Money Advice Update - June 2018

Money Advice Update
June 2018

The Death Notification Service

The Death Notification Service has been created to allow you to notify of a person's death to a number of banks and building societies at the same time. The aim is to make the process quick and easy for you to inform them at a time that suits you. Currently those involved are Bank of Scotland, Barclaycard, Barclays, Cahoot, Clerical Medical, First Direct, Halifax, HSBC
Lloyds Bank, M&S Bank, Nationwide Building Society, Natwest, Santander, Scottish Widows
The Mortgage Works and UCB Home Loans Ltd.  

To read more or use the service click here.

Banks close 2,900 branches in three years, says Which? By BBC

Branches are shutting at an alarming rate, says Which? About 60 bank branches are closing every month with RBS shutting the most. It found that 2,868 branches will have closed between 2015 and the end of 2018, with the number accelerating this year. It called the trend "alarming" and said many people were left without proper access to services. But banks said their branches were losing customers as more people banked online. By region, Which? said Scotland had been worst hit, with 368 branches due to have shut by the end of 2018. That was followed by the South East (361), the North West (353) and South West (327). 

To read the full article click here.

UK Finance reports Strong growth across Northern Ireland mortgage market

UK Finance’s Mortgage Trends in Northern Ireland Update for quarter 1 2018 reveals:
  • There were 2,200 new first-time buyer mortgages completed in Northern Ireland in the first quarter of 2018, some 10 per cent more than in the same quarter of 2017. The £0.22bn of new lending was 10 per cent more year-on-year. The average Northern Ireland first-time buyer is 30 and has a gross household income of £33,000.
  • There were 1,400 new homemover mortgages completed in Northern Ireland in the first three months of 2018, some 16.7 per cent more than in the same quarter of 2017. The £0.19bn of new lending in the quarter was 18.8 per cent more year-on-year. The average Northern Ireland homemover is 39 and has a gross household income of £46,000.
  • There were 2,300 new homeowner re-mortgages in Northern Ireland completed in the first quarter of 2018, some 9.5 per cent more than in the same period a year earlier. The £0.25bn of re-mortgaging in the first quarter was 19 per cent more year-on-year.

Brexit puts London house prices in danger of first fall since 2009, reports the Evening Standard

Property experts think average house prices in London will slide around 1% in 2018. London house prices are on course for their first annual fall since the financial crisis as Brexit bites in the capital’s property market. A poll of 30 specialists predicted that average house prices in London will slide around 1% this year, registering a decline for the first time since 2009 and far behind a 1.7% rise nationally. The pound is down around 10% against the dollar since Britain voted to leave the European Union two years ago, making properties cheaper for overseas investors. But doubts over the outcome of protracted divorce talks have made buyers wary, alongside stamp duty rises and the removal of tax breaks for buy-to-let investors. More than half the experts polled were braced for dwindling demand in the capital, with one respondent predicting a fall of as much as 6% for London property.

To read the full article click here.

Labour Force Survey

The Labour Force Survey latest results published 12th June 2018 revealed: 
  • Unemployment rate for the period February-April 2018 was 3.3%, the third lowest on record. The unemployment rate increased by 0.2 percentage points (pps) from the previous quarter and decreased by 2.1 pps over the year (from 5.4%). 
  • Unemployment rate (3.3%) was below the UK average of 4.2% (the joint lowest since 1992). The NI unemployment rate was the joint lowest rate of the UK regions (with the South West) and was below the European Union (7.1%) and the Republic of Ireland (6.1%) rates for March 2018.
  • Figures for February-April 2018 estimated that 52.7% of those unemployed in NI were long-term unemployed (i.e. unemployed for one year or more), compared to 27.0% in the UK.
  • There was a decrease (0.2 pps) in the employment rate (69.7%) over the quarter and an increase over the year (0.9pps).  
  • The economic inactivity rate (27.9%) was unchanged over the quarter and increased by 0.7 pps over the year.

Northern Ireland judgments rose to 2012 levels, reports Credit - Connect

The total number of defaults and small claims judgments issued in Northern Ireland during the first quarter of the year rose to the highest levels since Q1 2012, according to figures released by Registry Trust. There were 2,242 small claims judgments in Q1 2018, 16 per cent more than during the same quarter last year and the highest total for any first quarter since 2012. The average small claims judgment decreased four per cent to £1,960; combined these changes led to an 11 per cent rise in the total value of small claims judgments.

In the High Court, 24 judgments were registered, 21 fewer than during the first quarter of 2017. The average High Court judgment plummeted, dropping 48 per cent in value, leading to a 72 per cent fall in the total value of judgments. During Q1 2018, 2.74 per cent of judgments were marked as satisfied. This contrasts with 13.14 per cent in England and Wales, where satisfaction rates are generally higher owing to differences between legal systems.

IHS Markit Household Finance Index™ (HFI™)

Income from employment rises at survey-record pace in June, but higher living costs continue to hold back household confidence.
Key points for June 2018:
  • Household finance index drops slightly in June, largely reflecting greater living costs signalling a sharper squeeze on household budgets,
  • Inflation expectations reach four-month high
  • Income from employment increases at fastest rate since the survey began in February 2009 
  • Workplace activity expands to the greatest extent since October 2014
  • Almost half of UK households (45%) anticipate a Bank of England rate rise by the end of 2018
To read the full survey click here

Financial Conduct Authority (FCA) launches a consultation into rent to own schemes and overdrafts

As part of the FCA’s ongoing review of high-cost credit products, they have published proposed rules and guidance for consultation. They have also identified a number of areas for discussion which focused on arranged and unarranged overdrafts, as well as rent-to-own, home-collected credit and catalogue credit products. They have also included store cards. They are also working on alternatives to high-cost credit designed to increase choice and encourage the availability of alternatives to high-cost credit.

To read over the consultation click here.

UK Finances reports convenience of debit card payments puts cash in second place

At the end of 2017, UK consumers made 13.2 billion debit card payments compared to 13.1 billion cash payments. Almost two thirds of Britons now using contactless payments as the number of payments doubles in one year. Evolving consumer habits, increasing access to card payments and new technology are providing consumers with more choice.  The popularity of contactless payments, online shopping and smartphones is having a significant effect on how we manage our money and pay for things, leading to debit cards overtaking cash as the most frequently used payment method in the UK.

To read the full article click here.

After years of penalising older borrowers, now banks launch mortgages you can take to the GRAVE, reports

Older borrowers are for the first time being offered mortgages that they can take to the grave. In a move to help retired people stay in their homes, Hodge Lifetime is about to launch a new interest-only loan for over 55s which lets them keep borrowing until they die. Nationwide, Britain’s biggest lender, has also revealed plans to launch an interest-only mortgage that will allow homeowners to borrow into later life - and experts say that more firms will soon follow suit. The new loans are part of a lending revolution designed to help older borrowers who are unable to clear their mortgage before retiring, or who want to help family members climb on to the housing ladder. New rules were introduced in March which allow banks to relax lending criteria for older borrowers and customers may need to show only that they can meet interest-only repayments.

To read the full article click here.

Complaints about high-cost credit climb to record level

The number of complaints about home credit rose by 146%, hiring leasing and renting rose by 73% and payday loans rose by 64%. Complaints about current accounts decreased by 15% and packaged bank accounts by 42%. Complaints about high-cost credit have soared to a record level, raising concerns about how lenders treat vulnerable consumers. New complaints about payday loans soared by 64%, from 10,529 to 17,200. The FOS upheld six in 10 of the complaints. Excluding payment protection insurance products, which make up 55% of the complaints, credit worries represent almost a quarter of those received by the watchdog.

To read the FOS report click here.

Don't bank on it: Why we fail to switch our accounts, reports the BBC

The numbers tell it all. The Competition and Markets Authority's (CMA) investigation into the banking industry in 2016 found that just 3% of current account customers had moved their account in the past year.  More than half of customers had been with their bank for more than 10 years. The CMA found the big four's 70% share of current accounts has barely budged despite attempts by various challengers. Since 2005 the total market share of Lloyds, Barclays, HSBC and RBS has fallen by just 5%, the CMA said. 

Customers more likely to switch "have higher income, higher balances and higher education levels than those who did not", according to the CMA. Those with unarranged overdrafts are less likely to move, even though they potentially have more to gain by switching providers. But the CMA found customers do not switch unless they have a problem with their bank and most think they have little to gain financially by moving. The small business banking market is even more focused on the big four, which have an 80% market share of the 5.5 million accounts. Just 4% of customers shift their accounts annually and even dissatisfied customers are reluctant to move.

To read the article in full click here.

Informal borrowing and mental health problems, by the Money and Mental Health Policy Institute

How informal borrowing affects people experiencing mental health problems and what can be done to help. New analysis reveals that people experiencing mental health problems are one and a half times more likely to borrow informally as people not experiencing poor mental health. This new report explores the drivers of this trend, what happens when people experiencing mental health problems borrow from friends, family and acquaintances, and how the borrower and lender can be protected.

To read the report click here.

StepChange launch behind on the basics research

Analysis by StepChange Debt Charity reveals that two in five clients who received advice in 2017 were behind on at least one of their essential household bills (such as energy bills, council tax, mortgage or rent). Across Great Britain, the charity estimates the number of people behind on priority bills was over three million. Among renters, for example, those without rent arrears had significantly higher levels of borrowing relative to their income (77%) than those renters with rent arrears (55%). Worryingly, an estimated 9.3 million people last year used credit to meet a household need – with 1.4 million of these using high cost credit. Groups identified as being at higher risk of arrears on priority expenditure included lower income families, renters, people with an additional vulnerability, and younger people. This could be because they are more likely to have been affected by factors that increase the risk of arrears – namely a squeeze on income, rising living costs, insecure work, and regular income shocks. The most common arrears were on council tax (30%), water bills (23.7%), rent (21.5%) and mortgage (20.6%). Generally speaking, the lower the income of the household, the more likely they were to be in arrears.

To read the full report click here.

Money worries have left two in three Brits worried about loved one's mental health reports the Money Advice Service (MAS)

Overall, nearly two-thirds (63%) of UK adults have been concerned about a friend, family member or colleague’s mental wellbeing, linked to money worries. Of those who have been worried, the most common signs include changes in mood and temperament (36%), trouble sleeping (31%), and being anxious, stressed or lacking in confidence to contact the bank (22%). Nearly two-thirds of UK adults (63%) say that stress over money has affected the mental health or wellbeing of someone they know. Adults in the UK are most likely to have been worried about the mental wellbeing of a family member (47%), a friend (39%) or a partner (35%). Plus, more than half of all adults (55%) have experienced concerns over their own mental health or wellbeing because of money worries at some point in their lives, with more than one in five (22%) saying that they are currently experiencing mental ill health or poor mental wellbeing as a result of their financial situation. The stress caused by money worries can affect anyone, but the research suggests that younger people are particularly at risk. For those aged 18-34, nearly three-quarters (72%) have at some point experienced mental health or wellbeing issues linked to money. Women are also much more likely than men (61% vs. 49%) to report the same.

To read the full article click here.