Abacus Daily Debt News

Those planning to move house and who hold a mortgage with Halifax may soon find themselves facing debt problems, as the lender is forcing some customers to switch from cheaper deals.

Borrowers who have taken out the bank’s standard variable rate (SVR) mortgage will not be able to continue with this agreement should they relocate, instead having to transfer to fixed and tracker accounts, Money Mail reports.

The news source noted that this can mean that hundreds of pounds are added to monthly repayments.

And mortgage expert at Moneyfacts.co.uk Darren Cook observed that, a few years ago when SVRs were costly, no-one would have wanted to transfer them to a new home.

"Now, if your SVR is under four per cent - the average is 4.63 per cent - it can make sense to keep it," he said.

However, mortgages themselves are becoming more affordable, recent figures from Woolwich of Barclays have indicated, with the average monthly payment being £497, a drop from the £607 seen in December 2008.

By Sarah Adie

New figures regarding personal debt levels in the UK have been published, revealing that - at the end of December last year - the amount stood at £1.46 billion.

Statistics from Credit Action have shown that, excluding mortgages, the average household debt in the country had reached approximately £9,000, although if unsecured loans were included in the calculations, this would climb to £18,722.

In addition, consumer borrowing through overdrafts, personal loans, credit cards and finance deals also experienced a rise, averaging £4,692 per adult by the close of the year.

And interest payments on debt for the last 12 months reached £66 billion - or, on average, £2,620 per family unit.

PricewaterhouseCoopers observed that the typical household would have to spend around 15 per cent of its net income to meet such interest demands.

Earlier numbers from Credit Action in January indicated that the average debt levels for households - without mortgages - reached £9,016.

By Sarah Adie

The number of people seeking homeowner loans may rise this year, as research has revealed that many believe house prices will decrease no further.

Conducted by Unbiased.co.uk, the report indicated that three per cent are putting off buying property until prices have dropped, while 18 per cent believe they have bottomed out.

Chief executive of the company Karen Barrett noted that the past 12 months have seen consumer attitudes change and people are no longer "biding their time", waiting for costs to fall.

"They are now looking to buy and gathering the means to do so," she said, adding that Britons are also aware of "the importance of getting the right mortgage now more than ever".

Her comments come in the wake of a recent study by Woolwich of Barclays, which found that mortgages are becoming more affordable.

It was seen that the average monthly payment is now £497, a drop from the £607 recorded in December 2008.

By Sarah Adie

The majority of parents in the UK are concerned that their children will fall into debt in later life.

This is the finding of a new survey conducted by Nationwide and the Personal Finance Education Group, which indicated that 69 per cent are anxious about this, a rise from the 62 per cent recorded in 2008.

However, 91 per cent of those asked stated that it is up to the parents to impart financial education as well as schools, although many admit they do not have the skills in place to teach their offspring.

Commenting on the fact that 77 per cent believe that money matters should be taught in schools, Nationwide’s head of corporate responsibility Caroline Hallatt said: "It is important that children of all ages have a good understanding of financial matters so they are equipped to make the best possible decisions … when they leave school."

Meanwhile, a recent Nielsen-British Retail Consortium survey showed that Britons are increasingly anxious about their personal debt levels, with 69 per cent planning to use spare cash to improve their finances.

By Sarah Adie

Children from middle-class families appear to be being put off from applying to university because of hikes in tuition fees, suggesting that debt fears may be a factor.

Figures from the Higher Education Funding Council for England have shown that interest in college places from such people is rising less quickly than other lower-income demographics, the Daily Mail reports.

And those who are not successful in achieving bursaries and grants in order to help them pay their way through university could be considering moving abroad or looking for work instead.

Statistics from the Student Loans Company also revealed that almost 140,000 school leavers did not receive grants in the autumn, with a minimum of 17,000 missing out after the income limit was dropped to £50,000.

However, those currently at university may like to consult a money doctor, of which there are many in more than 70 higher education facilities and who are trained by the Financial Services Authority to help young people manage their money.

By Sarah Adie

Sections of the Consumer Credit Act 1974 are to be clarified by the Office of Fair Trading (OFT) in order to help those in debt understand how they apply to them.

According to the organisation, some people are under the impression that parts of the Act can be utilised to eradicate debt, while a number of creditors are not offering information to their clients, which they are legally obliged to do.

Director of consumer credit with the OFT Ray Watson noted that "a great deal of confusion" has arisen.

"This guidance is to clarify the legal position and the OFT view on standards expected of the industry," he continued, adding that it also intends to make people aware of the risks of trying to use the Act to avoid "legitimately owed" arrears.

Meanwhile, UK adults were recently advised by Andrew Hagger of Moneynet.co.uk to avoid accidentally going into their overdrafts without authorisation in January and, if it looks likely, to contact their creditor to accommodate this.

By Sarah Adie

Women appear to be cutting back on their expenditure as a result of the recession and limiting potential debt problems that may arise through too much shopping.

This is according to the latest survey from The Co-operative Bank Savings, which found that 75 per cent do not intend to make impulse purchases this year.

Cutbacks will be seen in clothes and accessories, while eating in restaurants will also be minimised.

Director of retail products for the firm John Hughes noted that this study is indicative of the fact that women are being "savvier" about their spending habits.

"They are sticking to a budget and paying greater attention to their bank balances," he said, adding that saving money throughout the year can be beneficial in the long run, despite it being difficult right after the Christmas period.

And similar numbers were recently published by the Office for National Statistics, which found that less is being spent on clothing and footwear, with the average amount being £21.60 a week.

By Sarah Adie

The proliferation of store cards has been derided by an industry expert, who stated that their existence exacerbates the levels of personal debt and can result in poor financial circumstances.

Andy Wood of insolvency trade organisation R3 and the P&A Partnership said that offering credit in shops is "frankly irresponsible".

"Without proper training, shop assistants are inappropriately qualified to understand the consequences of what they are selling and [are] often commission driven," he continued.

In addition, R3 cited figures from a recent study of industry practitioners, which revealed that 70 per cent believe it to be too easy to gain access to store cards, while some reported instances where people have held more than 30 at any one time.

This comes after Chris Tapp of Credit Action recently observed that Britons are having a "love affair" with credit cards, with people turning to plastic as a solution to the recession.

By Sarah Adie

Action needs to be taken to ensure low-income households are provided for in the recession.

That is the suggestion of head of policy and campaigns at Family Action Rhian Benyon, who called for the government to ensure such families are protected - particularly as the rise in fuel bills caused by the recent cold snap will be adding to pressure.

Increased benefits and tax credits are required to help avoid debt problems, she said, warning: "Low incomes mean that many will not be able to access mainstream credit and lending facilities, forcing many to seek loans from higher-cost home credit companies."

Earlier this week, governor of the Bank of England Mervyn King noted that the next couple of years are likely to see the patience of British households "sorely tried".

Inflation will pick up "markedly" over the first six months of 2010, he predicted, while salary freezes are to be expected.

By Andy Mackay

The lack of structure in repaying credit card debt is creating problems for consumers, it has been argued.

Samantha Owens of Moneyfacts.co.uk noted that although this form of finance is an important part of the banking industry, many consumers do not understand their commitments.

She said that changes to the system may be necessary, in order to allow customers to properly manage their money worries.

"Credit cards … come with the risk of a greater temptation to overspend; [they] are one of the most expensive forms of credit and [have] little or no structured repayment mechanism," Ms Owens explained.

The price comparison site called for the introduction of recommended minimum payments to be considered, as many people are not reducing their credit card debt by significant amounts.

A similar suggestion was recently made by moneysupermarket.com, which proposed recommended levels rather than mandatory ones because the latter would create further difficulties.

By Andy Mackay