Credit Crunch

Brits move abroad to escape credit crunch

More and more Brits are leaving the UK to set up home abroad due to the credit crunch, according to currency specialist ‘HiFX’.

Last year, record numbers of UK citizens moved abroad permanently and the company states that enquiries about emigration have increased by 30% this year.

The findings suggest that Brits may be feeling the economic effects of the credit crunch and are worried about debt and personal finance issues. However, despite the rise in interest in emigrating, actual emigration figures have only increased by 10% so far this year.

Director of HiFX Mark Bodega, said, “The problem that many people are being confronted with is a simple one - they cannot sell their UK property.” The generalised fall of property equity is causing people to delay their plans, he continued. 

In August, Abta suggested people are continuing to take holidays despite the credit crunch and suggested that now more than ever, people felt they needed a holiday to escape worries at home. 

A study from Alliance & Leicester International (ALIL) has also revealed that 52% of British ex-pats stated that they moved abroad to avoid the high cost of living in the UK and to improve their standard of living.

Over a fifth of ex-pats are choosing the Middle East as their new home, while Australia and the USA continue to be popular destinations for UK migrants. In Europe, Spain and France continue to be the most popular destinations among Brits seeking a better and cheaper way of life.

British pensioners wanting to maximise their pension funds figure highly in the exodus according to Bank of Scotland International. 31% of over 65’s are considering living abroad and 11% said that New Zealand would be their preferred destination, with Australia, Canada, France and Spain also proving popular retirement destinations.

Many in the UK who can afford to buy a second property abroad - as well as keep their current UK home - are choosing to rent out their property in Britain and in doing so, are funding their new lives abroad as well as keeping an investment in the UK.

Posted in Credit crunch | No Comments »

Reclaim PPI

Reclaim your misold PPI Policies

What is PPI?

PPI stands for Payment Protection Insurance, its what they add to loans and credit card agreements and its meant to pay out if you become ill or unemployed.

The problem with PPI is it does’nt pay out most PPI policies don’t pay if you are Self-employed, Retired even if you have to stop work because of a medical condition

you weren’t asked about!

Many of these policies are not worth the paper thier written on!

A lot of shifty bank employees add these policies on to your loans without even telling you. The FSA has strict rules these sellers must follow. If they haven’t followed these rules,  you can reclaim your money.

Have you been stung by mis-sold payment protection insurance? Take our simple 60 second online test today to see if you can claim.

Posted in Personal Finance | No Comments »

Pound Value Plummets

The Value of Sterling has dropped following credit crunch comments from Alistair Darling. GBP is still on a seemingly unstoppable downward spiral despite the announced £1 billion government housing package.

Sterling has fallen to an all time low against the Euro trading at just £0.8153, earlier this morning, the £ was also getting battered by the $ falling to a fresh 29-month low of $1.7802.

Following comments that “Britain faces its worst economic crisis in 60 years”, The £ already on a downward spiral plummeted further. The BoE meets this Thursday to discuss U.K interest rates a drop in which could see further weakness in Sterling.

Posted in Banking, Credit crunch | No Comments »

UK consumer debt totals over £1 Trillion

Research from leading accountants Grant Thornton has shown that the total amount owed by UK consumers in the form of mortgages, loans and credit cards has increased by 7.3% in the 6 months preceeding June. The figure now stands at nearly £1.5 trillion.

During the same six months, the UK’s Gross Domestic Product (GDP) only increased by just over 5% to £1.41 trillion, which means that personal debt in the UK exceeds the income that’s generated by the country as a whole.

According to Stephen Gifford, Grant Thornton’s chief economist, we needn’t panic about this news as personal debt is covered by the equity that’s owned in UK housing, but the figures do serve to further highlight the issue of personal debt in the UK.

Mr Gifford added that if the UK property market and our national economy continue to decline, the current levels of personal debt will increase and become unsustainable.

In the last ten years, the number of people declared insolvent has risen from an average of 24,000 per annum in 1997 to over 100,000 in 2007.  The latest insolvency figures show that during the first six months of 2008, more than 49,000 people were declared insolvent. Grant Thorton are also predicting that the total number for 2008 could top the 100,000 mark.

GE Money’s recently released report has established that over three million consumers in the UK have had a mortgage or a loan application rejected at least once in the last eighteen months. The restrictions on lending criteria have seen even those with a good credit history being refused credit.

These figures demonstrate that the days of getting cheap credit in the UK are - at least for the forseeable future - over, so UK consumers who are already struggling with debt will without doubt suffer more as a result.

Furthermore, figures released recently from the CBI have revealed that High Street sales have declined to their lowest level in twenty five years. This is being blamed on the lack of consumer credit too.

The Alliance Trust Research Centre have also established that this year has seen a record low in consumer’s household budgets as well as a record low in their net wealth. The drastic decline in property prices and values, as well as rising levels of debt, have put huge pressures on consumers and as a result, spending is declining overall in the UK.

Posted in Credit crunch, Debt | No Comments »

Foreign Property Unaffected by Credit Crunch

Since UK property began to soar in cost, many purchasers have been buying property abroad which is a trend that is continuing despite the credit crunch.

Many forecasters are warning however that the impact of the credit crunch may begin to affect foreign property markets eventually as fewer British investors have access to funds with which to purchase property abroad.Spain, Italy or France to use as holiday homes but in recent years, a new type of UK buyer has generated a growth in the potential revenues from buying in Bulgaria, Morocco and Turkey. The new wave of buyers are purchasing property to let out to the holiday market and keeping the property until its value rises before selling and moving their money elsewhere. UK buyer. Prague and Dubrovnik are among the newly fashionable regions to benefit from UK investment.

Traditionally, British buyers have invested in property in

The new type of buyer tends to be younger and not afraid to buy new-builds in locations that wouldn’t previously have appealed to

The problem facing the younger investor is that they often fund their property purchases with mortgages and as the credit crunch bites, they may find it increasingly difficult to get the mortgage they need to buy.UK homes, so most won’t need to borrow at all.”US recovers from the subprime mortgage crisis.

However, Savills Estate Agent researcher, Jacqui Daly, told the Telegraph recently that, “We will see a return to the traditional use of the holiday home as a lifestyle choice, and that demand will actually rise in the near future.” Daly added, “Demographics show there are many more of these to come. They have a lot of equity in

The managing director of Holiday Rentals.com, Greg Grant, said that he believes owners of foreign property won’t lose out, but he expects many owners to alter their methods of letting their properties.

He told the Telegraph, “Those who have previously kept their homes to themselves may begin renting out to maximise income in these tighter times. They’ll see that a month’s rental can, if timed well, pay for much of a year’s running costs on a home.”

Time will tell how much foreign property investment is affected by the credit crunch but much depends on how the

Posted in Credit crunch, Property Prices | No Comments »

UK House prices set to fall 15%

UK Property prices could ent the year 15% Down

Yet more evidence the credit crunch is far from over was announced yesterday, Nationwide one of the UK’s largest mortgage lenders said the average price of a property fell by 1.9 percent in August, 10.5 percent lower than property prices were last August. This months figures show the largest annual drop since monthly records began in 1991.

Due to the fact unemployment is on the increase and a reccession looms many banks now refuse to offer mortgages to potential buyers that don’t have at least a 25 percent deposit.

George Buckley, chief UK economist at Deutsche Bank said:

“If prices continue to fall at the pace they have done over the past three months, they will end the year down 15 percent. With inflation, this means that residential real estate will have lost around a fifth of its value in real terms during 2008.”

Some estate agents had reported a increase in new buyer enquiries for August, this was however counterbalanced by an increase in new instructions to dampen house price growth in the short term at least.

Posted in Credit crunch, Property Prices | No Comments »

Credit Card issuers ‘hounding’ out 1.8m customers

Some UK credit card companies are said to be ‘hounding’ nearly 1.8m responsible customers in the last year in order to force them to give up their cards. 

The customers targeted are those who always pay their credit card bills on time, but who are not generating the card companies any revenue because they don’t have large debts. These clients are being ‘forced out’ by the companies using account closures or credit limits reductions.

The shock findings are revealed in a study by price comparison website uSwitch. It reveals that among over 2000 adults with credit cards, 8% of them were being subjected to these profit-hunting methods over the last year, which is the equivalent of 2 ½ million credit card users.

Scandalously, the credit card providers had no genuinely valid reason for forcing out over 70% of these customers given that over half of the customers ditched used their credit card regularly and made at least their minimum payment while another 1/5^th paid their outstanding balances in full each month.

Only 16% of those customers actually deserved to be dropped by the credit card provider because they had exceeded their credit limits or had missed more than one payment.

These findings contradict the assertions made in the last year by credit card providers that they would not be ditching low-profit customers.

Egg is one of the worst offenders and faced mass consumer anger after it cut off credit to over 160,000 customers earlier this year.

This situation has come about simply because responsible credit card users don’t earn their credit card provider as much money as those whose debt becomes unmanageable and accrues a lot of interest.

‘This is Money’ announced earlier this year that credit card providers have been slashing unprofitable customer’s credit limits to just £100 more than their existing balances, without giving them any notice or reason why.

Posted in Banking, Credit crunch, Debt, Personal Finance | No Comments »

Credit Crunch Ruins Holidays

Tour operators going broke

Thousand of U.K Holidays makers could have their holidays ruined, some could even have troubles getting home as the credit crunch hits tour operators. 4 Tour operators have collapsed in the last 4 weeks, bringing the years total to 12 since April.

Holiday makers will be protected and entitled to refunds as the firms are all members of  ATOL a financial protection scheme for U.K Tour operators, to check if your travel operators protetected or make a claim visit the Civil Aviation Authority Website.

Sky high fuel prices and strong competition are to blame for the difficult trading conditions being experienced, the Civil Aviation Authority say they expect increasing problems. Roger Mountford, chairman of the Air Travel Trust Fund commented:

“An increase in the number of insolvencies is an indicator of tougher trading conditions. That may be an indication of further deterition later this year.”

Before booking your holiday check the Tour Operator is ATOL Registered on the Civil Aviation Authority Website.

Posted in Credit crunch | No Comments »

Options for debt management

When your debts become so large that you can’t control them anymore, there are a number of things you can do to manage the problem.

Let’s take a look at two of the options available to you:

IVA – an IVA is an Individual Voluntary Arrangement that is made between you and your creditors. It’s usually handled by specialist debt management advisors or consultants who call themselves Insolvency Practitioners. They will approach your creditors on your behalf and offer them reduced payments towards a portion of the original debt. The debt may be reduced by up to 65% as part of the agreement and whether the full amount is paid or not, the debt is considered settled after five years.

All your creditors are contacted and a repayment figure is offered to them that if they accept will then form your legally binding payment obligation for five years. In order for an IVA to be accepted the majority of your creditors must agree to it or else it could be refused.

You should be aware too that if you enter into an Individual Voluntary Arrangement with your creditors and you have an endowment policy with your mortgage, you may be expected to cash it in and pay the money you receive into the arrangement. Similarly, if your property has any positive equity, then some of it may have to be released to your pay off your creditors.

Bankruptcy is another option that many consider an absolute last resort but one which is becoming more commonly used in debt management. You can be made bankrupt in one of three ways:

• Voluntarily – The person in debt declares themselves bankrupt.
• Involuntarily - The creditors of an individual call for bankruptcy to be declared.
• The advisor or anyone bound by an IVA may call for bankruptcy proceedings.

A bankruptcy order can still be made against you even if you refuse to acknowledge the notice or refuse to agree to the terms of bankruptcy. You should therefore co-operate as much as you can once the proceedings have begun.

What implications are there to being declared bankrupt?

• You are no longer entitled to any claim on, or control of, your assets
• You can’t get credit over £250 without permission.
• You can’t be a company director.
• You can’t take any part in the formation of a limited company (LTD) without the express permission of the court.
• You can’t trade under any other name unless you inform all parties concerned of your bankruptcy.
• You can’t practice as a Charted Accountant or as a Lawyer.
• You can’t be a Justice of the peace.
• You can’t become a member of parliament.
• Your credit is affected for many years after the bankruptcy.
• Your bankruptcy will be publically announced.

Most of the above restrictions only apply for a limited time.

You may also be required to sell any and all assets that are in your name, however if for instance your house is in your spouse’s name, the court cannot call for it to be sold. The same goes for anything else that could be considered an asset.

If you are having severe financial difficulties you should always consult with one of the free and independent sources of advice such as credit counselling services or your local Citizen’s Advice Bureau.

Posted in Debt | No Comments »

How to know if you have a good credit

How do you know if you’ve got a bad credit rating?

In these days of the Credit Crunch you’ve probably heard its pretty hard to get credit if you have a bad credit rating.

But how do you know if your credit rating is good or bad? Just assuming its bad because you got turned down for a loan once could be costing you a lot of unneccesary interest, you could be refused credit for any number of reasons not just bad credit. The reason banks might not want to risk giving you cash is because you have no credit history.

The only way to know what your credit rating is like is by checking it yourself. View your Experian credit report online for free.

Posted in Credit crunch, Personal Finance | No Comments »