UK disposable income is at its lowest level for 11 years

Recent research shows that UK families are £2,500 a year worse off as they experience the rising costs of food, fuel and energy. In 2007, after covering essential bills, the average family had £1,425 a month to spend as they wished. However, this year that amount has shrunk to £1,210 a month.

Moneybasics provides many resources, such as a budget calculator, to help you and your family make your disposable income go further and also provides information to help you reduce the cost of those monthly essentials.

Please read on for a summary of the top personal finance news stories for the week beginning 18th August 2008.

Monday 18th August

Supply of rental properties rises – The Royal Institution of Chartered Surveyors (RICS) has reported that the number of people choosing to rent their homes has risen, as selling becomes more difficult, due to falling house prices. However, the number of would-be tenants is still outstripping would-be landlords which has caused rental prices to increase.

Wednesday 20th August

Discount supermarket sales rise – Research by TNS Worldpanel has shown that shoppers are turning away from the more expensive shops, as the many of the more upmarket retail outlets continue to struggle. In contrast, many of the discount retailers have experienced rising sales. This highlights how consumers are opting to change their spending habits to cope with the credit crunch – something that all of us need to do in order to make ends meet in times when our budgets are increasingly squeezed.

Thursday 21st August

Two market leading energy providers raise prices by 30% – It was estimated this week that 10 million British households would be affected by the decision of energy suppliers to dramatically raise gas and electricity prices.

This decision follows that taken by other energy companies to raise prices and is blamed upon the soaring cost of wholesale energy, particularly the price of oil.

Although these price rises will affect many consumers, those that are locked into fixed-tariff deals may escape the increases. Both Labour and the Conservatives have responded to the increase in prices, with Gordon Brown discussing the possibility of introducing fuel vouchers to those families that are eligible for child tax credits.

If you are worried about the increase in your energy bills, contact your energy provider for information about how you specifically will be affected. Similarly check out price comparison sites, such as uSwitch, for information and price comparisons which could help you to beat the price rises.

Thursday 22nd August

Mortgage rates back up to 2007 levels – Although the credit crunch has made it more difficult for consumers to take out a mortgage there has been a brief respite, as mortgage rates have increased to 2007 levels. Price comparison site Moneyfacts estimate that the average rate on a two-year fixed deal is now 6.59% - almost the same as 6.56% in August 2007 and down from 7.08% in early July. However it must be remembered that these deals are only being offered to those seeking a mortgage who can supply a considerable deposit and lenders are still charging higher fees. For example, Moneyfacts estimate that the average mortgage arrangement fee is £964, which is still £161 higher than the price in August 2007.

With rising rental prices, and falling house prices, it is important that you understand all the mortgage and non-mortgage options. Look at the Mortgage section of Moneybasics for information on how to get the best deal for you.

Prepared for Moneybasics by Joanna Parsley, Advocacy Officer (Credit Action).