News

Bank reports sharp fall in mortgage lending

2010-09-06T10:52:54+00:00

Mortgage lending fell sharply in July, fuelling fears that the housing market is headed towards a double dip recession.

According to Bank of England (BoE) figures net lending fell sharply from June's £518m to £86m the fourth lowest level since records began in 1993, once redemption and repayments were taken into account.

The BoE said annual growth in lending also fell, based on the last three months’ figures, to 0.4 per cent from 0.6 per cent.

The figures follow a raft of gloomy data on the housing market, which has failed to reach its normal summer season bounce. Nationwide recently reported a 0.5 per cent price fall during July, while Halifax reported falls for four of the first seven months of the year.

And the Council of Mortgage Lenders recently revised down its forecast for net lending during 2010 to £12bn, compared with its previous prediction of £15bn.

The Bank also reported a worrying rise in the volume of bad loans being written off by lenders – £3.2bn of loans to individuals were in arrears in the second quarter of this year, a record high.

However, new mortgage approvals edged up slightly last month to 48,722, a mere 70 more home loans than were forwarded in June. However, this still beat experts’ predictions of just 47,000.

The Bank of England said secured lending to individuals rose by just £100m in July, after a £700m rise in June, while unsecured net consumer credit rose £0.2bn.

Benefit claimants owe huge debts

2010-09-06T10:50:19+00:00

Nearly 15,000 people claiming Jobseeker’s Allowance (JSA) are struggling with debts of over £15,000, according to figures released today by a debt charity.

The Consumer Credit Counselling Service (CCCS) revealed that in the first half of 2010, 14,446 people claiming JSA who contacted the charity owed an average of £15,412 to five different creditors.

This figure amounted to one out of every eight people who contacted CCCS during this period, with the charity warning that huge numbers of people in this situation would never be able to pay back their unsecured debts, even if they put their entire JSA towards repayments.

Malcolm Hurlston, chairman of CCCS, said: "Thousands of people claiming JSA are ensnared by unsecured debt and their needs demand specific study.

"Government must be mindful of how welfare cuts will affect those living off benefits and move to ensure they are not damning huge numbers of people to a lifetime of debt."

According to the CCCS figures the proportion of their clients who are in debt while claiming JSA is almost three times higher than in the general population.

The charity said that one of the key reasons for the debt problems was unemployment, with 22.4 per cent of people who contacted CCCS in the first half of 2010 citing this as a reason for their debt problems, a figure which is disproportionately higher than the current eight per cent level of UK unemployment.

Hurlston added: "There is a causal link between unemployment and debt. Unemployment can devastate the finances of any family and our experience shows that once somebody with few financial options is forced to take out a loan to cover living costs they are often then trapped in debt for years to come."

Taxpayers bear brunt of HMRC blunder

2010-09-06T10:45:29+00:00

HM Revenue and Customs (HMRC) is facing fresh embarassment as it was revealed that a blunder means over one million UK citizens will have to fork out sums over £2,000 to resolve underpaid income tax.

HMRC said that around 1.5million UK citizens have underpaid their income tax in the last two years, and as a result those currently owing £2,000 or more will face demands for repayment in one lump sum.

A spokesperson for HMRC told Credit Today: "What we’re seeing this year is around 1.5m people who have underpaid their tax.

"If that money is under £2,000 it is coded out and those people will pay slightly more tax in the next year. But if it is above £2,000 they will have to pay that extra element in one lump sum."

The problem came to light after HMRC computerised an administrative process, whereby information held on their records is checked against amounts deducted in tax and national insurance by employers using the pay as you earn (PAYE) system. This process used to be performed manually.

The news follows an announcement by the Treasury that 4.3million people are set to receive a tax rebate after overpaying their income tax during the last two years. Around £3bn in overpaid tax is due to be returned by HMRC, with the average repayment totalling £418.
HMRC was unable to confirm how many people were due to receive a rebate, but it is expected to be much higher than the 4.3million citizens already confirmed.

The spokesperson added: "There are people who have overpaid and at the moment we haven’t got a firm idea of how many that is, but there will be a fair element who get a decent sum back.