income.

"Those factors will continue to constrain the mortgage market," he claimed.

The Bank of England report showed that there were 37,937 home loans approved during February, which was up from 31,791 in January.

But this compared to 67,842 mortgages being lent out in February 2008.

By Jamie Price

Many people have been "behaving wisely" with their finances in the wake of the credit crunch, it has been claimed.

Adrian Lowcock, a senior investment adviser at Bestinvest, said that since the onset of the economic downturn, consumers have been altering their spending habits.

"They are paying down debt and rebuilding their own balance sheets rapidly," he explained, adding that high street spending will probably be affected by the trend.

And people attempting to handle their debt could actually be beneficial for wider markets, he added, stating: "The quicker savers and borrowers re-organise their finances, the better for the economy."

Meanwhile, the Bank of England has reported that consumer credit lending became weaker during February, declining by a total of £0.2 billion.

However, an improvement was noted in the flow of mortgages between January and February, with this figure standing at 37,937 in the latter month.

By Jamie Price

Borrowers have benefited from a "partial" passing on of recent Bank of England base rate cuts, it has been claimed.

Ross Walker, an economist for Royal Bank of Scotland Global Banking & Markets, said that average interest rates have begun to come down in light of the reductions.

However, he noted that the cost of borrowing will never be on a level with the Bank’s base rate, arguing that this would not be realistic.

"You couldn’t reasonably have a mortgage based at 0.5 per cent interest rate. It wouldn’t reflect risk, it wouldn’t reflect the real cost of capital," Mr Walker commented.

The base rate is presently at its lowest level since the Bank of England was established in 1694, potentially having a positive impact for those in debt.

It was last cut on March 5th, when the monetary policy committee voted to lower it by 0.5 per cent.

By Jamie Price

Many UK adults are stuck in "subprime" jobs offering low salaries, it has been claimed.

Kate Green, chief executive of the Child Poverty Action Group, said that millions of young people live in homes that are still "below the poverty line", with parents working in roles on "rock bottom pay".

It comes as the tenth anniversary of the national minimum wage is celebrated, with the Trades Union Congress (TUC) launching a campaign for it to be extended to 18-year-olds.

Currently it is only available to those aged 22 or over, with Ms Green arguing that the government must heed the call in order to assist younger workers.

Such a move would "increase the fairness and protection" the minimum wage guarantees, she stated.

Meanwhile, the number of unemployed people rose by 165,000 during the three months leading up to January 2009, according to the Office for National Statistics.

By Jamie Price