Money Advice Update - December 2018

Money Advice Update
December 2018

Money Advice Trust has launched a new report titled Vulnerability: the experience of debt advisers

The report is based on a UK-wide survey of 1,573 debt advisers working in approximately 400 organisations. It includes new data from a survey of nearly 400 individuals with lived experience of mental health problems and debt. The report brings together these new findings along with good practice guidance for supporting those in vulnerable situations.
To read the report click here.


UK Finance says Northern Ireland mortgage market continues to show steady growth

There were 2,700 new first-time buyer mortgages completed in Northern Ireland in the third quarter of 2018, some 3.8 percent more than in the same quarter of 2017. The average Northern Ireland first-time buyer is 30 and has a gross household income of £33,000. There were 1,800 new home mover mortgages completed in Northern Ireland in the third quarter of 2018, a rise of 5.9 percent than in the same quarter of 2017. The average Northern Ireland home mover is 39 and has a gross household income of £48,000.
There were 2,200 new homeowner re-mortgages in Northern Ireland completed in the third quarter, some 4.8 per cent more than in the same quarter a year earlier.
To read the full statistics click here.


The Bank of England has warned a consumer debt crisis could cost banks £30bn

The Guardian newspaper has reported that UK banks need extra £10bn to ward off the threat of bad debt, said the Bank of England. The Bank of England has issued its strongest warning yet about the UK’s ballooning consumer debt, saying Britain’s banks could incur £30bn of losses on their lending on credit cards, personal loans and for car finance if interest rates and unemployment rose sharply. After assessing the fast growth in the consumer credit market, Threadneedle Street is requiring the banking system to hold an extra £10bn of capital as protection against any future losses after finding that lenders are underestimating their exposure to bad debts in an economic downturn. It follows a warning in July by the Bank’s executive director of financial stability, of a “spiral of complacency” about a consumer credit market that was growing at 10% a year when household income had grown only 1.5%.
To read the full article click here.


Shoppers switch to credit card use according to the UK Finance

Shoppers are increasingly using their credit cards for day-to-day spending rather than one-off purchases, the banks' trade body has said. The greater protection offered when buying bigger purchases and the temptation of loyalty points has led to their increased use, UK Finance said. The body said credit card spending saw a sharp rise of 12.1% in October compared with the same month in 2017. Debt charities have warned about the use of credit for everyday purchases. They said that people risked financial difficulty if they built up spending on credit cards. If they were hit by a financial shock - such as long-term illness - they could struggle to make repayments and face high interest charges. Over the past 12 months, the outstanding level of borrowing on cards issued by the High Street banks grew by 5.7%, UK Finance said. Total spending on these bank-issued credit cards was £11.3bn in October.

To read the full article click here.


Credit Connect report that 5.8m people are invisible to the financial system

New research by Experian has revealed that there are 5.8 million people in the UK who are virtually invisible to the financial system, because there is insufficient information available about their financial track record. The campaign aims to raise awareness and educate consumers of the importance of thickening of their individual financial files. These Invisibles, are consumers with little or no financial information (sometimes referred to as those with thin-files or no-files) can find themselves excluded from mainstream finance, or face higher costs to access the type of financial products and services that most people take for granted. More than a million (1.2m) of the group live in households in the squeezed middle where total incomes are forecast to contract over the next few years, making them particularly vulnerable to higher borrowing costs at a time when they may need credit the most.

To read the full article click here.


Money Advice Service Talk Money Week Roundup

Talk Money Week was about collective impact with the ultimate aim of engaging consumers directly to encourage them to open up conversations about money, and also bringing together organisations from across the public, private and third sectors to collaborate to improve UK financial capability. The week was a resounding success with fantastic support from government, MPs and lead employers. It featured over 400 events and activities up and down the country with 120 pieces of media coverage speaking straight to consumers, and reached millions of people on social media.
To read the Financial Capability Calls to Action click here.


StepChange launch the Locked Out report

StepChange’s research looks at how their clients' problem debt affected their access to housing and the security, quality and affordability of their homes, at a time they were trying to stabilise their finances or repay their debts. Problem debt has caused issues for many clients, including being made homeless, being unable to move into a new home, feeling forced to move from their current home, or simply putting up with problems because of the worry of eviction. The research found:
  • Poor credit ratings affected clients' access to housing
  • Problem debt forced clients into expensive private rentals
  • Clients felt less secure in private rentals compared to social housing
  • Housing quality had a negative impact on energy bills
To read the report in full click here.


The Belfast Telegraph reports banks close a quarter of Northern Ireland branches in year

One in four branches of the big Northern Ireland banks will have shut their doors in the space of little over a year, it can be revealed. A breakdown of figures from Ulster Bank, Danske Bank, First Trust and Bank of Ireland shows that between the start of 2017 and autumn 2018, almost 25% of their branches will have closed. That includes 11 Ulster Bank branches shut by the autumn, following the closure of nine last year, cutting its network from 64 down to 44. First Trust cut its branch network in half during 2017, with now just 15 across Northern Ireland. Danske Bank shut two branches here last year, reducing its network to 44. Bank of Ireland now has 28 branches after pulling the shutters down on six in 2017.

To read the full article click here.


UK Finance reports that the industry delivers on its commitment to service information for customers

From November 2018, consumers will be able to compare clearer and more consistent information about the additional services current account providers offer all customers, including those in potentially vulnerable circumstances, after a voluntary commitment made by the finance industry comes into action. Details of the support available for customers experiencing money worries, dealing with a major life event, or with a disability or a physical or mental health condition will be displayed in the same template on each participating bank and building society’s website. Information is also given on how the provider can help customers manage their day-to-day money better.
To read the article in full click here.


UK Government says loans will help people trapped in debt caused by payday lenders

The Treasury believes the scheme could help the 3 million or so people in Britain who borrow from high-cost providers. The government is to explore the idea of zero-interest loans to help the millions of people trapped in a cycle of problem debt caused by borrowing from high-cost providers such as payday lenders. Campaigners welcomed the development but they called on the government to go further to protect low-income households from exploitative lending practices. Some urged ministers to go further by introducing an interest-rate cap on all forms of borrowing, which would help prevent people from running into financial trouble in the first place.

To read the full article click here.


UK manufacturing growth hits 25-month low amid Brexit fears

The Guardian has reported figures dragged down by the fall in exports and optimism for the year ahead are at a 22-month low. The August figures suggest the manufacturing sector could stay in recession for the rest of 2018. Britain’s manufacturers face a difficult autumn as the Brexit deadline looms and Donald Trump’s trade sanctions hit exports, according to figures for the sector in August. A survey of manufacturers has found that growth slowed last month to its lowest level since July 2016, dragged down by a shock fall in exports.

To read the full article click here.