Top money stories - Mon
29th October- Fri 2nd November 2007

Top Tip:

With Christmas approaching, practical money savings ideas are helpful to make every penny go further. Why not try out the following:

Check out the Money Saving Ideas section of the Credit Action website for more tips.

The Financial week that was...

Monday 29th October

Mixed messages from Bank of England figures – The Bank of England’s new figures show that the number of new mortgage approvals fell from 108,000 in August to 102,000 in September. This has added weight to previous findings that have suggested a cooling housing market. However, the figures also revealed that unsecured lending had its biggest rise since January 2006. While the credit crunch may have deterred mortgage approvals, it hasn’t reduced consumer appetite for debt.

First time in two years that property prices fall – A Hometrack survey found that property prices fell by 0.1% in October, with the greatest falls occurring in London and the surrounding areas. It also found that properties now take longer to sell. On average it takes 7.4 weeks to sell a property, up from 6.9 weeks in September. With the uncertainty surrounding the housing market, an increasing number of potential homeowners are deciding to adopt a wait-and-see approach to the market. This, in part, has led to the current slowing of house price inflation.

Tuesday 30th October

Consumers hold the power – Moneyfacts.co.uk, a price comparison website, believes that there has been a shift in power from financial services firms to their consumers. Paul Pester, chief executive of Moneyfacts.co.uk, said that new means of communication – such as mobile phones and the internet – have enabled consumers to rally together quickly and easily. The increased “interconnectedness” of the world we live in – living in the age of the information superhighway – means that firms need to be increasingly transparent in their business processes and decisions. In many regards this is a positive development, particularly for the consumer.

100% mortgages on the rise. The number of 100% mortgages – borrowing up to the total value of the property – is on the rise according to mortgage website mfrom.co.uk, and could have dire effects if the housing market takes a big hit. 100% mortgages allow borrowers to get on the housing ladder without having to pay a deposit. It also places some in a precarious position. A fall in the housing market could send 100% mortgage borrowers into negative equity – a situation where the total value of your property falls below the value of your mortgage. If you are thinking of taking out a mortgage, check out the Mortgage Section: How much can I afford to borrow? on the Moneybasics website and the Mortgages Made Clear section on the Financial Services Authority website.

Wednesday 31st October

Property prices rise by 1.1% according to Nationwide – In contrast to Hometrack’s survey, Nationwide found that property prices rose in October. This took the average house price up to £186,044. Nationwide said that we should be wary of the figures. They commented that a number of factors, such as a lower number of properties being put on the market, resulted in the rise in prices. Most of these factors do not indicate that the housing market is going to remain robust in the short-term.

Credit card cover abroad – The House of Lords has ruled that credit card firms must refund people who buy undelivered or damaged goods while abroad. This decision has upheld an earlier decision by the Appeal Court. This has now provided greater protection for consumers who chose to use their credit cards while abroad. With credit card costs on the rise, make sure you check out the How Much Does a Credit Card Cost? on Moneybasics and use the Credit Card Calculator to work out the total cost of your card.

Consumer confidence falls – Research group GfK NOP found that consumer confidence fell for the fourth consecutive time in October. The run on the bank at Northern Rock and the five interest rate rises that have occurred since August 2006, substantially increasing the cost of borrowing money, have led to the fall in consumer sentiment.

Price comparison website mis-informing insurers – Defaqto, a research company, has accused price comparison websites of providing inaccurate insurance information. The research revealed that some websites failed to include key insurance providers, offered inaccurate quotes, and falsely claimed to offer car insurance quotes from the wholesale market. They recommend that consumers look at three or four price comparison websites before deciding on their insurance. They also recommend you don’t automatically go for the cheapest insurance as it may not offer extra benefits like a courtesy car or assistance following an accident.

Thursday 1st November

Spending will be unaffected by house prices – The BBC has found that 88% of people believe that a house price fall of 10% or more will not affect spending on everyday items. This is contrary to the GfK NOP research results and shows that there is still a good level of optimism about the state of the economy. The conflicting results are a good indicator that this is a time of economic uncertainty and a time to be careful with our money!

Friday 2nd November

Interest Rates expected to be held – Reuters pooled sixty economists and fifty-five of them forecast that the Bank of England will leave interest rates at 5.75% on their next meeting on Thursday 8th November. With oil prices reaching a high of US$96 a barrel over the past week, the Bank do not want to lower interest rates too abruptly and cause further inflationary pressure.

Prepared for Moneybasics by Jason Taylor