Personal Finance Stuff » Bank of England

Governor of the Bank of England wants to strangle take home pay

Alan — Wed, 02 Feb 2011 03:44:17 +0000

Facing rising inflation a pay restraint and a tightening of take home pay has been advised by Mervyn King the Governor of the Bank of England. Due to higher commodity and energy prices in upcoming months, rises in inflations in the UK economy are almost unavoidable. Before falling sharply in 2012, he predicts in 2011, increases of 4 to 5%.

There is consideration of increasing interest rates to thwart an attempt to increase wages to cover the ever increasing prices. The current inflation rate has been brought about by the rise in VAT and high import prices as well as the rise in commodity and energy prices.

For the past four years, three percentage points increase in the inflation rate each year has been attributed to these factors. The UK economy is in a rebalance of less domestic spending and more exports and these factors are necessary as part of the rebalancing.

Some suggest this in contrast with reports that employers will be offering salary increases after almost two years of salary freezes this from data supplied by XpertHR.

Most employees are not expecting a pay raise in 2011 and most will not receive one as well, says Sheila Attwood of XpertHR. She also states that after two years of pay freezes workers will not be pleased with continued pay freezes. In 2011 a 2.5% to 3% increase in pay is expected which is below the RPI inflation of almost 5%.

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Half the country can not meet debts, official

Alan — Wed, 15 Dec 2010 22:39:07 +0000

Even though the general economy is showing definite signs of recovery from the recession, over half of the British population is still struggling to make ends meet, according to the annual survey taken by NMG Consulting. The survey, taken for the Bank of England, reported that 51% of the heads-of-households questioned said they were having trouble making the payments on unsecured loans, personal loans and credit cards.

About half of the 2,000 survey participants said their disposable income had dropped in the last year, with more than a quarter of them reporting a drop of at least £100 in monthly income. Again, about half said they had cut down on spending in order to pay off debts; about 18% said they had taken on a second job and/or were working longer hours just to keep up with payments.

Approximately half the people surveyed said they found it very difficult to get a new loan, and those with high loan-to-value mortgages were having trouble finding sources for a reduced-rate loan. Overall, close to 90% of the participants expressed concern over the impact of government fiscal policies, chiefly higher taxes and reduced services.

The combination of continued high levels of unemployment, lack of substantial earnings increase, and the difficulty of obtaining new credit means that many of the working population are feeling the burden of a restricted budget. The research also indicated that many people are not getting the advantage of lowered interest rates on loans, but are using cash from existing credit lines instead.

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Banking costs highest ever

Alan — Sat, 11 Sep 2010 04:16:23 +0000

Banks and building societies are charging their customers more and more, according to findings from the Bank of England. Customers, on average, are being charged at a rate of 19.1 per cent.

The Bank of England has said that these are the highest rates that have been seen since records were first taken back in 1995. Some financial experts say that many lenders have been restructuring the accounts that are currently in place, as well as cutting many of the best deals that they offer as they do this. Several providers were reported to have increased their rates over the past month.

According to Michelle Slade of Moneyfacts.co.uk, “Overdrafts customers are an easy target” for many banks and other financial institutions. And with many people making use of an overdraft every month, many customers may be being charged much more than in the past.

Findings from Moneyfacts.co.uk also show that over 25 per cent of bank accounts that are currently in use have had increases in their overdraft rate, even though the bank rate has not changed.

Rates for credit cards are remaining at a high level, with lenders charging about 17 per cent interest. Still, not all rates have risen. Mortgage rates have seen a recent decrease, and some tracker deals for anyone with a 25 per cent deposit have fallen to as low as 3.55 per cent.

Some deals also got cheaper, with five-year fixed rate deals dropping about 0.25 per cent to 5.1 per cent. These loans have been reducing in cost for nine months in a row now. Unfortunately for some people, however, those with a deposit account may notice a decrease in returns for their accounts.

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Low interest rate not helping lower mortgage principle

Alan — Wed, 23 Jun 2010 04:27:34 +0000

When the Bank of England reduced interest rates to .5% over a year ago, the move was made to give home owners some spare cash from the new lower mortgage payments. It also was thought that the spare cash could be used to make larger payments on home loans.

However, Capital Economics economist, Roger Bootle, stated that the claim that homeowners are paying their mortgages back at a faster rate is not founded.

Bootle stated that instead the mortgage principal repayment rate is much less than the lowered interest rates were expected to be showing, and that although the mortgage arrears may be slightly improved they could mask a fragile picture of the homeowners’ market.

The Council of Mortgage Lenders warned that the housing market will be subdued over the last part of the year, even though there has been a slight increase in mortgage lending. During May, lending for mortgages rose by seven percent, but is still much lower than the rates seen towards the end of 2009.

During the month, a total of £11.3b was handed out, an increase from the 10.5b supplied in April but still much less than in December of 2009 when £13.6b was distributed.

The CML stated that the market is still low although it shows a bit more buoyancy with a lower than normal average turnover. Next week the housing market is said to be part of the emergency budget with measures included that may place more pressure on home budgets.

CML economist, Paul Samter, stated that the ground was cleared for the Budget next week in an effort to shape public finances into a better stance.

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