Households across the country are struggling to cope in the deepest recession since the 1950s. Many are facing a financial pitfall and risk plummeting into debt.

Figures from the Office for National Statistics (ONS) revealed that consumer spending has dramatically fallen since 2007, as Brits increasingly feel the pinch. A number of people have cut back on luxury items over the last few years with hotels and restaurants taking the biggest hit.

ONS research shows that the purchase of items now considered to be luxuries (such as expensive foods, clothes and non-essential goods) has fallen by almost 10% in the last 18 months.

In the three months up to December last year, the UK economy shrunk by 0.2% and production fell by 1.4%. Overall, the UK economy grew by just 0.7% last year.

Following a slump in retail sales, fears of another recession are looming. This is not helped by the fact that unemployment levels are reaching new highs, with 2.67 million people out of work. This is the highest level of unemployment since 1995.

The number of home repossessions is also on the increase, as many cannot afford to keep up with payments. The latest statistics from Credit Action, the leading charity, shows that a home is repossessed in the UK every 14 minutes and 17 seconds.

The number of Brits sleeping rough on the streets has also shot up by a fifth in the last year. Figures gathered from local authorities show that the number of rough sleepers has increased by 23% in the last 12 months.

It’s not just Brits who are suffering in one of the worst economic downturns for decades; the debt crisis in the Eurozone has pulled 17 nations into a ‘mild’ recession. According to figures from the European Commission, the economy will shrink by 0.3% in the euro-zone very soon.

If you are finding your personal debt levels overwhelming and are plummeting into a recession of your own, it could be worth seeking professional debt advice from ClearStart.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

Thanks to a record high in rent prices and the dismal state of the economy and UK housing market, it’s now actually cheaper to buy a property than rent one.

Homeowners are now almost £1,400 better off than renters, according to the latest research from Halifax. As mortgage lenders are offering cheaper deals by the day, homeowners can pay an average of £600 a month for a three-bedroom house, whereas renters are paying an average of £716 a month.

The effects of the housing market crash coupled with low interest rates have left homeowners repaying significantly less on their monthly mortgage. In 2008, homeowners paid an average of £928 a month which was 29% more than the typical renter. This figure also included maintenance and insurance fees.

Mortgages

Mortgages rates have dropped from the average of 5.75% in 2008 to 3.63% in 2011. House prices have also fallen sharply by 11% since the market crash. This has only reduced mortgage payments further for new buyers.

As a result of these low costs, owning a home is now cheaper than renting, unless you live in Wales. Halifax found that Wales is the only part of the UK where it is cheaper to keep renting, as homeowner costs are £5 more per month on average.

Renting

While the survey found that owning a home was more cost-effective the rental market is still booming. House price falls and bank demands for bigger deposits from borrowers have meant that many simply cannot afford to save, pushing them into the rental sector for longer.

With so many people renting, the need for properties has drastically increased, sending rent rates soaring. Last year, the average monthly rent cost hit a record high of £728.

The number of UK adults who moved into the rental sector increased by 275,000 last year. This is almost 25% compared to 2010 figures, according to figures from estate agent Countrywide.

Mortgage debt

Are you struggling to make your monthly mortgage or rent payments? If so, it would be advisable to contact your lender or landlord to address the issue immediately.

Seek debt advice to get your finances in order rather than turning to a dangerous payday loan. If you need help with unsecured debt such as credit cards and personal loans, ClearStart can help by offering advice and solutions with the free self help pack.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

First time buyers were hit with 1.6 per cent higher prices on average, compared to the situation a year earlier, bringing the cost to £153,393 for an average home. In contrast to this trend, prices paid by former owner/occupiers fell by 0.5 per cent.

This brings the price of the average mix-adjusted house in the UK to £205,269.

Average mix-adjusted house prices in December were at figures of £213,574 in England, £145,926 in Wales, £155,595 in Scotland and £133,647 in Northern Ireland.

Average prices were actually on the decline for three UK countries in 2011; Wales (-1.6 per cent), Scotland (-4.6 per cent) and Northern Ireland (-8.1 per cent).

London maintained its image as a costly capital with the highest average house price (£346,604) whilst the North East fared the best for reasonable house prices with an average figure for a home coming in at just £131,462.

London and the South East aside, the average UK price in December was £168,220, this represents a 1.4 per decline over 2011.

Gross mortgage lending in December was an estimated £11.7 billion, according to the Council of Mortgage Lenders (CML). This is a 12% drop from £13.2 billion in November, but a 12% increase on the £10.5 billion figure for December 2010.

The statistics paint a grim picture for the housing market, giving first-time buyers even more of an incentive to purchase their properties before the end of the stamp-duty period, for properties under £250,000, on March 24.

Michael Newey, a housing spokesman for the Royal Institution of Chartered Surveyors (Rics) said;

“Many problems with the market still exist and the lack of affordable mortgage finance is still preventing many from getting on to the property ladder.

“Prices are still falling across most parts of the country, but expectations for future prices have become less pessimistic.”

The fact that the average price paid for new properties soared by 9.5 per cent to £208,601 over 2011 compared to an annual increase of 7.7 per cent in November, may leave homeowners with an even bleaker outlook for 2012.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

According to the latest figures from debt charity Credit Action, this number is on the rise as the country slips into a personal finance nightmare.

The number of landlords suffering with money matters may come as a surprise as tenant demand grows.

New research, by estate agency Countrywide, found that rental activity in the UK has increased by almost a quarter in the last year alone. This is a continuing trend, as millions can’t afford to get their foot on the property ladder. Would-be property owners are forced to remain in the rented sector causing a surge in new tenants.

Yet despite this growing demand for affordable housing, the Credit Action February Debt Statistics reveal that 402 landlord possession claims are issued and 274 landlord possession orders are made every day.

Landlords snapping up properties during this buy-to-let boom may be left a little short if the tenants can’t afford to pay the rent. This could have a knock-on effect and cause Brits to fall into debt.

Tenants falling into debt

The average cost of rent has climbed down since reaching a peak in September, however it is till relatively high at £711 per month. Tenants are also affected by greedy landlords hoping to cash in on the Olympics. In some London boroughs landlords are charging between five and 15 times the typical rents in time for short term Olympic lettings.

The number of tenants who miss rent payments has increased over the last 12 months.

Landlords in debt

Landlords are also faced with debt problems, as their property values decrease, causing them to lose cash. Not only that, but whilst they are letting out properties, tenants are finding it hard to meet rent and bill payments, leaving landlords in arrears.

If your finances are stretched beyond your means, you could seek out debt help and advice. ClearStart offer a debt management program that could help you make affordable payments and manage your finances.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

Across England and Wales, The North West emerged as the area with the highest numbers of mortgage claims and claims leading to orders per 1,000 households. Barking and Dagenham led the way with a figure of 1.62 and this was closely followed by Bury at 1.45 and Luton UA at 1.37.

The region holds the title for the fewest number of mortgage claims and claims leading to orders per 1,000 households (including mortgaged and rented) was the South West. Westminster and Waverly took joint first place with a figure of 0.21, with Camden narrowly missing out at 0.19.

In relation to Landlord possessions, 35,439 claims were issued in the final quarter of 2011 and this represents a 3% decrease compared to the previous quarter in 2011, but is up by 3% in comparison to figures for the last quarter in 2010.

Figures for the highest number of landlord claims leading to an order made per 1,000 households saw
Barking and Dagenham reach the top spot again, with a figure of 4.49 followed by Brent at 3.57 and Newham at 3.15.

Waverley also came out on top once more for the authority that had the lowest number of landlord claims, leading to an order made per 1,000 households at 0.21, followed by Flintshire at 0.23 and Wokingham UA at 0.24.

According to a report by the Prudential, outstanding mortgages and credit card bills take up the largest share of debt owed by pensioners, making an average of £260 in monthly payments – a fifth of their expected £1,290 monthly income.

ONS figures seem to highlight the financial strain put on residents of London boroughs and it could be argued that they point to the devastating impact that the credit crunch has had on the city.

Debt problems

If mounting debt is pushing you close to the edge financially, speaking to an independent debt specialist like Clearstart could be the first step to securing a brighter future.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

New research from the Chartered Insurance Institute (CII) has revealed the dramatic levels of ignorance that many of today’s young Brits have regarding finances.

Alongside other figures, it was revealed that 71% of UK youngsters don’t know what the term “APR” (Annual Percentage Rate) means. Even though  up to 95% of those surveyed hold a debit card, further financial concepts which continue to confuse include equity, (73% were unaware what it meant) credit (33%), and debit (24%).

Debt as part of life

On top of this, data also has shown that over half (51%) of those questioned believe that debt is “something everyone goes through”. A third (32%) of them considered credit to be “useful,” while only 12% of students said it is “hard to come by”.

Considering that current university students could actually face up to £50,000 worth of debt when higher tuition fees come into force, it is essential for the youth of Britain to learn about personal finances in order to make the most of their money.

In fact, the CII study also revealed that almost four out of ten students have not actually had any kind of financial teaching at school. Just 16% of students say that their lessons covered insurance, only a fifth (20%) say that their lessons covered pensions, and just a quarter (25%) were taught about mortgages – all basic financial concepts.

Secondary school teachers were also surveyed in this project, with almost half (45%) of them believing that financial education is lacking in their school due to minimal time and resources to teach the subject.

“Our research showed that even those teens that are learning some form of financial education could use additional support as many basic financial concepts seemed out of their grasp. It’s crucial for this age group to have a good understanding of personal finance, as many of them will set off for university and have to budget for themselves for the first time,” said David Thomson, from CII.

Debt advice

Any students who are currently dealing with debt should not simply accept it as a part of their future. Specialist advisors, such as ClearStart, can help young people to realise that there is a way out of your debt problems.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

Family debt has increased by 48% over the last year, a report from insurance firm Aviva found.

The impact of high inflation, combined with soaring unemployment levels and low wages, has meant that household debts have risen substantially.

Average family debt, excluding mortgages, has shot up from £5,360 in January 2011 to a staggering £7,944 in January 2012.

That’s a significant 48% rise in debt levels in the space of just one year. The report found that this chunk of debt takes 32% out of the average household ‘take home pay’ of £24,792. Families are failing to save and their debts continue to mount.

The report found that those starting to plan a family had the highest levels of debt, owning an average of more than £15,000.

Families are most concerned about rising living costs over the next six months and 46% of parents are worried about the threat of redundancy.

Families are scaling back on their spending in a bid to economise. Over 20% of UK families claim that they are not spending any cash on personal goods while a further 30% say they spend nothing on entertainment, recreational activities or holidays. Almost half (42%) spend nothing on leisure goods.

The high cost of living has drained personal finances and UK families are finding it increasingly hard to cope. As a result, 42% of families are saving nothing on a monthly basis and this has increased over the last 12 months.

“While average incomes have increased over the past year, the prices of essential goods and services have also increased, meaning that families are struggling to keep up,” commented Louise Colley, from Aviva.

“Many appear to have acclimatised to this economic environment by shopping around and seeking to minimise their spending in certain areas. However, at the same time there are still a worrying number of families with insufficient savings or large debts.”

If you are one of the UK’s large number of families facing debt problems, you could find a debt management program suitable for you with ClearStart.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

A new study by the GMB union has showed dancers, driving instructors and chartered surveyors are just a few of the 277 professions where ‘real’ wages have taken a hit.

Rising inflation has contributed significantly to the fall in real incomes.

The union revealed that 11 occupations in total suffered a 25% real wage drop. This includes credit agents as well as legal associate professionals, those in the leisure/travel industry, financial and accounting technicians and many more.

Figures from the GMB show that wages have fallen dramatically by 25% in some cases since the average drop of 5.9% in 2007.

Those professions which experienced a 20%-25% cut over the last four years included chemists, company secretaries, leisure and theme park attendants, printing, property, housing and land managers and more.

Paul Kenny, GMB General Secretary said; “These figures show that the Government’s strategy for an economic recovery is in tatters as living standards in the UK drop by 5.9%.”

“George Osborne has the economic literacy of a stick of rhubarb. UK full time workers in 277 occupations have seen the value of their earnings drop when they have a job. Things have got a lot worse in the past year as the recovery underway at the time of the election stalled and the UK is mired in a new recession.”

The South West saw the full time workers suffer the most in a fall in living standards with a drop of 8% followed by the West Midlands with a drop of 7.6%.

Debt problems

The dramatic rise in the cost of living could push thousands into debt. Living standards continue to fall as real wages diminish, leaving many to search for alternative ways to get cash.

However, debt could become a serious problem if you fail to make repayments on time. You could speak to a professional at ClearStart to address your debt problems.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

Whilst the new labour government might have had this outlook in 1997, the coalition is singing a very different tune.

Osborne is enduring a tough time at the moment with the failing economy, mass public unrest and the euro crisis occupying his thoughts.

If the Euro-zone collapses, or even forms a breakaway group, this could have disastrous global consequences.

The Bank of England has warned that the current economic climate is ‘extraordinarily serious.’

Sir Mervyn King, Governor of the BOE said; “There are many ways in which the future could play out. Maybe it [the euro-zone] won’t break up, maybe it will continue in various forms, but maybe there will still be questions of default.”

Whilst households prepare for Christmas throughout the UK, the houses of parliament are preparing for economic meltdown. If the Euro-zone was to break up, the chancellor may be forced to impose austerity measures that families and business would not have seen since World War II.

This news comes as if things aren’t bad enough with wage cuts, pay freezes, job losses, poor pensions and high inflation.

Fortunately, there is some good news. As noted several times in the chancellor’s speech, Britain is able to borrow money on the world markets at 2% compared to economies such as Italy, who face rates of up to 7%.

With more borrowing comes more spending on housing benefits, welfare and the jobless. But as the government splash the cash their budget goes out the window, slashing growth forecasts in the process. This year alone, the UK growth forecast was reduced from 1.7% in the March budget to 0.9% currently.

Falling into debt

Whilst the country is on the brink of another credit crunch, personal finances are taking a serious hit. Debt levels could increase on a grand scale as millions struggle to make ends meet. If you are concerned about your financial situation, finding a suitable debt management programme could help you to overcome your problems.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.

Millions of families’ battle with repossession as they can’t make the payments needed to retain their home. Homeowners who are living with growing negative equity are seeing the value of their home drastically fall, forcing them to stay put.

The housing crisis is worsening as affordability becomes more of a dream and less of a reality.  However, the government has taken note and thought about addressing the problem. The radical and ambitious shake up of the housing market comes under the coalitions new  ‘Housing Strategy’ plans.

Under this brand spanking new reform we could see 5% deposits for first time buyers on new builds. The re-introduction of the Right-to-Buy scheme is a £400 million project that will see cash pumped into a  ‘Get Britain Building’ fund to help builders finance their projects and help to create thousands of new jobs and homes.

Currently the average deposit required by banks and lenders is 20%, compared to 10% in 2007. This has driven millions to rent for longer whilst they struggle to save. Mounting debt pressures from rising utility bills and the general cost of living is forcing people to rent for longer as savings are eaten up by this ‘hand to mouth’ lifestyle.

The average age for those buying their first property is 44, according to the Bank of England. This is a period of your life when you might have significant financial commitments such as children, partners, motoring and commuting costs, life insurance, pensions, elderly parents amongst other costs. Debt problems could also be a significant financial commitment.

Debt management

Around 35,000 families have their homes repossessed each year and this figure could be expected to double in the future. Standard and Poor research found that the number of cash-strapped homeowners facing eviction is on the rise as the number of repossessions could jump to 70,000 per year.

If you are concerned about keeping up with repayments and falling into debt, you could receive confidential advice from a ClearStart specialist.

Chris Jacques

Chris has worked with Clearstart’s sister company Lawrence Charlton since July 2008 having previously dealt with escalated complaints at the Shop Direct Group for four years. With a strong knowledge of court/bailiff processes Chris has worked purely in debt management since 2008. He now spends the majority of his working time dealing with priority debts of all kinds; i.e. those that have enforcement agencies or courts involved. Chris is currently in the process of completing his BTEC Advanced Certificate in Debt Resolution.