Planet Funds

Housing prices in Northern Ireland grew tremendously last year, according to the Royal Institute of Chartered Surveyors, but they are beginning to slow.

Home sellers will need to be practical when pricing their homes this year, but RICS expects sales to continue.

The market has changed dramatically during 2007, according to Tom McClelland, housing spokesperson for RICS Northern Ireland.  Today, “agents have to work harder to achieve sales and sellers have to be more realistic about asking prices,” he says.

Changes in the market could ultimately work to the benefit of first-time home buyers, predicts McClelland, because fewer buyers are competing for homes in that price range.

By the end of last year, the housing price growth rate was 24.2 percent, making it the highest in the UK.

Homeowners may not see savings on their mortgage payments in spite of additional cuts in the base interest rate this year, says one expert.

According to David Kuo, head of personal finance for the Motley Fool, the Monetary Policy Committee’s decision to keep the base rate unchanged may or may not have an impact on mortgage rates. That relationship has not been firmly established.

Lenders have been encouraged to pass December’s rate cut on to borrowers by Chancellor Darling.   Mr. Kuo warns, however, that mortgage loan providers are not required to pass savings on to borrowers, and given the current economic climate, many may choose not to do so.

At the moment, many lenders are focusing on returning their business to better health.

While experts predict that the Bank of England may institute further cuts in answer to the current economic slowdown, homeowners will probably not feel any benefit from those cuts.

There is a strong possibility that personal insolvencies will increase this year, according to James Falla of Thomas Charles & Co.

Predictions that personal insolvencies could increase this year may be accurate, according to one industry expert.

The number of persons declaring themselves insolvent in 2008 is likely to rise, says James Falla, director of advice service Thomas Charles & Co., proving experts right.

Rising debt levels have gained wide attention recently.  Mr. Falla points to data collected by KPMG that suggests a 30 percent increase in the number of personal insolvencies this year.

Mr. Falla points out that personal insolvency may take one of three forms:  bankruptcy, individual voluntary arrangements (IVA), or informal debt management plans.

While it is possible to find statistics on bankruptcy and IVAs, data about informal debt management plans is not available.

Some people trying pay back loans may find an answer in debt consolidation loans, according to the price comparison firm uSwitch.

The current credit situation should not hamper individuals attempting to get a self-cert mortgage.

While borrowers are encountering tighter lending conditions in other money markets, Andy Pratt, spokesperson for Alexander Hall, reports little change in the self-cert market.

Nonconforming lenders in the subprime market have taken the brunt of the problems in the financial markets, according to Mr. Pratt.

The broker representative expects that borrowers with good credit will not experience problems in securing loans, as the high street banks are not seeing a negative impact.

Mr. Pratt says that borrowers who qualified for a self-cert loan in the past should not have any trouble now.

Data provided by the Economic and Social Research Council suggests that of the 29 million Britons working today, 13 percent are self-employed, making them qualified for a self-cert loan.

Britain’s mortgage borrowers could pay more due to the Bank of England’s decision earlier this month to leave interest rates unchanged.

Because the bank failed to implement a .25 percent cut in rates, borrowers may pay an additional £105, according to Ray Boulger, broker for John Charcol. 

Negative news on the economy led many industry experts to predict a rate cut, according to Mr. Boulger, who believes a cut was in order.

Britons could see financial problems due to inflating prices, signaled in part by npower’s decision to increase ticket prices by 17 percent, says the financial expert.  He does point out, however, that the consumer price index has risen only slightly above the two percent target rate, and he expects the global financial situation will cause it to slow.

Mr. Boulger fears that if the monetary policy committee waits too long to reduce the rate, they may be forced to cut the Bank rate more deeply than would have been the case earlier.

Meanwhile, moneysupermarket.com predicts that more borrowers may turn to secured loans.

One-quarter of 16- to 44-year-olds surveyed by uSwitch admitted that they were concerned about paying bills that will come due in the New Year.  The study, funded by the Financial Services Authority (FSA), found that more than 50 percent of them could not say how much they spent during the holiday season.

Britons’ interest payments have soared to a record high £93 billion, an increase of £12.7 billion.  The numbers suggest that many may find themselves unable to manage their debt load as family finances continue to tumble out of control.

Britons have enjoyed easy credit over the past few years.  As lenders start to tighten their standards, however, consumers need to be prepared.

In the past six months, 9.5 million adults spent to the limit on at least one source of credit, according to uSwitch.  Nearly one-quarter report that they can no longer manage their debt.

Credit applications are being rejected, according to research which shows that 38 percent of those who applied for a credit card were denied.

The increase in mortgage interest rates has resulted in higher monthly payments, putting many borrowers in a difficult position.  The average household will pay £3,744 in interest charges, including mortgage interest, an increase of £517 over a year ago, according to uSwitch.

Britons have been able to rely on cheap credit for quite some time, says Mike Naylor of uSwitch.  Although the recent drop in interest rates will help, Mr. Naylor worries that it may have come too late to help those in serious trouble.  He advises people to act immediately to prevent a disaster.

A further interesting finding of the uSwitch survey:  13 percent of those surveyed said they planned to get their financial situation under control, while 26 percent admitted that they will probably book a holiday or take up a new hobby.

High expenditures during the holiday season will lead an estimated 130,000 people to bankruptcy, according to accounting firm KPMG. The figure for 2007 was slightly less than 110,000.

Large credit card charges and increasing mortgage payments are adding to the problem.

KPMG expects that some people will be declared bankrupt, while others will complete Individual Voluntary Arrangements (IVA). People with an IVA repay a part of their debt to credit card companies and banks and are able to start anew with a clear financial record.

Many people currently facing financial disaster will attempt to transfer debt to low-interest credit cards or consolidate their loans. Tighter lending standards, however, may force them into insolvency.

In the past, people have found it very easy to borrow more money by taking out a second mortgage on their homes, obtaining a consolidation loan, or getting another credit card, according to KPMG’s Mark Sands. For many, these tactics have been a life-saver.

Mr. Sands expects that access to these products will be limited in the future. He reports that credit card companies are rejecting nearly half of the applications they receive, an increase of 30 percent from pre-crunch days.

High interest rates and the expiration of fixed-rate mortgages have contributed to peoples’ debt burden, says Mr. Sands. These people are now faced with ballooning payments that add an additional £400 to £1,390 per month on a £150,000 loan.

Dog lovers should be ready to cover the high cost of pet ownership.  More than five million Britons own at least one dog, according to Tesco Pet Insurance, and they need to watch their budget to make certain they can care for them.

A mere twelve percent of pet owners purchase insurance for their pets.  People who do not have insurance could face high fees from their veterinarians, according to the financial services provider. 

Caring for a pet can have a “hefty” price, according to company representative Allan Burns, who says he is concerned by many pet owners’ lack of preparation.

The company is offering a 20 percent discount to customers who purchase insurance for their pets over the internet and a 10 percent discount for those who contact the company over the phone.

Thirty-eight percent of pet owners admitted to Mintel, the marketing research firm, that they were not certain they could afford veterinary treatment for their pets, according to Tesco.

Moneyfacts suggests that some people with large vet bills might find a solution in debt consolidation loans.