Money Advice Update - December 2017

MAIL ONLINE reports that the free cash machine could disappear in the next 10 years

Recently the Mail Online reported that the free cash machine could begin to disappear from the high street. This comes as many of our bank continue to close branches. Mail Online states cash machines will vanish from the High Street within a decade. Instead customers will be forced to withdraw money from tills in shops. John Howells, who runs Link, which oversees more than 70,000 ATMs across the country, believes payments with paper money will plunge in the next ten years.  He expects this to drive down the number of withdrawals from cash machines, meaning huge numbers will become unprofitable and shut down. The claims will alarm the millions of people in isolated areas who have already lost their bank branches and rely on ATM withdrawals to get by.

To read the article in full click here.
 

Banking Standards Board want your views

The Banking Standards Board (BSB) would like your views on using banks and building societies – if you could complete this short questionnaire and share among your clients and networks it would be very much appreciated. From the BSB:

“We want to find out what matters to you when it comes to banking, as well as what your experience of using banks and building societies is like in the UK. Your feedback will help us in our work to raise standards of behaviour and competence across UK banks and building societies.” https://www.surveymonkey.co.uk/r/WW8WTM2 
 

In Too Deep: an investigation into debt and relationships

Relate, the UK’s largest provider of relationship support, launched a report into how debt affects relationships. The research explores the links between debt and relationships. Our findings paint a picture of a relentless cycle, whereby debt can have a profoundly negative impact on relationship quality and stability and, equally, negative relationship dynamics can actively worsen and create debt problems.

To read the full report in full click here.
 

Money Advice Trust and Behavioural Change launch a Toolkit for Money Advisers

The Money Advice Trust and Behaviour Change recently launched a ‘Nudging Tools for Money Advisers: a behaviour change toolkit for the money advice sector’. The toolkit provides team leaders, advisers and managers in the money advice sector with six practical ideas inspired by behavioural science to enhance their money advice services. 

To download the Toolkit click here.
 

Financial Conduct Authority (FCA) release trends in regulated mortgage lending

The FCA’s publish their recent data bulletin on trends in regulated mortgage lending over the last ten years. This is a particularly interesting period to look at because it encompasses the financial crisis and its aftermath. This bulletin looks at how mortgage activity reduced in the wake of the crisis and the extent to which it has changed since. The focus of this bulletin is on high level trends in regulated mortgage lending drawn from the regular data that they collect and publish via our two main mortgage datasets: Product Sales Data (PSD) and the Mortgage Lenders and Administrators Return (MLAR). 

To read the bulletin click here.
 

Mail Online report that getting a loan will be harder for landlords: Anyone with four or more homes may be barred by banks

Around 11 per cent of Britain's 1.9 million landlords have four or more properties Lenders will soon carry out stricter checks on landlords with big portfolios. They will be grilled about the properties they own and the rent they charge. Landlords who have four or more properties could find it impossible to get a mortgage under tough new checks by banks. Money Mail can reveal that three lenders — Santander, Principality BS and Platform, a subsidiary of The Co-operative Bank — have stopped accepting mortgage applications from landlords with this number of houses as a result of new rules being introduced by the banking watchdog. From September 30, lenders will have to carry out stricter checks on landlords who have these big portfolios. At present, most banks and building societies assess a buy-to-let application based on the rental income and value of the property they are lending against. Under the changes, every time a so-called portfolio landlord applies for new loan, or refinances an existing one, they will be grilled in detail about all the properties they own, including how much rent they charge and the size of their loans.

To read the full article click here.
 

Mail Online report twelve Northern Rock mortgage holders lose their homes each day since bank's collapse

Twelve Northern Rock mortgage holders have lost their homes every day since the bank’s collapse at the beginning of the global financial meltdown a decade ago. Around 3,100 of the bank’s customers are also still in negative equity, meaning their debt is higher than the value of their house. But as thousands struggle with the lender’s legacy of ruin, former chief executive Adam Applegarth, 55, is enjoying a £304,000-a-year pension in retirement. The boss, who quit when his risky lending practices blew up the bank, has since been linked to a toxic loan bubble in the car finance market. Analysis of annual reports from 2007 onwards shows at least 43,000 homeowners have suffered a repossession or voluntarily surrendered their house. The Newcastle-based lender’s collapse was followed by the failure of Lehman Brothers in the US, and the taxpayer-backed rescues of Lloyds and NatWest owner Royal Bank of Scotland. The Rock was widely seen as the nation’s most reckless lender, doling out around £7billion of ultra-risky debt in 2005 alone, much of it to first-time buyers.

To read the full article click here.
 

This is Money report that a clampdown on interest-free credit cards luring people in

Credit card companies face a crackdown on interest-free offers after it emerged more than half of borrowers have no idea what rate they will pay when the deal expires. There are now 117 credit card deals that charge no interest on debts switched from another card – with Barclaycard and Tesco Bank offering a rate of 0 per cent on balance transfers for up to 40 months and Santander 43 months. But when these deals come to an end the rate typically jumps to around 19 per cent – although Capital One, Aqua and Marbles have credit cards where the APR hits 34.9 per cent.

To read the full article click here.
 

Inflation jumps to 2.9% as prices for clothes and shoes rise at the fastest rate for 30 years

The Telegraph reports that price rises accelerated in August as costs for clothes, shoes, furniture and telephones all picked up pace. Inflation hit 2.9pc, the Office for National Statistics said, up from 2.6pc in the 12 months to July and the highest level since May, indicating that the fall back in price pressures in June and July may have been a blip in the upward trend. The weak pound has pushed up import prices and that has fed through into costs for shoppers, hitting households in the pocket. Prices for clothes and shoes rose by 4.6pc on the year, the fastest pace in almost 30 years. Trips to restaurants and hotels also became 3.5pc more expensive compared with August 2016. However, food inflation slowed down, dipping from 2.6pc in July to 2.1pc in August, reducing the intensity of the pressure on the weekly shop. Households are under increasing strain - the latest pay numbers show earnings rose by 2.1pc in the year to June, with prices rising at a faster pace.

To read the full article click here.
 

StepChange publish a briefing on the overdraft struggle faced by their clients

This briefing looks at the impact persistent overdraft debt is having in the UK. StepChange asked their clients to share their experiences and received some shocking responses about how much getting into debt with their bank affects their clients' lives. The Financial Conduct Authority (FCA) found that nearly 13 million people in the UK have been overdrawn in the last 12 months. While overdrafts are meant to be a form of short-term lending, StepChange discovered that many clients are becoming dependent on them. People who are frequently overdrawn and regularly going over their overdraft limit can find themselves in a cycle of borrowing that is very difficult to escape from. Around half of their clients have overdraft debt. Our research also found:

• 2.1 million people were constantly in their overdraft in 2016
• Over three quarters (79%) of the clients surveyed were constantly in their overdrafts in the 12 months before they sought advice
• Clients were typically getting into overdraft debt to cover essentials; 81% of clients with overdrafts used them to pay for food, living costs, or household bills

To download the full report click here.
 

This is Money report on more people in danger of losing their home

Thousands more households will be in danger of losing their homes next year if they lose their job or become too ill to work, UK Finance has warned.  That is thanks to a double of whammy of the switch to universal credit and the scrapping of a safety net for mortgage interest payments. The report argues that support for mortgage interest - paid by the government to homeowners struggling to keep up with their mortgage payments due to lost income - is a critical for struggling homeowners, especially the elderly. They warned home possessions could start to rise. By scrapping it at the same time as axing tax credits, it's 'inevitable' that more of the families who fall behind on their mortgages will be evicted. Support for mortgage interest is scheduled to be axed next April, after which an estimated 135,000 low-income homeowners who currently claim the free benefit will be forced to take a loan from the government instead - and pay interest on it. Analysis done by insurer Royal London suggests that a Pension Credit recipient receiving the average weekly SMI payment of £20 could run up a debt of £5,552 if they claim SMI for five years - the typical claim duration for pensioners.

To read the full article click here.
 

The Times report that HMRC bans payments by credit card as deadline looms

Some 454,000 people paid their tax using a personal credit card last year, with HMRC taking about £12 million a year in commission, which it says it has to pay the credit card companies to process payments. HM Revenue & Customs is to stop accepting credit card payments less than three weeks before the deadline for submitting, and paying, self-assessment tax returns. About 10.5 million people are expected to submit a self-assessment tax return by January 31. However, a European directive being introduced on January 13 will ban all companies, including HMRC, from charging customers a fee for using Mastercard and Visa credit cards. The government is taking the legislation one step further by extending this to all credit cards and digital payment services such as Paypal and Apple Pay. HMRC’s move is an unexpected consequence. This week it confirmed that it would no longer accept personal credit cards but would accept corporate and business credit cards, which are not affected by the rule changes.

To read the full article click here.
 

BBC News - Can a bank in a box replace a branch?

Atlanta-based company NCR has developed an interactive cash-machine which, it says, can do 80% of the tasks typically undertaken in a bank. Does this mean the end of local bank branches? And as cash is increasingly in competition with mobile payments in some countries, are even the days of the cash machine numbered?

To watch the video click here.
 

Borrowing by movers up 16 per cent in Northern Ireland reports UK Finance

In the third quarter of 2017 in Northern Ireland, home buyers borrowed £480 million, up 12 per cent on the second quarter of 2017 and 20 per cent compared to the third quarter last year. First-time buyers borrowed £260 million, up eight per cent on the second quarter and 24 per cent on the third quarter last year. Home movers borrowed £220 million, up 16 per cent both quarter-on-quarter and year-on-year. Re-mortgaging activity totalled £220 million, unchanged on the second quarter of 2017 but 10 per cent higher than in the same quarter last year. 

To read the full report click here.
 

UK economy faces 'longest fall in living standards in 60 years' according to the BBC

The UK is on course for its longest fall in living standards since records began over 60 years ago, the Resolution Foundation think tank has said. Its post-Budget analysis says the squeeze on incomes is set to last longer than that which followed the post-2008 crash.
It says real disposable incomes are now set to fall for 19 successive quarters. The Resolution Foundation's main focus was on the growth downgrade, which it said put the economy on course to be £42bn smaller in 2022 than previously expected. The Foundation said that tax and benefit policies were set to put downward pressure on living standards and upward pressure on inequality, and would take an average of £715 away from the poorest third of households a year, while giving £185 to the richest third.

To read the full article click here.
 

Mail Online reports that Banks are under fire for hammering borrowers but not rewarding savers with interest rate rise - but who are the REAL winners and losers?

Banks have been accused of failing to pass on the interest rate hike to savers 1.4 million families with tracker mortgages will immediately face higher bills. Experts believe the rate hike could boost bank profits by up to £500 million. The PM has urged banks to pass on the interest rate hike to hard-pressed savers. The Bank of England raised rates from 0.25 per cent to 0.5 per cent – adding £180 a year to repayments on a typical variable mortgage. Governor Mark Carney suggested two further increases would follow over the next three years to bring inflation back under control, taking rates up to 1 per cent in 2020.

To read the full article click here.