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Archive for the ‘recession’ Category

House prices up or down?

Wednesday, July 8th, 2009

The latest part of the roller coaster that is house prices comes from Halifax. Their findings show a sharp fall in house prices in June, which has partly reversed the gradual increase of house prices we had seen in the last couple of months, reports BBC News Online. The news contrasts greatly to findings showing a large 2.6% increase in prices back in May.

The findings come from Halifax’s property survey, some good news highlighted the slowing annual decrease in prices from 16.3% to 15% last month, they went on to proclaim that there was evidence the property market is stabilising after sharp slumps since mid 2007.

Martin Ellis Halifax’s chief lender states that prices have ‘fallen by only 1.9% in the past three months’ the lowest quarterly decline, however, a long way from those green shoots predicted here in an earlier blog.

So why have these figures told a different story to that of Nationwide’s figures which sparked the earlier blog about a spring bounce or green shoots? Halifax, whose figures are based on a sample of its own lending said prices had only risen once in the last 4 months and are still 2% lower than February. Nationwide however, had its findings showing that prices had risen in three of the last four months.
Overall there is hope as undoubtedly house prices are picking up due to low levels of interest rates. HM Revenue and Customs has shown that completed sales in May were at their highest since October 2008.

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Tags: house prices, housing, recession
Posted in credit crunch, recession | 1 Comment »

Paid to stay home - the CBI’s new measures to tackle redundancies

Tuesday, July 7th, 2009

How would you like to be paid to stay at home and do nothing? Well that’s exactly what the Confederation of British Industry’s (CBI) ‘Alternative to Redundancy’ (ATR) scheme has suggested that employers should do. By putting workers into a low paid limbo rather than straight out making them redundant the company is better able to respond to surges in demand. Times Online reports that the ATR scheme would give workers £130 a week, half of which covered by the employer the other half by the Government.

Workers would stay on the scheme for six months ready to be re hired at any time in this period. The CBI deputy director John Cridland sees this scheme as a way to help ‘business cope with sharp drops in demand’ yet be prepared for recovery, workers will be able to benefit from ‘improved financial support and a door that is kept open for six months’.

Opposition has been raised by unions in particular Brendan Barber of the Trade Union Congress, who deem the proposals as just another way for employers to short-circuit the current redundancy rules. With the AtR measures employers would be able to fire workers with just four weeks notice rather than the 90-day consultation period and any worker who is on the AtR scheme but accepts a job will lose all redundancy benefits effective immediately.

Barber argues it’s better to ‘keep people in work or training with their employer rather than sitting at home’, the TUC argues instead for wage subsidies that are now common in the rest of Europe. Cridland hits back saying that subsidies are too costly for Britain’s coiffeurs. He argues that the AtR is not about letting business avoid their responsibilities – Cridland even points out ‘that if a scheme runs for six months and a redundancy is still made, and then the business will actually end up paying more’.

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Tags: Benefits, CBI, recession, TUC, Unemployment
Posted in Government, Unemployment, recession | No Comments »

Rising Costs hit hard – let 24/7 Moneybox be your lifeline

Wednesday, July 1st, 2009

Many of you may already know about rising costs from personal experience, however, the Joseph Rowntree Foundation has officially highlighted that the cost of living is rising faster than average prices for many people, according to BBC news.

Costs for many households have risen sharply, in particular in the lowest income bracket where 1 in 4 are living below minimum income levels as stipulated by the Rowntree Foundation. The costs for a single family on a low income budget are up by 5.3%, pensioners and parents also faced 5% increases as well. The reason behind this the foundation has highlighted is that low income consumers spend more as a proportion of their income on the price sky rockets of fuel, food and public transport.

Rowntree created the benchmark of the minimum income level as that of which people have a ‘socially acceptable standard of living’, also that people has ‘what they need in order to have the opportunities and choice to participate in full in society’.

However, the issue of how you define poverty is a contentious one. In particular as Rowntree has highlighted, during the recession poverty has actually gone down. This is due to the Government pegging poverty as living below 60% of national average earnings, however, obviously earnings have taken a hit, in fact it has stopped growing completely this year, while benefits uptake have increased by 5%. This has all lead to fewer classed as in poverty. The report will also tie in with the Government’s bill which will make the goal to halve child poverty by 2020 law.

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Tags: Add new tag, costs of living, inflation, joseph rowntree foundation, recession
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Holidaymakers need better protection, but not from the sun

Friday, June 26th, 2009

The summer is prime holiday time for 40 million of us Brits, however, there have been calls for the Government to look into the regulation covering holidays, according to BBC News. Trading Standards have outlined that not only do package holidays coverage needs to be reviewed but for holidays on any person going abroad, where regulation has been deemed to be outdated.

The outdated regulation has been levelled at the lack of ATOL protected holidays. ATOL protects against the travel agent going bankrupt and leaving passengers stranded. However, obviously in the current climate this is increasingly becoming an important aspect of any holiday making abroad. Vivid examples of this include XL who went down and led to thousands of people putting in claims for cancelled holidays.

However, less than half of holidays are ATOL protected compared to 98% ten years ago. This is down to the increase of computer customised holidays that mix elements of different holiday packages and subsequently aren’t ATOL protected.
Suggestions for rule changes include a blanket protection for all flights booked with scheduled airlines and protection for flights sold alongside another component such as accommodation.

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Tags: bankruptcy, fast loan, holidays, regulation, trading standards
Posted in holiday money, recession | No Comments »

FSA admits impotence as Building Societies are scrutinised

Thursday, June 25th, 2009

The blame game is in full swing again today as accusations once again being thrown about by top members of the Financial Services Authority (FSA), reports Times Online. High ranking officials have pointed their fingers at some of the biggest building societies in Britain, who are being accused of ignoring numerous warnings and threats put forward by the FSA to stem borrowing.

Nick Lock, the manager of the FSA’s retail firms division, spearheaded the criticism. Hugh May, quoting Lock at the Building Societies Association (BSA) annual conference in Harrogate, stated that ‘we have seen unsustainable margins on prime-lending, over-ambitious growth targets and a risk appetite that was too great’. May also points out that there were ‘fundamental mispricing and inadequate investment in risk management’.

A number of building societies have been hitting the wall over the last 12 months. Scarborough Building Society has been rescued by Skipton and in March Nationwide bought the best bits of Dumfermline which had incurred losses amounting to £26 million.
Building Societies had apparently ignored warnings from the FSA which had been repeated ‘over and over again’. But this only illustrates the argument that financial turmoil is not down simply to the building societies and financial institutions, but instead the lack of regulation.

Why did the FSA have no teeth to ratify their warnings, it is surely their job to prevent this situation occurring? It’s not hard to see why building societies and all financial institutions have exploited the deregulated system for all its worth, a little reading into rational choice theory and Mancur Olson’s collective action problem can even describe how it has actually been rational for financial institutions to act greedily in a situation where regulation is sparse (Olson and his counterparts in game theory and collective action problems stipulate that irrespective of whether you choose to benefit or not from greedily exploiting a market then your rivals will, which will be to your detriment, firms are myopic in particular as long term goals require irrational collective action).

It is strange therefore that the FSA readily decides to stand up and show how impotent and pathetic it has been in reigning in their greedy subjects, perhaps in admitting their weak behaviour they will be allotted more powers in the upcoming regulation proposals.

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Tags: building societies, FSA, mortgages
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Housing Sales – Green Shoots or ‘Spring Bounce’?

Wednesday, June 24th, 2009

Optimistic findings today from HM Revenue and Customs (HMRC) which show that the number of homes sold are continuing to rise, reports BBC Online. However, it is key to note that this may be down to the usual spring bounce period where sales have tended to increase.

This complements or (could be attributed to) the increase in the mortgage approvals in the last six months highlighted by the British Bankers’ Association (BBA). The BBA put mortgage approvals up by 15.8% at 31,162 since this time last year. But again the BBA points out the market as still subdued.

According to HMRC 62,000 homes worth over £40,000+ have been sold in May this is up 7% from last month. BBC felt it necessary then to point out the truism that this is nowhere near the levels of the boom in housing.

Critics point out the usual spring bounce findings which occur every year, however, when through stripping out the seasonal factors March saw a 40% leap in property sales from the month before. Perhaps, it can be argued, that green shoots are emerging in the property market. Home loan providers have even begun increasing their cost of fixed rate mortgages in the last couple of weeks in response to higher demand.

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Tags: hmrc, housing, mortgages
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King targets Banks ‘too big to fail’

Tuesday, June 23rd, 2009

An interesting opinion from Governor of the Bank of England, Mervyn King, is that the Banks ‘too big to fail’ should be prevented from getting that big in the first place. According to the Times Online King stresses this is not a personal ploy for power nor is it instigating a battle with the treasury but in the country’s and taxpayers’ best interests.

This comes at a time when the Chancellor Alistair Darling will be announcing proposals for regulation of the financial sector for the next ten years. The proposals will at large be based on the findings of Lord Turner’s Report on the Financial Services Authority.

King’s remarks not only question the general size of banks but whether the banks are mixing high-street retail banking with high risk investment banking, which had caused so much trouble in the last couple of years. The issue of size and relative failure is a contentious issue, many analysts have argued that the bigger banks were more likely to fail and fail in a more expensive way to the taxpayer. However, others highlight that even the relative smaller banks have an impact for instance Dunfermline, Northern Rock and Bradford & Bingley, were not large yet still needed to be saved. Even the biggest banks did not fail simply because of their size, for instance RBS’s disastrous acquisition of ABN Amro, leading to them needing rescue from the taxpayer.

The Swiss government is even considering measures to physically curb their big banks: UBS and Credit Suisse. However, one analyst argues this may lead to banks moving their headquarters abroad, the last thing the country wanting a revenue drain abroad.
At the basis of Darling’s future proposals for regulation is the idea of responsible lending. Something we here at 24/7 Moneybox take very seriously indeed. When you apply for our cash loans we want you to be sure you have thought ahead and can afford the repayment. Check out our lending guide if you need some assistance.

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Tags: Bank of England, FSA, recession
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Repossessions overestimated but still on the up – How 24/7 Moneybox can help

Monday, June 22nd, 2009

Some relatively good news from the world of property repossession, BBC News Online has led with an article stipulating that predictions for repossessions for the rest of 2009 have been overestimated, but they do still remain high. The Council of Mortgage Lenders (CML) had originally predicted the amount of repossessions at 75,000 in last December; however, latest findings have put the level of repossessions closer to 65,000 a drop of at least 10,000. Despite this the level of repossessions has gone up by 50% in the last three months.

Even with the recalculation the CML states there are still no signs of a ‘robust recovery’, and puts the repossession reduction down to a number of factors not really related to the health of the economy. First of all the reduction in interest rates, from 5% in October 2008 to 0.5% now, has alleviated homeowners from steep mortgage payments. In court advice schemes have, according to the Housing Minister John Healey, prevented 4 out of 5 repossessions in court. Finally not-for-profit organisations are soon to be piloting a £285m scheme to buy homes and affordably rent them out to struggling homeowners. The CML, short of endorsing the governmental schemes has stipulated that they have allowed people to get into touch with their lenders and subsequently getting help.

However, the CML highlight that job losses and reduced bonuses have made meeting payments extremely difficult. The CML predicts that these will get worse as the recession continues and predicts that 428,000 may get into arrears on their home loans.

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Tags: CML, mortgages, payday loan, recession, Repossession
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APR – The focus of mainstream media

Monday, May 25th, 2009

An interesting article in the FT today on the subject of payday loans. the article opens with the amazing revelation that the recession is not a great thing and some are finding it hard to make their money last for the month. Hmm not particularly insightful, an amusing if slightly patronizing review of pawnshops and their clientele.

As with all mainstream media the shock tactics come into play with the APR which as an annualized rate doesn’t lend itself at all to a short term loan. Quoting Geoff Holland of the British Cheque Cashing Association, with whom 24/7 Moneybox are full and active members: “Comparing APRs with those of bank loans is misleading, he says, likening extremely short-term rates to a situation where someone buys a £2.50 pint of beer for a friend in return for borrowing £25 over a week.” We couldn’t agree more.

Indeed the article goes on in what we think is an incredibly balanced and sensible article to quote Tom Howard of the Consumer Credit Counselling Service: “For some people it’s the only sort of loans they have access to. It’s better that they use those forms of credit rather than going to loan sharks who are illegal or perhaps more unscrupulous.” In addition the article notes that the Office of Fair Trading has had little in the way of complaints.

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Tags: APR, BCCA, Pawnshops, payday loan, recession
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That’s another fine mess you’ve got us into!

Friday, May 1st, 2009

Our favourite soap opera that is the Treasury select committee, in its second report on the crisis, states the blame lies largely by the banks’ own reckless behaviour.

“Bankers have made an astonishing mess of the financial system,” said committee chairman John McFall.

The BBC article goes on to outline the disparity between the banks’ assurances that they are lending again especially to small businesses and anecdotal evidence from disgruntled customers who are finding it increasingly hard to get credit.

It seems down right outrageous that the banks are putting their profit margins and shareholders’ interest first and the needs of their customers second. After taking billions in public bailout funds, almost all banks have tightened their lending criteria and honest customers who in more normal times would have no problem getting credit are being turned away.

In such tough economic times we here at 24/7 Moneybox are committed to looking at each and every case on its merits and helping out where we can. We appreciate that just because its tough out there for all of us its not the time to reign in on the vital recession busting tools such as consumer credit.

Our innovative online loans can help bridge the gap in your finances during the month and smooth out your household’s cashflow. Our payday loan service is quick and professional and you could be on your way to a short term payday cash advance in minutes.

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