On Tuesday the Financial Services Authority (FSA) released findings from their latest study, showing that 20% of us, one in five, are worried about meeting the costs of our mortgage repayments over the next 12 months.
In response to this study, the FSA is launching a £2m advertising campaign - targeting the 1.4m that are coming off fixed-rate mortgage deals over the next 18 months - and an advice guide for homeowners.
If you are feeling worried about the rising mortgage costs, these worries will not go away without specific preventative action. Begin by becoming more aware of how to can manage your money better. Read through the Tips to Reduce Spending and write a few of the key tips down. Perhaps you may want to put a few of the tips up on the fridge and/or in your wallet/purse so that you get reminded of them.
Read on for a summary of the main personal finance stories for the week beginning 3rd March 2008.
The financial week that was...
Monday 3rd March
Government commits £12m to pilot advice project – Over the past 14 months, Otto Thoresen, chief executive of life insurer AEGON UK, has been heading up a research project looking at giving non-specific financial advice. The report proposes that an impartial, sales-free, personalised advice service is offered to help people to manage their money better. This will be known, for the time being at least, as ‘Money Guidance’.
The government has agreed to pilot the project over the next 18 months, serving approximately 750,000 people in the UK.
Wednesday 5th March
Minimum wage to rise to £5.73/hour – On Wednesday the government announced that the national minimum wage will increase by 3.8%, to £5.73 per hour in October 2008.
For 18 to 21-year-olds the new rate will be £4.77.
For 16 and 17-year-olds the new rate will be £3.53.
Prime Minister Gordon Brown has said that this change will benefit one million people, of which two in three (66%) of those helped will be women.
Thursday 6th March
Interest rates held at 5.25% - As was widely expected, the Bank of England’s Monetary Policy Committee (MPC) announced that interest rates would be kept the same at 5.25%. After the quarter-point cut in February, many expected, and correctly forecast, that the MPC would keep interest rates constant because of continuing inflation worries. With fuel prices eating away a larger proportion of take-home pay than in recent history, the MPC will need to try to keep fuel price inflation in check as it will benefit the economy in the long-term. To do this they cannot continually lower interest rates so we should expect to see the kind of dramatic rate cuts which have happened in the USA.
House prices fall by 0.3% in February – The Halifax House Price Index showed a drop in property prices, consistent with other house price surveys. As the effects of the credit crunch continue to hit, many property analysts expect the market to remain flat in 2008, with some expecting a small fall in prices.
Time to save! – A study by price comparison website MoneyExpert.com has shown that the average interest on savings accounts has risen by 1.2% since January 2007 as lenders look to deal with their liquidity crisis (the credit crunch). Do you know what Saving options are available to you? Do you know what an ISA is? Knowing about saving can really help you to grab hold of your financial future with both hands.
Prepared for Moneybasics by Jason Taylor, Advocacy Officer (Credit Action).