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Attention Junglers! The views below are mine, CeeJay, not those of Credit Jungle. I like to think I'm civil 100% of the time but if you have an issue with any of my musings please let me know through the blog.

Looking forward to speaking with you all soon!

CeeJay

Half of Negative Equity Cases Come From 2007

Hola Junglers!

So Google’s bid for world domination continues with their purchase of Motorola – I wonder where it will end?  I don’t like big brother theories, as my little brothers will tell you, but even I’m, beginning to wonder if one company should be so powerful and hold so much information about us.  But let’s leave that debate for another day as this morning I’ve been chatting with Mike the Mortgage Monkey again about the doom that is negative equity.

For those that don’t know what negative equity is, it is the situation where your house is worth less than your mortgage.  i.e. if you sold it you would not have enough cash to pay off what you owe.  This obviously prevents people from selling their houses and is one of the reasons the housing market is in the doldrums.

According to the Council of Mortgage Lenders (CML), 827 000 borrowers were in negative equity on the first quarter of this year, with nearly half of these having taken out their mortgages in 2007, when house prices were at their peak and lenders were prepared to lend over and above 100 per cent of a property’s value.

If you take into consideration mortgages taken out in 2005, the figures are better, with only 14 per cent in negative equity, but a further 11 per cent of these have equity of less than 10 per cent.  With the majority of  mortgage companies not prepared to lend more than 90 per cent of the value of the property, this means that none of these people are able to move or re-mortgage at the moment (unless they have managed to save a decent sum of money of course).

This basically means people have to wait for property prices to increase in value (which seems unlikely for the forseeable future), or for the lenders to relax their lending rules, which is also not going to happen soon given the current climate.  All in all with today’s news that inflation has reached 4.4 per cent again the tough times look set to continue for most people.  Maybe we should ask Google for a loan?  Although if Google were to enter the lending market as well I really would start to worry!

Are you in a negative equity situation?  If so when did you take out your mortgage and how long do you think it will take before you are in a position to move or re-mortgage?

Leave a comment below and let us know.

Kindest Croaks

CeeJay

xx

negative equity

 

How Much Do You Trust Your Partner?

Hola Junglers!

If the current Mrs CeeJay had told me we had just thrashed India for the third time in three tests, and scored over 700 runs in the process, then I wouldn’t have believed her – and I trust everything she tells me.  However, according to a survey by Nationwide, it appears that despite 32  per cent of people claiming that trust is the most important thing in a relationship, less than half of us actually share a bank account.

Even more surprising, it appears that one in four people have a secret bank account, which their partner knows nothing about!  I wonder what they use them for, and if they are part of the 32 per cent that claim trust is so important!

What would you do if you found your partner has a few thousand pounds tucked away?  Or are you one of the people that have a secret slush fund?  If so why do you kept it quiet?

Let us know by leaving a comment below.

Kindest Croaks

CeeJay

xx

secret bank account

UK Families Will Be £1500 Per Year Worse Off

Hola Junglers!

What’s the difference between a circus and the US Congress?  There are fewer clowns in a circus!  But at least our American cousins have managed to resolve their debt crisis, even if it has left some serious custard pie on their faces.

In other news… The International Monetary Fund (IMF) has issued its annual report on the UK economy, and stated that British families will be £1500 worse off for the next 5 years.  That’s a considerable amount of money for most households, and has been brought about by the increase on VAT and fuel, increase in the higher tax threshold and cuts in other benefits. Despite this, they also say that the unprecedented cuts that have been made are necessary, although with growth happening slower than anticipated, the goverment should be prepared to act quickly, if it looks like stalling or stopping altogether.  Acting quickly means being prepared to implement such things as temporary tax cuts, which would relieve the pressure on families and encourage them to spend more.

So although it is painful and would appear that it’s going to remain so for the forseeable future, it appears we are on the right track – even if that track looks like being a bit bumpy!  The good news is it should mean interest rates will remain low for a while yet.

How are you finding things these days?  Are you finding it tougher and tougher or have you made cuts yourself and adapted accordingly?

Let us know by leaving a comment below.

 

Kindest Croaks

CeeJay

xx

imf report

 

Are We On The Verge Of Credit Crunch 2?

Hola Junglers!

President Obama is currently looking about as happy as Rebekah Brooks at ex-News of the World journalist’s dinner party, but why is that?

Well not only are Greece, Italy, Spain, Portugal and maybe even France facing a major financial crisis, but so is the USA.  So what is happening and should we be worried?

Well it appears that unless the American Congress can agree to raise their debt ceiling (which is basically their overdraft), they will not be able to meet their repayments.  As is stands at the moment they have until Monday to reach an agreement or they will default on their loans, sending the financial markets into another melt down.

So how did this come about and why can they just not agree to an increase and move on?

Well for a start the debt already stands at a record $14.3 trillion, caused by the wars in Iraq and Afghanistan, tax cuts introduced under George Bush and the current Administrations policy of spending to support the economy during the banking crisis.

The problem they now have is that Congress is divided.  There are 3 parties represented and they all want different things.

The Republicans want a committment to cut costs in order to agree an increase.  The Democrats are keen not to cut costs as it would impact on welfare and healthcare for the poor, and so basically just want an increase, whilst the Tea Party just wont agree to an increase under any circumstance.

So what happens if they cant reach agreement by Monday?

Well according to leading Economists the repercussions will be felt world wide.  The financial markets would crash, interest rates would shoot up and banks would start to recall loans, forcing us into another Credit Crunch, before we have fully recovered from the last one.

No doubt behind the scenes there will be some serious horse trading on various other issues as they try and reach agreement.  One thing that nobody knows is that if no agreement is reached, who the voters will blame.  This will weigh heavily on the shoulders of all concerned, because the public backlash could last for decades.

So fingers crossed they will resolve it at the eleventh hour, even if it s by a stay of execution in the form of a temporary increase, while they try and reach a long term agreement.  If not we could be a few days away from Credit Crunch 2.  There are some things you just dont want a sequel to!

Kindest Croaks

Ceejay

xx

credit crunch 2

 

Economic Slow Down But Why Are House Prices So High?

Hola Junglers!

The England cricket team are flying high after their resounding win against India this week, and closing in on the World Number 1 spot.  However, house prices still appear to be flying high as well, despite GDP slowing this month and the world, not just the UK, going through an economic down turn.  I wanted to know what is going on so I grabbed Mike the Mortgage Monkey and asked him “What’s going on”.  Here’s what he had to say.

“Firstly, every report, survey or set of statistics that are published tell a slightly different story, although they pretty much all say that prices have either fallen slightly or stayed level this year, the one notable excepetion being the Nationwide who report a slight increase.  This makes it confusing, although for my money the most reliable source is the Land Registry, which reports on the actual price property actually changes hand for as opposed to the vendors asking price!  According to the Land Registry, although localised, property is falling between 7 and 12 per cent across the UK, with the notable exception of London.

“The second point is that prices may seem higher than they actually are because vendors are being unrealistic in their asking price,  partly due to a failure to understand the market, and partly due to necessity – many will have 95 per cent mortgages and will need  minumim 10 per cent deposit for the next purchase.  If you look at the average asking price, which according to Right Move is £236, 597 against the lowest quoted selling price the difference is as much as 45 per cent!  This means that the number of actual sales is still very low.

“I suppose what I’m saying is prices are probably at best staying level – outside of London that is – but may appear to be higher than they actually are, and until the banks slacken their lending criteria, which will only happen gradually over the next year or so, nothing much will change”

Well Junglers, I hope that gives a bit more clarity to the situation.  Let us know what is happening in your area and your experience of either trying to sell or buy a house this year.  Were you able to buy for a lot less than the asking price?  Or have you been desparately trying to sell without success?  Leave a comment and lets us know either way.

Kindest Croaks

CeeJay

xx

high house prices

 

 

 

 

When Do You Use Your Credit Card?

Hola Junglers!

You can’t move in the Jungle today, as the News International executive team and half of the Metropolitan Police force, appear to be hiding here from the other half of the Metropolitan Police force!  The undergrowth is a bit thick, but at least they all have experience of hacking!

Anyway, lets move on to matters of credit…

A recent report shows that the most popular day for consumers to start attacking the plastic and using their credit cards is 21 days after they have been paid.  In fact 9 per cent actually start using their cards withing 15 days, relying on them for the rest of the month.

A third also say they use their credit cards for large items such as holidays, which they do not expect to be able to pay off at the end of the month.  As mentioned before, credit cards are ideal for purchases over £100 and below £30, 000 as you are protected under the Consumer Credit Act.  However, it is still better to save the money first then make the purchase with your credit card and then you can pay it all off at the end of the month, avoiding the interest while benefitting from the protection.

So spend carefully Junglers – it’s better to save for a couple of months and avoid the debt!

Kindest Croaks

CeeJay

xx

credit card spending

Is Cash Still Kill In Your House?

Hola Junglers!

Harper 7.  Well I guess if all else fails and the Beckhams fall on hard times their latest offspring can always get a job on Star Trek: Voyager.  I seriously thought it was only Borgs and us frogs, who had to number our children due to the sheer volume…

Anyway, according to the British Retail Consortium (BRC), a lot of us are either cutting up the plastic or at least trying to avoid using it.  The consortium, which represents 90 per cent of the UK’s stores, says its members have seen a 12.9 per cent drop in credit card transactions.  This is thought to be a conscious effort by consumers to avoid getting into debt.

The number of transactions involving cash also fell, although the average value of each transaction rose to £12.93.  Debit card transactions have jumped by 15.8 per cent.  Cash remains our favourite way to pay overall though, with more than half of all retail payments being made in the traditional way.

Although obviously people should avoid trying to get into debt, you should be aware that debit card and cash transactions do not offer you as much protection as credit cards.  If your transaction is over £100 and less than £30 000 and you make the purchase with your credit card, if something goes wrong, you can claim the moeny back from the credit card company under Section 75 of the Consumer Credit Act 1974.

Therefore give it some thought assuming you have an option of course.  If you are planning a large purchase such as a holiday or maybe some furniture for the house, consider putting it on your credit card and then paying it off as soon as you get your bill.  That way you avoid paying interest and have the added benefit of being protected.

Let us know if your spending habits have changed.  Do you try and avoid using your credit card these days?  Is cash still king?

Kindest Croaks

CeeJay

xx

cash is king

Would You Buy A House With A Mate?

Hola Junglers!

The chances for many young people getting on the property ladder are about as likely as News Of The World CEO Rebecca Brooks still being in a job by the end of the month.  However, Housing Minister Grant Shapps believes he has  the answer.  He is asking the lenders to offer “mates mortgages”, whereby groups of friends who could not raise enough cash for a deposit on their own can club together and buy a house.  In theory this is an ideal solution, in that it gets people onto the property ladder and helps stimulate the market.

However, in practice there could be a number of pitfalls.

For a start, being good friends with somebody is one thing.  Living with them could be another thing entirely.

More importantly, this type of scheme works on the basis presumably that the housing market will rise sharply over the next 5 years or so, meaning when the “mates” are ready to settle down and start a family etc, they can sell, take a profit and have a deposit to buy somewhere with their loved on.  However, all reports are suggesting that with the exception of London maybe, housing prices are at best holding their own and do not look set to increase for the forseeable future.

This could mean that come “settling down” time, the mates could either lose money, or certainly be no better off than they are currently, only with the added issue of a property to sell.  It would also have the effect of keeping property prices artificially high.  People are currently struggling to get mortgages, which means people with houses are struggling to sell, which means they are being forced to lower their asking price, meaning over time the problem gets resolved.

What do you think?  Would you rather buy an house with a mate than rent or live at home?

Let us know by leaving a comment below.

 

Kindest Croaks

Ceejay

xx

mates mortgages

Are You Feeling The Pinch?

Hola Junglers!

According to the Joseph Rowntree Federation, it is not just the News Of The World editors and journalists that are feeling the squeeze at the moment, even if it is in a slightly different way.  According to their research families are now 20% worse off than they were last year.

The Foundation looks at the cost of a “shopping basket” of everyday products, such as food, transport, education and clothing, which are needed for the average household to function to a minimum standard of living.  They then look at the income required to reach this minimum standard, taking into account any benefits that might be due.  The results are quite startling.

In 2010 the minimum income required for a married couple with children, where both parents work, was a combined total of £29, 727.  This year it is £36, 800 an increase of just over 20 per cent.

This has been brought about by high levels of inflation on everyday items such as transport, which has increased by 8 per cent and food which has gone up by nearly 6 per cent, combined with a decrease in child care allowance and a freeze in other benefits.

For families where one parent works, the earner would have to bring home £31, 584 an increase of 8 per cent on last year.  This puts families in a difficult situation.  If the single earner cannot command this level of salary, the second parent has to work, which means child care needs to be funded, driving up the combined salary required.

Those best off, are single with no dependents, where the minimum income is £15, 000 a rise of 4 per cent on 2010.

Is rising inflation and a cut in benefits affecting you?  If so what are you doing to make ends meet?  What are you going without or are you being more creative?  Let us know by leaving a comment.

Kindest Croaks

CeeJay

xx

money saving tips

Mortgage Arrears Set To Increase?

Hola Junglers!

Hopefully you have all recovered from the disappointment of seeing that Scottish guy lose his nerve on Friday and are not too sunburned after the last couple of days fantastic weather!

Now on to more pressing matters…

Another good news bad news story sadly.  The good news according to a recent Bank Of England survey is that the default rates on secured loans remains unchanged, and the default rate on personal loans has fallen for the seventh consecutive 3 month period.

However, banks and building societies are predicting a rise in the third quarter for both types of lending, and the number of people missing credit card payments has increased and is expected to continue to rise.

So fairly glum news still, with the number of mortgages being granted also remaining flat overall for the past 3 months.

Anyway, try and  keep smiling Junglers in these tough times.  I’m off to book some tennis lessons for the tadpoles.  I’m not a pushy parent but with all these children there must be at least one future Wimbledon champion among them and a £1.1m first prize is not to be sniffed at….

Kindest Croaks

CeeJay

xx

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