There's been a lot of positive talk in the UK housing market over the last few days or so........Onward Christian Soldiers.....
Relaxation of the credit stanglehold?
Total net lending to individuals rose by £0.3 billion in October. The twelve-month growth rate fell to 0.7%, and the three-month annualised growth rate increased 0.3% to 0.5%, according to new figures from the Bank of England.
Money for New Mortgages?
The value of building society mortgage approvals in October was £1,511 million - broadly in line with the £1,565 million of approvals in September according to new figures from the Building Societies Association.
Gross lending also remained steady with £1,666 million being lent in October compared to £1,605 million in September.
Within the total, net lending secured on dwellings increased by £0.9 billion, in line with the September increase and above the previous six-month average of £0.6bn. The twelve-month growth rate was unchanged, at 0.8%. The three-month annualised growth rate increased 0.4 percentage points to 1.0%. Within total secured lending, secured lending by banks (excluding the effects of securitisations) increased by £3.1 billion, slightly below the September increase (£3.3bn) but above the six-month average of £2.6bn.
The number of loan approvals for house purchase (57,345) was above the September figure (56,205) and above the previous six-month average, whereas approvals for remortgaging (24,596) were below both the September figure and the previous six-month average.The number of loans approved for other purposes (29,195) was higher than in September and higher than the previous six-month average.
Credit Cards - Britains 'Secret' loan sharks!
Consumer credit fell by a net £0.6 billion, below the previous six month average of -£0.1bn. Credit card lending increased by £0.1 billion and other loans and advances fell by £0.7 billion. The annual growth rate of consumer credit continued to fall, to -0.1%; the three-month annualised growth rate fell to -2.2%.
Housing Market still in Cheyne-Stokes
House prices grew by 0.2% in November according to the latest national house price survey published by Hometrack, the housing intelligence business - the fourth consecutive increase in prices, bringing the year on year rate of house price growth to -2.9%.
Commenting on this month's survey, Richard Donnell, Director of Research said:
“There are three distinct elements to the latest results from this and other recent surveys. This first is that prices continue to post month on month increases. The second is the extent of prices rises across the country and the number of households who have seen an improvement in market conditions over 2009. The third, and most important element, is the short term outlook for prices.”
“This is the third consecutive month that the survey has posted a 0.2% price rise. Add to this a growth in sales volumes and it is easy to see how agents are beginning to feel more confident about sustainable pricing levels - at least in the short term. But this pick up in market activity and prices is not one that has been felt across the whole country. The stark reality is that there are large swathes of the country where prices have remained unchanged or have seen continued price falls.”
Over the last 6 months London and the South East have consistently seen the largest number of postcodes registering price rises - values are up across 78% of London and over half of the South East. Yet in five regions less than 20% of the market has registered any price rise.
Personally I see nothing in these indicators to warrant any change of course by the Bank of England regarding Interest Rates.
It is quite clear however that the money invested by the British people into the Quantitive Easing 'project' is clearly designed to line the pockets of those within the system where the money will not 'trickle down' into the general money supply.
The credit strangulation of SME's and individuals is as bad as ever!
The Bank of England has just announced that the latest efforts at so called Quantitative Easing involves the injection of another £25 billion of made up money in the circular flow of money system, which means that since the recession Britain has generated £200 billion of made up debt!
So Where's the money gone? And what is Quantitive Easing anyway
It turns out that QE as the press now like to call it, is radically different from the Pump Priming developed by FDR in 1930 to get the States out of the Great Depression!
And this explains why you and me, the small and medium sized enterprise and it's workers are not getting any credit or money!
Truth of the matter is QE is designed to shore up the internal arteries of the international banking system and not leak any money out. To leak money by the creation of credit to the general public and increasing the money supply would introduce both inflationary and currency exchange pressures that would be far from welcome in the current economic climate. So here is how QE works - The UK Government decides to make up some more cash to shore up the banking system. It creates £25 billion pound worth of bonds that it says you and me will repay! It then instructs the Bank of England which sells them to Banks. They make a nice profit by selling them onto - have you guessed it yet?
Yes 95% of the guilts and bonds go to INSURANCE COMPANIES! Very little money is being released to the public system.
It just means that today the Government decided that You, Me and Everybody! - in the UK, now owes another £25 billion of made up money plus the made up Interest, to Aviva et al.
So QE cannot have any beneficial effects to the likes of you and me, Joe Public, except the potential ability to stave off a second wave of recession by keeping the banks ticking over!
Pump Priming conversely is a 'lets spend our way out the crap' solution which would only work in the UK if the money is diverted into the public sector.
Why just the public sector? Because only large national institutions have enough employees to spread the money to all parts of the system before it returns to the investment banks.
Like all system solutions they have to be top down and bottom up!
The recession will not come to an end in this country until we start pumping it into the bottom!
Insurance Blogger loves a peoples champion and as this test case has shown UK consumers may now have far more rights and loan protection under UK Consumer Credit Law than was previously realised....
And the UK Courts will probably be filling up with cases as fast as those dealing with the mis-selling of loan and mortgage protection insurance products as other legal firms jump onto the bandwagon.
Once again it will be Insurance that underwrites these ridiculous anti-social court cases......
Last week, a debtor secured a five-year block on his home repossession in a claims management case against his lender Blemain Finance, after consumer credit law was used to challenge his secured loan agreement.
The firm acting for Cardiff-based Peter Bentley, claims management company, Cartel Client Review, used the meaning of unfair relationships under Section 140A of the Consumer Credit Act (CCA) 1974 to claim that his loan contract with Blemain Finance was an unfair one.
Blemain also agreed to charge no further interest on the GBP 40,000 loan and cut his repayments from roughly GBP 550 to GBP 150 a month. At the High Court in Cardiff Judge Milwyn Jarman also prevented the lender from levying any charges or legal costs.
The judge barred Blemain for enforcing repayment via repossession for five years, but even after this period, it can only bring repossession proceedings if there are at least 12 months’ arrears on the new level of payments.
Bentley’s lawyers, Consumer Credit Litigation Solicitors (CCLS), successfully argued that Blemain had loaned the money to Bentley irresponsibly and that the agreement took advantage of his desperate situation.
CCLS argued that shortcomings in the decision making procedure on granting the loan, such as in the under writing, affordability checks and valuation processes, led to the credit agreement being unfair.
Andrew Settle, solicitor for CCLS, said: "The relationship between the parties was an unfair one within the meaning of Section 140A of the CCA 1974. CCLS is utilising a significant number of legal arguments, like those used on behalf of Mr Bentley, in thousands of cases on behalf of our clients."
CCLS successfully demanded to have the loan account re written, which is believed to be the first time a loan account has been rewritten under settlement, as a result of the unfair relationships test.
Carl Wright, chief executive of Cartel Client Review, claimed that Blemain made the offer to Bentley in a bid to prevent a judge in a High Court setting a legal precedent against its lending practices.
He added: "The consumer credit rule book is being re-written as a result of High Court settlements like Blemain Finance Limited v Bentley. With consumer victories won recently in the Courts and landmark cases settled, and further cases to be determined by the High Courts, the consumer financial landscape will change irrevocably as we move in to 2010.”
Mr Bentley’s financial problems started when his mother died in 2007. He began part-time work to look after his father, who was suffering from Alzheimer’s, and then took out a GBP 40,000 secured loan in February 2007 to alleviate his financial predicament.
Bentley later fell behind with his repayments and by the time the case was heard in court, the debt had risen to GBP 47,000.
With the UK in the deepest recession since records began in the 1950's, it is hardly surprising that the Commercial Insurance Sector has seen it's customer base shrinking faster than the Royal Mail says it is losing hand written letters, and one would have thought that the beleaguered business insurance sector would have little to look forward too in the new year....
However, things are not always what they seem and as Kris Oldland reports, there appears to be green shoots of recovery for the spring........
SME Commercial Insurance Sector sees promise in 2010
After a year which has been tricky for some and catastrophic for others we could be forgiven for looking towards 2010 with some trepidation and in some of the more morose corners of industry dare we say it, a heavy dose of doom and gloom? Well those hardy soles in the ever exciting SME market are having none of it – despite the sector being hit harder by the recession than most.
At least that is what the results of a recent report from British communication giant BT would seem to suggest.
The 2009 BT Pulse report has revealed that an overwhelming three quarters of SME’s predict the economy will see an upturn in 2010. Further to this over 60% of the respondents were confident about their businesses prospects for the coming year and an impressively confident 35% even predicted their situation will have improved as soon as January 2010.
The report surveyed 7,200 Directors of small and medium sized enterprises and a strategy director at BT commented that the findings “show that the economy is at a tipping point. Despite the obvious knock to confidence, positivity about when the upturn will come is encouraging.”
With 45% of the respondents going as far as saying that they have streamlined their business so that they are now operating even better as a result of the downturn, it seems that many of these SME operators are primed to thrive as soon as the market catches them up.
These bold predictions have also been echoed by the Institute for Chartered Accountants in England and Wales (ICAEW), who have also recently released a similar statement that “confidence among business professionals has turned positive for the first time in two years.”
However not all quarters of the UK industry are predicting quite such a swift return to the good times as the British Chambers of Commerce (BCC) has issued a slightly more ominous statement that although the recovery may have started, the economy still faces considerable risk.
According to the organisation, GDP will drop by 4.3 per cent this year, followed by growth of 1.1 per cent in 2010 – an improvement on the BCC’s June prediction of 0.6 per cent.
David Kern, chief economist at the BCC, says: ‘While we expect a gradual improvement over the next two years, the pace of UK expansion is likely to be weak by pre-recession standards. It is critical that wealth-creating businesses have adequate capacity to respond to an upturn in demand when the recovery strengthens.’
However despite the general confidence, many SME’s are still walking a dangerous tightrope leaving themselves unnecessarily open to adverse risk as they cut their policies and leave themselves underinsured.
Of course should these buoyant entrepreneurial companies live up to the high expectations they are piling upon themselves then it follows that their insurance needs will grow too and with the aid of a good broker they may just be able to manage the balancing act of ensuring that their cover is adequate and competitively priced.
With the SME sector looking once again to rise like a phoenix from the ashes the role of the high street commercial insurance brokers could once again become a crucial link between the sector and the general insurance industry.
About the Author:
Kris Oldland is an Insurance Journalist with particular interest in Commercial Insurance and UK business Insurance
Risk Management - Transport Sector heading in the right direction?
Transport Sector heading in the right direction?
By Insurance Blogger Kris Oldfield
Call it a credit crunch, an economic downturn or just a plain old recession the current financial situation is impacting in some form or another upon just about every single one of us and in many cases we having to adapt to survive. A recent survey by Marsh has highlighted the changes in attitude and strategy that are moving through the transportation and haulage insurance sector with nearly three quarters of Europe’s leading transportation firms set to review their approach to risk management in the near-term.
With just over half the respondents admitting that the Transportation sector had been hit harder than others the general mood is one of caution. Tellingly the research also shows that more than 80% of those questioned felt that Risk Management was of a much higher priority amongst senior management at their organisations since the economic downturn.
However despite the overwhelming majority of respondents seeing the need for re-assessing their risk management strategies, the research suggests that there is not necessarily a reduction in risk appetite as one may assume. The amount of respondents who felt that their board had become more risk adverse was equally matched by those who saw no change in their risk appetite (40%). Interestingly there was also a sizeable faction (14%) who believe that their organisations have actually increased their risk appetite as they look to prosper, by boldly maximising the opportunities created by their competitors caution during the downturn.
Unsurprisingly the biggest concerns in the sector are customer debt and in the near-term, credit risk. Nearly two thirds of the respondents stated that customer debt was their most significant concern with many citing the increased risk of credit lines and delayed or non payment as some of the key challenges they face. Over a quarter of all respondents also admitted that credit risk was a concern for their organization and one in six admitted that their company was either ‘fairly’ or ‘significantly’ affected by the reduced levels of trade credit available at present.
Mark Pollard, head of industry practices for Europe, the Middle East and Africa at Marsh, commented that it was unsurprising that the European Transportation sector felt that it had been hit particularly hard by the recession as the industries primary function is the delivery of goods and passengers – demand for which historically has been shown to decline in periods of recession.
However in addition to this Pollard added that the fact that firms have been able to use the recession as a springboard to make essential reviews to their approach to risk management and improve upon their existing resilience was “extremely encouraging”.
With nearly a third of those surveyed confirming that they anticipate increasing their risk management spend, the signs seem to indicate that Pollard may well be correct – especially as this comes at a time when many other areas of business are being subjected to ruthless budget reviews and cost cutting measures. In fact less than 10% of Transportation companies have indicated that they believe that they will be reducing the expenditure of their risk management budgets, a statistic that seems a clear indicator of the direction in which the sector is now heading.
-------------------------------------------------------------------------------------------- InsuranceBlogger is not surprised that Risk Management in the Transport sector is thriving despite the recession. The recession itself has led to an increase in haulier cargo insurance and marine cargo insurance claims through piracy and modern day Dick Turpin highwaymen. The old adage 'it fell off the back of a lorry' appears to never has been as true, as the rise in cargo and goods in transit theft continues despite major Police offensives. InsuranceBlogger believes that the 'black economy' is the main driving force behind this as consumer spending polarises to the 'boot sale' economy. Watch this space for a detailed look at risks to the haulage industry!
Recession still to bottom out as UK Insurance Industry Suffers
The pundits in the housing markets often seem to be singing from a different songsheet when it comes to what's really happening in the UK economy. One minute we hear that repossessions have dropped in comparison to the first quarter of 2009, and that house prices are rising, but this is surely industry sales talk. Fact of the matter is house prices haven't reached anything like the levels needed to stimulate a National recovery and movement in the market. Mortgages are very difficult to come by and often require up to a thirty percent deposit. Those lucky ones on tracker mortgages are praying every month that the Bank of England doesn't put up interest rates, otherwise many of them would bejoining the ranks of the reposessed! Credit in general is non-existant, particularly in the Car Finance sector, and the credit card companies with their extortionate rates are only interested in recuoperating lending and tightening the national screw further!
Unemployment is rising and you only have to drive a short distance to see hundreds of towns that relied upon local industries that have gone to the wall, with the ranks of unemployed growing on a daily basis!
We as a Nation are in the proverbial big time, the good news is so is everybody else!
Insurance in the UK is suffering big time in many ways too. Households are cutting back on items seen as luxuries and Insurance is often perceived this way. In particular home insurance and personal finance insurances such as income protection have seen their markets decimated. As no mortgages are being given away and the recent furore over miselling, mortgage protection insurance has virtually disappeared as a product to be replaced by a more encompassing lifestyle protection insurance policy.
Car insurance is in trouble too, despite the fact that it is compulsory. Many underwriters have been asking for rate rises for nearly two years but the prices have been artificially kept down by the levels of competition brought in by the Internet insurance comparison sites or aggregators as they are known. Many major players have made substantial losses in the Motor market over the last few years and many have had to cut deeply into their reserves. This cannot go on ad infinitum, and prices must harden. This will inevitably lead to many suppliers leaving the market. As for the car scrappage scheme - did that generate demand? Yeah for a couple of thousand Hyundais built in India and imported into the UK - Sheer and utter madness!
Commercial Insurance is the one area which has obviously taken a massive reduction in premium volumes as businesses go to the wall and very few new startups enter the market.
One thing we can be sure of it's going to be a long cold winter, a change of UK Government won't make the slightest bit of difference and by the noises coming out on ABC and CBS News recently is going to kick of Stateside long before it does here!
A Quarter of Home Insurance Policies Cancelled As Recession Grips
One in four people have cancelled or not renewed their annual home insurance in order to save money during the recession, according to a recent survey carried out for the association of British insuraers (ABI)
The research carried out by a national survey of over 2,000 adults conducted by YouGov, on behalf of the ABI, also shows that other insurances that are seen as 'luxuries' such as life insurance are also being ditched, as families try to balance outgoings with income, in what is already in most homes a seemingly impossible task.
The survey found the following worrying trends for the UK Insurance market:
Nearly a quarter of people 22% say that to save money in the last year they have cancelled or not renewed their home contents insurance.
More worringly, 17% say that they have cancelled or not renewed their buildings cover, some probably against the terms of the mortgage that usually insists that buildings cover is in place to protect value of the charge on the property.
In Scotland, the figures rise to 28% for contents and 21% for buildings.
13% have cancelled their life insurance.
One in five (21%) say that they are seriously considering reducing or stopping saving. (Well with Interest rates so low - who can blame them!)
This lack of cover is leaving many families even more exposed to their biggest fear in the recession: nearly half (49%) of those surveyed said that they currently worry about their in ability to cope with a sudden event, such as a burglary, accident or loss of employment.
Interstingly, other research found that :
Over half (53%) of women worry about how they would cope with an unexpected event (compared to 43% of men).
And 44% of women are worried about the adequacy of their pension (38% men), reflecting lower pensions among women.
Asked what cutbacks people have or would be making: over two thirds (68%) said that family treats, such as eating out, were top of their list, followed by holidays (56%). Six out of ten women are prepared to reduce spending on clothes and shoes.
Insurance Blogger urges those thinking about cutting back on home insurance cover to consider what would happen if their house was burgled or flooded? With rising crime and rising floods a couple of hundred pounds on a home insurance policy might seem small beer if the worst occurs. Shop around for home insurance on the Internet or visit a specialist home insurance provider for an array of good deals at the current time. Similarly if it's not too late think about purchasing some lifestyle protection insurance if you are worried about your future
Those self serving suits from around Threadneedle Street who we saw exposed in Channel 4's excellent documentary on non-executive banking directors, have been racking their brains recently on how to get the first time buyer market moving.
Laughing into their cafe crappe they must be rubbing their hands in glee that the public furore has shifted onto their erstwhile employers - the MP's of Westminster or as Sky TV would have us call it 'The Rotten Government'
So on the back of the Speaker Bashing, the Government in the guise of Lloyds TSB has today launched a new first time buyer mortgage product called- ‘Lend a Hand’ (who thought of that?) - offering 95% loan to value (LTV)
‘Lend a Hand’ or 'Cop for Your Kids' as it is soon to be known, which is obviously aimed at the middle classes with kids still at home, offers first time buyers a 95% loan to value (LTV) mortgage by taking a legal charge on a savings account belonging to their parents, grandparents, rich friends or anyone else willing to cough up the dough to get the kids a place to live.
The new product is a fixed rate mortgage at 4.39% for 3 years, and is nearly £100 a month less than the industry average 90% mortgage rate at 5.98%. Hmm - isn't the base rate currently 0.5%?
Lloyds are still looking for a 25% deposit but they are allowing this to be made up through a combination of a minimum 5% deposit by the first time buyers and the remainder from the parents or backers savings account.
For example,on a £100,000 property, a 95% LTV mortgage of £95,000 is provided by Lloyds TSB at a three-year fixed rate of 4.39% with a £995 fee. £5,000 is provided by the first-time buyer as a deposit for the property, £20,000 is provided by parents, grandparents or friends and held in the Lloyds TSB ‘Lend a Hand’ savings account earning a fixed rate of 3.5% for 42 months.
Why couldn't they offer the rate Tax-free like an ISA if they really want to encourage people to get involved ?
So what are the multiples of salary limits and can the first time buyer really afford the mortgage repayments?
Furthermore Insurance Blogger is amazed that the Government thinks that there are lots of people have got £20 grand to spare during the current credit crisis and recession, plus a possible further five thousand on top if they really want their kids out the house?
At least Lloyds TSB isn't allowed to sell mortgage payment protection insurance at the point of mortgage sale any more! Granny's pension wouldn't stretch to that!
12800 UK homes repossesed in the first quarter of 2009
Despite the UK government saying they eould help keep people in their homes there were over 12000 repossessions in the UK in first quarter of 2009.
There were 12,800 repossessions through the courts by first-charge on the property mortgage lenders and banks, in the first quarter of this year, according to the Council of Mortgage Lenders (CML).
This compares with 10,400 in the fourth quarter of last year, and 8,500 in the first quarter of 2008. Insuranceblogger is disgusted that the people who created the credit crunch crisis for those poor repossessed are so quick to resort to the courts!
Although repossessions are still rising, the CML now thinks its earlier 75,000 repossessions forecast looks pessimistic for the year as a whole, and expects to revise the figure downwards in its next housing market forecast update later this summer.
The number of mortgages in arrears continued to rise both months in arrears and as a percentage of the total outstanding mortgage value.
The number of existing mortgages has declined from around 11.7 million to around 11.1 million.
According to a suit from the CML - "The key message continues to be: talk to your lender as soon as you identify difficulties emerging, and take advice from an independent money adviser if you have other debt issues as well as your mortgage. Lenders do not want to repossess if a realistic alternative solution can be found."
Hmm - have a look at this, especially if you are being threatened by debt collectors
Courts, bailiffs, debt collectors and repossesions can be avoided with mortgage protection insurance which will keep a roof over your head even if you lose your job!. Act now before its too late!
Doomsday UK – Swine fever pandemic ravages British Economy
Within days of the closure of the last schools, the final tube train stopped signalling the immediate closure of the UK’s public transport network for the foreseeable future. Snakes of lorry convoys with armed police motorcycle outriders have been seen moving around the country’s motorways, ensuring vital supplies are getting delivered. The halt of Petrol (Gasoline) sales has prevented the movement of most private individuals. What’s vital? If the newspaper shop on the corner doesn’t get any cigarettes in soon he’ll probably get burnt out! Most businesses have been shut for over a month now under local community orders. Around the country local authority disaster action plans are in full swing and restrictions of movement of goods and people, are in place. Rioting is reported in some urban centres up and down the country by the major British TV networks, although the coverage is poor with outside broadcasts rare. Rubbish piling up in the streets and rats are not helping the problem, as victims of swine fever as it is now known succumb to other diseases. Everyone calls it Swine Fever since the H1N1 swine influenza virus mutated into the deadly strain. Bodies are going uncollected and unburied as the number of fatalities rises. The most up to date information can be found on remote UK Internet TV stations such as YouTube or Ustream. It looks well bad in India………Even worse in Cornwall...
No seriously we really do think it just media hype! Although a major viral crisis would damge the UK economy. Uncertainty and fear have been jamming the enquiry lines of call centres of UK insurance companies and brokers, up and down the country this week, following the sporadic outbursts of Swine Flu, influenza variant strain H1N1, associated with travellers returning home after vacation in Mexico. Unlike the questions regarding travel insurance which have been covered extensively in the national press, it appears the UK public are more concerned about their individual personal covers, should Swine Flu become pandemic. We asked some of the UK’s leading Insurance Business characters for their thougfhts on how Swine flu in the UK, was going to affect their insurance products and claims.
Hayden Powers, Customer Services Manager at Burgesses Ltd the UK’s largest online supplier of independent income protection insurance and mortgage protection insurance for Sickness and ASU products http://www.burgesses.com explained, “The majority of sickness insurance protection products sold by online independent providers such as ourselves in the UK, cover Flu and it’s associated sickness, and we can assure all our clients and direct customers that they are covered ‘back to day one’ of a period of sickness caused by swine flu. It is important that a sickness insurance policy includes the back to day one cover, as most income insurance and mortgage payment protection policies for sickness have a thirty day excess period before you can claim. If your swine flu sickness period only lasts three weeks and you have a thirty day excess period with no back to day one of your sickness cover, then you will not be able to claim.”
Robin Rankin of UK Commercial Ltd http://www.uk-commercial-insurance.com the online UK Commercial Insurance broker network, confirms that many small business owners are very concerned about the effects of swine flu on their business. He said, “They are concerned about the interruption to their business that widespread Swine Flu might bring. We have had enquiries as diverse as from freight forwarder insurance customers that do business in Mexico with imported goods, through to clients who have Keyman insurance who are concerned about business continuity if these key players fall victim to the flu. However most enquiries have been from small businessmen concerned about additional pressures on their already struggling businesses that swine flu might bring, in particular business insurance coverage under the contingency sections of business interruption. A major problem will arise if companies are forced to close due to a swine flu pandemic, and the nature of the risk becomes fundamental. In this scenario the UK Government will have to step in to rescue falling businesses.”
Dave Healey underwriting expert at online specialist car insurance comparison site http://www.car-insurance.tv warns of the dangers of driving with swine flu. He said, “We are warning our clients against driving if they are suffering the effects of flu or on medication prescribed due to having contracted swine flu. Aside from any legal obligations, persons doing so are at a much higher risk of having an accident”
It’s apparent that the UK insurance industry is bracing itself against the Swine flu outbreak as the situation worsens, but it is as yet unclear whether they are in a proper position to deal with a full scale influenza pandemic, as seen in 1918 with Spanish flu.
Good news is that despite all the bad economic news and the credit crunch, productivity is up. There has been a hundred per cent drop in the number of employees calling in sick saying they have the flu!
A lot of questions are being asked in the insurance world this week regarding the impact of the H1N1 virus to insurance claims. With the World Health organisation now classifying the virus at five out of six on the scale of pandemia, it only needs one more country to confirm inter human transmission for it to become the first Flu pandemic since 1968.
So what will be the impact on the Insurance World?
Insuranceblogger doesn't beleive that we are going to see a doomsday viral situation much hyped by films like 28 Days later or Survivors, so the impact on on the life insurance fund will be negligable. In the developed world the largest risk to human life appears to be from the associated pnuemonia, which unless extremely aggressive is unlikely to kill more people than the average seasonal flu.
Like in 1968, the largest impact will be on the loss of business if large sections of the workforce are forced to take a couple of weeks off. It is also possible that businesses will be forced to close by the Government in a bid to stop transmission if there are sporadic outbreaks that can be controlled by quarantine and restrictive movement measures may be imposed by local authorities. If this becomes a fundamental risk, commercial insurance business interruption cover will not be in place. If this situation occurs some sort of Government led compensation fund will need to be set up for the business interruption excess, or we could see more businesses going to the wall! Just what the doctor ordered in the middle of a recession!
On a personal level the millions of us who have personal sickness insurance in the form of ASU or protection products will be keen to know whether they are covered for the H1N1 virus. We spoke to Simon Burgess, the managing director of Burgesses Insurance the UK's leading provider of Sickness and Unemployment Insurance. He assured us that it has been confirmed by all his underwriters that all Burgesses clients are definitely covered in the event of contracting this variant of the flu.
................ Anyone stil out there? ...... hello?
Questions have been asked in the House of Commons regarding tenants who have been paying their rent and fulfilling all their other obligations but who nonetheless find they are at risk of losing their home. What protection do they have?
We sympathise with tenants who find themselves in this position. So, what can lenders with the charge on the property do in cases where the tenant is paying their rent, but the landlord is not using this money to meet their mortgage commitments?
It seems it all depends upon what type of mortgage the landord has and the protection for tenants falls into two distinct groups, and are affected in quite different ways.
The first are those whose landlord has a buy-to-let mortgage, and these tenants are generally in a much stronger position.
The second group comprises those whose landlord has a residential mortgage. A borrower with this type of loan should seek the permission of the lender before renting out the property. Where the lender agrees, it will be bound by the tenancy agreement. That provides protection for the tenant, should the mortgage lender need to take possession of the property or appoint a receiver because the borrower stops paying the mortgage.
In some cases, however, a borrower with a residential mortgage decides to rent out the property without telling the mortgage lender, in contravention of the mortgage agreement and perhaps even fraudulently. These tenants have been disadvantaged and their tenancies put at risk through no fault of their own. Likewise the mortgage lender. It is quite likely that neither the lender nor the tenant will even be aware of each other’s interest in the property. Both have been put in a difficult position because of the irresponsible behaviour of the borrower.
But while mortgage lenders may sympathise with tenants in this position, it is important to understand that their legal responsibility – reinforced by regulatory requirements – is to the landlord, and not to the tenant.
The lender has an obligation to minimise arrears and get the best price possible for the property. This is likely to lead the lender to seek possession of the property quickly. In this situation, the tenant has few rights.
So how common is this problem? Recent television coverage of the issue reported it against the backdrop of 75,000 mortgage possessions this year.
The reality is, however, that only a much smaller proportion of total possessions – perhaps 4,000 this year, or around 5% of the total, according to the Department for Communities and Local Government (DCLG) – will involve residential mortgages where the lender discovers the property is occupied by tenants.
Buy-to-let mortgages
If tenants are renting from a borrower with a buy-to-let mortgage, they are in a better position. Here, the tenancy is normally binding on the lender if it needs to take enforcement action against the borrower/landlord. The tenant will have the statutory right to notice under their assured shorthold tenancy.
Instead of seeking possession, the lender may choose to appoint a receiver, who will, as far as the tenant is concerned fulfill the role of the landlord, maintaining the property and collecting the rent.
Under an assured shorthold tenancy, a tenant is entitled to the remainder of their contractual period – which is typically six months but can be longer – as notice and to a minimum of two months at the end of that period. In practice, a lender or receiver will often allow the tenant to remain beyond the notice period until rent arrears are paid off or the tenant chooses to leave.
Sometimes, a property may be sold with a sitting tenant. This is rare, however, because the lender has a responsibility to the borrower to obtain the best price for the property, which usually implies sale with vacant possession.
New Advice agency campaign
A number of organisations, including Crisis, Citizens Advice, Shelter and the Chartered Institute of Housing have launched a campaign to help tenants when the mortgage lender takes enforcement action. The campaign calls for courts to be able to delay possession to allow tenants to find an alternative home.
But if there is a residential mortgage on the property, giving the tenant more time to find a new home could put the lender in conflict with the borrower, particularly if it means mortgage arrears build up and the property is eventually sold for less than would have been the case if it was marketed straight away. If the landlord had had adequate mortgage protection insurance for commercial premises the situation would not have arisen in the first place
The campaign also calls for notices to occupiers to be made more obvious and perhaps to carry a risk warning. Landlords Insurance is available to compare online.
RBS has begun consulting Unite and other employee representatives about a business plan for its back office operations that will regrettably involve job losses, 4,500 of which being UK based.
The plan could affect up to 9,000 Group Manufacturing roles globally, including 4,500 in the UK, over the next two years.
However, the actual number of jobs lost is expected to be significantly lower than this.
A redeployment programme has already identified 650 new job opportunities in the UK and the impact will also be reduced through natural turnover and less use of agency staff.
RBS will make voluntary redundancy arrangements available which may suit some of the staff affected by this announcement. RBS agrees with Unite that compulsory redundancies should be a last resort.
The business plan, which involves a number of other cost-saving initiatives including moving to a common technology platform, will help RBS achieve its target of reducing annual costs by £2.5bn within the next three years.
It is not yet known what impact will be felt by the Insurance group which is responsible for bramds such as Churchill and Green Flag to name but a few. Income Protection Insurance
Recession latest - Cracks appear as Barrack Brown tonic bites
Now Insurance Blogger always keeps a sceptic eye on things while the other one is open to all sorts of suggestion. Combine them both and you've got a third eye that can come to some sort of rational analysis of whatever the problem or situation is.
So what is really going on in the Economy?
And in particular in the UK Economy?
Are the cracks in the recession that are staring to appear around the globe genuine?
If so and to what amount of the recent Obama and Brown pump priming can we really attribute to the effect?
Moreover is it a tangible upswing in the Global Economy and genuine growth or are the latest figures just smoking mirrors, conveniently released PR for a week either side of the G (how many are there now) Lockdown London Economic crisis Summit.
OK so whats been happening?
The Zeitgeist seems prety upbeat with some recent strategically announced PR from some of the major UK Government owned Banking and Insurance institutions suggesting, that the downward spiral of deflationary pressures has finally bottomed out. Hmmm!
We need to examine some of these releases chronologically to see behind the mirrors!
Two weeks ago - late at night our time, CBS News New York post stories and report that the Obama insistence that the US financial institutions release bale-out capital for mortgages and housing is beginning to have some effect with construction projects starting up and the demand for houses and prices starting to rise.
Halifax - A week ago announcing UK housing prices are moving upward.
Today - Council of Mortgage lenders announce that there are more mortgage schemes available now and the number of live mortgage schemes has increased for the first time in eight months.
Hmm!
Insurance blogger is pleased but cautiously concerned!
Is this just cheesy Blair style PR that we are all supposed to buy into to go around saying how good life is at the moment and dip into our overdrawn accounts and start spending some more?
Well, until the restricted flow of the money supply starts to drip down to the masses and to those holding the system up with debt, one cannot possibly start to argue that the recent so callled 'fiscal measures' are having any effect at all other than to allow the banks to continue operating.
Until the lower level debt is released or absorbed into the reinflation that will eventually occur, there will be no stimulus to demand and pump priming will become just pumping - lets hope its enough to keep us all afloat!
On a global front there have been casualties everywhere - The Ukranian Government has had to go crawling back to its old masters in the Kremlin after its Banking system and Economy collapsed and the IMF and the West refused to bail it out!
Russia itself is beginning to melt. The frosty cold war like demands of recent years and the noises coming out of the renegade capitalist government there, have softened to the broad smile of the Obama machine. Where is Georgia anyway?
Has the Bear finally realised that all its efforts to undermine the Anglo-Saxon banking system has backfired and shot them in the foot. If you can't beat them - join them!
Likewise China, it may well have the largest bank in the world in the HSBC, but if it continues to squeeze and mess with our markets ( The Chinese Government is actively engaged in Cyberwars!), it is the Chinese people that will suffer in the long term, as we will not buy their products, not through protectionism, but through the inability to afford them.
Everybody is running scared of protectionism as it is well known that it was this mentality that depepened the 1930's global shutdown.
reading the following article from ezines at looking at the housing repossession figures it appears that that the courts aren't necessarily taking the Governments advice to be lenient of debtors.
Debit Crunch - Credit Card and Loan Debts May Lead to Mortgage Foreclosures By Paul Magus
Once upon a time an unsecured loan was exactly that - these days it appears every loan is secured against your property, if not what when you take it out but at anytime in the future, should the creditor wish to pursue an action against you through the UK Courts.
Creditors are using tougher tactics to make debtors pay back their debts - with a recent surge in applications for charging orders. A charging order is a application made to a district judge in a county court. Initially an interim charging order will be granted as soon as the creditor applies to the court for a charge. This will make your property very difficult to sell, even if you were planning to, as a potential buyer will need to negotiate the charge being removed, and would certainly not assist in a quick sale.
You will then be dragged before a district judge a few weeks later to explain why a charge should not be put on your property against for example, your credit card debts. A full charging order will be given in 99.9% of cases and the charge will be registered against your property on the land registry documents.These court orders, enable lenders to secure bad debt on credit cards and on loans against borrowers' properties. This would result in a loss of equity were the borrower to sell.
Much more worrying for the Nation as a whole is that today some lenders are now unwilling to wait, and according to a recent UK BBC Panorama program are bypassing the initial stages of the debt recovery process and now applying for an immediate 'order for sale' from the courts, forcing the property-owner to sell up straight away and pay off their debt from the capital raised against the sale of their house.
The CPS (Crown Prosecution Service) who set the CPR rules for procedure in the county and small claims courts, appear, primae facia, to be assisting Creditors in obtaining these orders, which cannot surely be in the National interest.
Be extremely careful in defaulting on your credit card payments you could lose much more than you bargained for including your home. We may have had the credit crunch which has restricted the flow and liquidity of money but we've yet to see the full force of the 'Debit Crunch' when the Credit Card and Loan companies want their money back, when your home will become at risk of repossession, even though you've always kept up with the mortgage repayments, for the smallest of debts, aided and abetted by the machinery of state through the Civil courts.
How to save money on Car Insurance without reducing cover
According to the Times Online the credit-crunched British public plan to cut back on insurance policies this year in a bid to limit spending.....
More than a million customers have already reduced their insurance cover, saying they simply cannot afford it, according to a survey by insurer LV, until recently known as Liverpool Victoria.
Insurance Blogger wonders if the public are just becoming more savvy and shopping around online. It's an easy excuse to use in the current economic climate and nobody questions it when they get put on the spot by a phone call out of the blue asking them why they didn't renew!
Another five million Britons plan to cut their cover to try to save money over the coming 12 months, the LV poll of just 2,141 clients reveals, say the Times.
Surprisingly they beleive that 37 per cent of people are considering downgrading their car insurance. LV state that on average, those planning to cut their insurance cover this year believe they will save £125 over the course of the year, or £10.41 a month.
Come On! we know money is tight but do households really do the sums to the n'th degree, or maybe their current insurer is overcharging by that amount!
LV= properly point out that "cancelling or reducing essential insurance cover could result in many people finding themselves seriously out of pocket if something untoward happens. It is at time likes these, when money is short, that insurance becomes evermore important.”
There are legitimate ways of reducing your car insurance costs, such as increasing your excess or making lifestyle changes such as increasing your security or decreasing your annual mileage, which will save money by reducing premiums without reducing your levels of cover.
Shop around on the Internet and check out specialist car insurance schemes that offer cover tailormade to your lifestyle and / or motor, which is more than not often cheaper than the standrard offering to everyone available through the large comparison sites.
Motorists found driving without car insurance could risk a fine of £5,000, disqualification and the car being seized and crushed by the police.
Avoid Home Repossessions with Mortgage Protection Insurance
The Council of Mortgage Lenders has just published statistics on mortgage arrears and possessions. Worringly but hardly surprising, the figures for 2008 show a sharp rise on the same period last year.
Key Facts include:
• 5,000 fewer repossessions than forecast in 2008 • 40,000 repossessions in the year - 1 in 290 mortgages • 10,400 repossessions in the fourth quarter - 1 in 1,100 mortgages • 1 in 64 mortgages in arrears of 2.5% or more • 1 in 53 mortgages in arrears of three months or more (inflated by lower interest rates) • 75,000 repossessions forecast for 2009 remains unchanged
Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007, according to the Council of Mortgage Lenders.
The total number of first-charge repossessions in the year was an estimated 40,000.
This was 5,000 lower than the CML's original forecast for the year.
The fact that there were 11% fewer repossessions than expected, despite a worsening economy and unemployment rising by the thousands daily, appears to show that the mortgage lenders appear to be listening to the Government somewhat, to ensure that repossession really is a last resort.
It is important to recognise that repossessions include a proportion of abandoned properties and property fraud. They also include buy-to-let repossessions, as well as home-owner repossessions. In the majority of cases where home-owners are committed to working with their mortgage lender to keep their home the CML states that repossessions can be avoided.
When the most succesful British (German owned) car of the last fifty years is laying off workers, it only emphasises the depth and breadth of the spread of the global economic downturn contagion.
BMW owned Mini based at the old Morris plant at Cowley Oxford, today announced the redundancy of 850 of its workers. The company which ships over 250000 Minis every year atound the world, has seen its sales in January 2009 drop by an astounding 35%, reflecting the drop in demand felt by the rest of Britain's ailing motor manufacturing industry.
The redundancies are sure to be felt by supply workers who make parts for the Mini and distribution workers who are having extreme difficulties selling them. There is estimated to be over 10000 minis awaiting shipment abroad at Southampton docks.
If you are one of the lucky workers who still hold down a job in the car manufacturing and associated industries we urge you to consider taking out Redundancy Insurance - given the latest number of layoffs across the country -no car manufacturer job can be considered safe. Plan for your future economic welfare now before it's too late.
Lifestyle Insurance: How to avoid the unemployment spectre
Yesterdays latest unemployment figures were rather depressing with the official count just bubbling under two milllion unemployed in the UK at 1.9m.
The January job losses have yet to be taken into account and with the closure of many high street shops and the recently decimated manufacturing, financial and motor industries, we could see the official job loss rate of 6.3 rise dramatically this time next month when the January figures are published.
Is your job on the line?
Very few jobs are 'safe' in the current economic climate and it is worth considering
How you would protect your current position should the worst happen and you face redundancy?
What contingencies do you currently have in place should you find yourself unemployed?
Do you really know the monthly amount of outgoings you will need to sustain your current lifestyle?
IProtect are offering a whole new take on unemployment protection and income protection for unemployment by offering a wholistic 'lifestyle insurance' policy thatis designed to maintain your existing lifestyle should you suddenly become incapacitated or unemployed through redundancy.
Visit Iprotect for lifestyle insurance information
According to the Halifax average house prices rose last month by 1.9% to an average price of £166,000. Can we really trust figures from any BOS owned business?
If this is true which we strongly doubt, this would have serious effect upon the first time buyer market and is not the desired outcome of the recent macro and fiscal policies.
With the Bank of England Steeing commitee meeting today to discuss Interest Rate adjustments we can see at least a quarter percent movement south to stop this inflation. This will of course seriously affect pensioners and others on fixed incomes who rely upon their savings.
Furthermore redundancies are increasing daily with 500 job losses announced today at Ford Swaythling - the home of the Transit......
There's still one financial institution out there that Insurance Blogger loves. We don't talk about them much here, because we don't have to. We don't directly promote their products, because they don't need us to. Insurance Blogger had the pleasure to work for them for five years in a consultant capacity and if there's one word that immediately springs to mind when Legal & General are mentioned - it is Integrity. Something that appears to be sadly lacking from most of the other financial institutions in the UK today.
So when Legal & General's fund manager told a Commons Select Committee that it called for the CEO and Chairman of RBS to resign as early as May last year, we were all ears.......
According to an article in The Times
Peter Chambers, chief executive of Legal & General Investment Management (LGIM), told members of the Treasury Select Committee that its resignation demands had come as part of a concerted effort to “engage with” British banks during last year's market storm
LGIM is the biggest investor in the stock market and owns about 5 per cent of every listed company.
Today is a landmark day in the history of modern mankind, and the significant of the winds of change are not lost on insurance blogger who grew up not contemplating that today was remotely possible in his lifetime.
The white dream died in Dallas and I watched the women cry. They cried again when the black dream died in Memphis in 1968 and we watched quietly as the fists were raised in defiance in Munich a few months later.
A few years later I was honoured to watch Kevin Keegan kick a ball into the back of a net at the same spot where the fists were raised, but my first thoughts were about Palestinians. Years later I had the privilege of standing on the spot in Berlin forWorld Cup Football where Jesse Owens stuck two fingers up to Hitler, and funnily enough I'm still thinking about Palestinians.
But for all the power nobody contemplated today was possible
So whats this got to do with Insurance?
We'll without boring old insurance we would not be welcoming Barack and Michelle to the White House.
why I hear you ask?
Well for one of its many sins Insurance is partly responsible for the Slave trade. Shippers, Owners, Insurance brokers, Lloyds Names, Gamblers etc all funded slaving ships and many of todays Insurance Companies and Brokers made the foundations of their businesses through slavery and risk. Shipping, Slavery and Insurance were intimately bound together as a business practice.
So you could argue that those Insurance companies who we shall remain nameless have abetted the hastening of global multi-culturalism.
Whatever!
Good Luck Barack, you've already created a good zeitgeist. Until America deals with the toxic debt, despite the goons in Whitehall's best efforts, we are a hundred percent reliant upon the origin of the problem containing the solution.
So where do we start, it's a historic day in UK economics for many reasons not least the UK Goverment offering a 50 billion further bailout to the banks at our expense, and underwiting the toxic debts of the UK banks with a bad debt insurance policy.
You can read about all this stuff on the news sites, but what particularly interest us is the way that the Goverment's banking help package has helped put RBS to the sword!
Not content with sucking up 37 millon pounds of our money to own 70% of the company in the Autumn the Government looks like its bank bailout package has backfired upon the Goons who control RBS.
On the announcement of the latest rescue package the City has just responded with the biggest single corporate loss in UK history - RBS shares are currently down nearly 70% of their trading value this morning, making the bailout worth nothing!
Share trading has probably stopped by the time I've finished writing this. Where this leaves RBS's insurance arm which includes Direct Line Churchill etc. remains to be seen. Probably going to get snapped up very cheap by the likes of one of the big suitors that have been courting it for the last year.
Insuranceblogger would like to point out that we foresaw this months ago (read the posts) and incidently would like to see any none performing bank go to the wall. Whatever happened to the free market economy - Ha! Ha!
Now's the time for 0% interest rates Mr Brown - great a free toxic mortgage!!!
Peter Mandelson the UK government's Business Secretary has announced a series of measures designed to help small to medium sized UK Businesses (SME) solve their current cash flow liquidity, credit and investment problems The support package entails the Government underwriting loan guarantees and the founding of a new Enterprise Fund designed to help SME companies struggling to access loans for working capital, wages and company investment.
The Government measures include:
* A £10bn Working Capital Scheme, securing up to £20bn of short term bank lending to companies with a turnover of up to £500m
* An Enterprise Finance Guarantee Scheme, securing up to £1.3bn of additional bank loans to small firms with a turnover of up to £25m
* A £75m Capital for Enterprise Fund (£50m from Government augmented by £25m from the banks) to invest in small businesses which need equity
Whilst we welcome measures to assist small businesses during the current credit crunch for falling into liquidation, questions must be asked of a socialist Governments role in underpinning a free enterprise society.
SME businesses can save on their commercial insurance in 2009 by shopping around the many online business insurance websites that now offer commercial insurance packages online for virtually every trade and profession.
The Bank of England steering committee are meeting today to discuss Interest Rates and are likely to drop the base rate by at least half a percent to 1.5%. This will be the lowest UK rate for over 350 years. Will it make a difference? Well certainly to those of us who have interest only mortgage repayments or large commercial borrowings, but only if these banks (source of all the current problems) pass this rate cut onto the us customers. If they dont then the Government have simply increased the banks profits by .5 percent!
Which brings me to Credit Cards. Credit cards are the lifeblood of the Internet and the majority of transactions could not be achieved without them. They are the most used form of transaction and are essential to the free flow of the modern money supply. So why are the pariah banks allowed to charge extortionate rates for this this form of essential credit? These anti-social institutions are charging you and me anything between 12% to 30% for the privilige. These Interest Rates are outrageous and it's high time the Government cracked down on these thieves and brought them to bear to explain their 'criminal' loan shark rates!
It is essential that credit card rates are brought in line with all the other forms of borrowing if the Government is serious about pump priming the economy. Write or email your member of parliament today to express your views about these outrageous and economy damaging rates. The credit card debt in the UK is massive and needs to be addressed immediately if we are to stand any chance as a nation of dragging ourselves out of debt and recession.
If you are lucky enough to be still employed and have a large monthly credit card debt, think about how you are going to pay these extortionate bills should the worst happen and you lose your JOB. Personal Accident provides a range of income protection and lifestyle protection insurance products which will cover your credit card debt for 12 or 24 months should you become unemployed. Vist Personal Accident for some future peace of mind and don't forget - Write to your MP complaining about the loan shark credit card companies!
Mortgage Payment Protection Insurance for Unemployment
Last December saw UK average house prices fall by another 2.5% taking the average house price down to £153,048 which amounts to £29,000 less than 1 year ago. However the number of new mortgages offered and approved in November was at it lowest since at least 1997, according to recent statistics from the British Banking Association (BBA).
The banks and building societies have taken a hit on the interest rate income and continuing to stifle liquidity and extenuate the crisis that they created. Despite Government measures the crisis appears to be deepening as the supply of money shrinks.
With unemployment growing daily and the outlook for the first half of the year bleak, it really is time you took a look at mortgage payment protection insurance.
This cover is specifically designed to meet your mortgage outgoings should you become unemployed. Award winning British Insurance offer various payment protection policies with mortgages covered up to £2000 per month. A typical premium will be in the £30 - £40 per month range - excellent value for peace of mind in these times when noones job is secure.
New face for the High Street as Unemployment worsens
We hope you had a good Christmas and everyone at Insurance Blog hopes you fare better in the New Year! But looking at the news and the statistical analysis, it looks like 'Things can only get.....worse. Yesterday the Chartered Institute for Personnel and Development predicted that unemployment will rise by 600,000 over the next year and with a further 400,000 temporary workers unable to find employment, by this time next year more than 2.8 million people will be officially unemployed. The CIPD predicts that the majority of the job losses will be before Easter, with 1600 people per day losing their job.
The future looks particularly bleak for the high street shops and the fall of Woolworths and their 27,000 employees on the dole, may look very small by Easter if the High Street manages to disappear at the rate it is shrinking - faster than the Polar Ice Caps. There will be an inevitable knock on effect for some High Street Insurance Brokers and the numbers are likely to shrink at the same rate as the rest of the retail market is collapsing!
If you work in retail we strongly recommend that you act quickly to take out income protection insurance. You will have to wait three months in order to claim as a matter of course, so act now! you can't rely on state benefits to maintain your lifestyle through this economic crisis!
The official umemployment figures have just been released and show that unemployment has risen to 1.86 million for the first time in eleven years or since Mr Blair's New Labour came into office to form the current government. The analysis shows that the worst hit areas are in the temporary worker sector where businesses are cutting back on staff due to rthe credit crunch. The worst hit group of people where unemployment has hit hardest is for the young. Under twenty fives are coming under increasing unemployment with one in seven unemployed, and it is extremely hard for someone just leaving education to find employment. Over 1 million people are claiming jobseekers allowance.
You can protect yourselves against the risks of unemployment in 2009 by purchasing a variety of unemployment insurance or redundancy insurance solutions. Independent suppliers offer a range of products for income and lifestyle protection
AXA Warns over 3.7 million people are struggling with credit debt
A quarter of the population is facing financial meltdown with many of the effects of the credit crunch to blame, according to new research from AXA According to AXA over 3.7 million people who are struggling to control their finances are failing to cope with mounting credit card bills and 1.02 million people have borrowed too much money and can't keep up with mortgage repayments.
And AXA warns that some are facing worse problems with over three quarters of a million people saying they have been forced to apply for an Individual Voluntary Arrangement and around half a million threatened with the bailiffs, or worse, repossession.
Some 6.1 million people have no savings left at all and around 1.7 million people say their investments have all but disintegrated thanks to the credit crunch. According to AXA, in all some 11.6 million people (25 per cent of the adult population) are said to be struggling financially with a significant number – around 1.3 million people – admitting their finances are entirely out of control.
The statistics have been published to coincide with the launch of AXA's My Budget Day website, which provides consumers with a series of online tools designed to help them take control of their finances in just one hour each month.
Government to help halt non Mortgage Payment Repossessions
The Government has announced a new scheme to help people who suffer a temporary loss of income stay in their home. The scheme will apply to mortgage holders who have mortgages up to £400,000. The ten biggest mortgage lenders have nodded approval to the scheme but they're all saying 'we need more details'. The devil may well be in the detail!
The new Homeowner Mortgage Support Scheme will enable households that experience a significant and temporary loss of income as a result of the economic downturn to defer a proportion of the interest payments on their mortgage for up to two years. The Government will guarantee the deferred interests payments in return for banks' pariticipation in the scheme.
The Government will work with lenders over the coming days to develop the scheme in detail, with a view to it being available to customers early in the New Year. The country's eight largest banks have already pledged that they will work with the Government to develop the scheme.
The Chancellor said:
"This is real help for homeowners at risk of repossession through no fault of their own. The scheme will give people who face a temporary fall in their income the confidence that they need to rearrange their finances so they can come through a difficult period without losing their home."
Housing Minister Margaret Beckett said:
"We are determined to do everything possible to ensure that hard working households have the option to stay in their homes, if they suffer a loss of income during the downturn. This scheme will give households the breathing space to get back on their feet again and help ensure they do not face or fear repossession.
It shares the risk of home ownership at this difficult time across all the partners - the Government, the lenders and the borrowers. We want to see all lenders signing up to this scheme as part of their efforts to ensure that repossession is always an absolute last resort."
Our opinion at Insurance Blog is that if the Government introduced their own captive mortgage payment protection insurance scheme utilising the skills of or plagarising the model of a large independent supplier such as British Insurance Ltd, and incorporated it into the National Insurance system then they wouldn't be in the situation they now find themselves - having to underwrite mortgage payments after the event at the taxpayers expense.
Similarly it is a National Security issue if we were to see large scale repossessions of homes and we welcome these proposals as a line of economic defence.
Moreover we're looking forward to further interest cuts today!!
Alliance and Leicester slash fixed rate mortgages!
Alliance & Leicester has launced a new range of mortgage products, with fixed rate mortgages being reduced by up to 0.90% in a bid to generate some demand.
The new mortgage products will be available from Thursday 4 December 2008 and include: Two Year Fixed Rate reduced to 4.94% from 5.79%
· Fixed until 31 December 2010
· £599 product arrangement fee
· Customers can borrow up to 75% of the property value
· 10% overpayment facility
· Maximum loan £250,000
Two Year Fixed Rate reduced to 4.99% from 5.59%
· Fixed until 31 December 2010
· 1% product arrangement fee · Customers can borrow up to 75% of the property value
· 10% overpayment facility
· Maximum loan £1 million
Two Year Fixed Rate FeeSaver reduced to 5.49% from 6.39%
· Fixed until 31 December 2010
· No product fee
· Customers can borrow up to 75% of the property value
· 10% overpayment facility
· Maximum loan £1 million
· Free valuation1
· Remortgage customers get £200 cashback or free Mortgage Transfer Service
Insuranceblogger is pleased to see some movements in the large area of the market that is traditionally risk averse and consequently doesn't benefit when rates go south. Sure to generate some demand in a particularly quiet seasonal period!
We don't usually have very good things to say about the macro-economic programs espoused by Mr Brown, however being mates with some of his mates may help spread the word of discontent.
Anyway, Today it's Thanks, not for recently agreeing the BOE base rate cut which is by not enough by far (TLTL), but for sticking it up the Lenders by insisting that they pass the cut on to us Joe Public.
Today I've seen £600 slashed off my mortgage repayments - it might be the bleak mid winter but if other people are feeling as good about this as us, then maybe we won't have to follow AIG and cancel Christmas. Happy Shopping!
Well we're pretty disappointed here at Insurance Blog in Mr Brown's, sorry Mr Darling's 'Emergency Budget' efforts yesterday. The £2.50 change to VAT is really going to get noticed in a market where January Sales started in November. Balancing the so called give-aways against threats to tax the not-so-very-rich rich, is hardly helpful or forwardlooking. Now radical would be raising the 40% tax limit from £38,000 to £60000 and maybe, reducing the rates and doubling the limits of Stamp Duty - helping to stimulate the housing market bottlenecks created by the middle classes where most of the debt and strangled liquidity lies! Oh yeah stop wasting money on stupid wars might help the Balance of Payments just a little bit maybe!!
Anyhow did anyone notice if there were any changes to the levels of Insurance Premium Tax?
IPT is the tax on premiums received under taxable insurance contracts. Currently there are two rates: • a standard rate of 5 per cent • a higher rate of 17.5 per cent (
All Insurance Contracts in The UK are taxable unless they are specifically exempted .
The following insurance contracts are exempt from IPT: • reinsurance; • life insurance, permanent health insurance and all other “long term” insurance except medical insurance; • commercial aircraft and some associated liabilities; • commercial ships and some associated liabilities; • lifeboats and lifeboat equipment; • foreign or international railway rolling stock and some associated liabilities; • export finance; • commercial goods in international transit; • block insurance policy held by Motability which covers all disabled drivers who lease their cars through the scheme; • risks located outside the UK; and • the Channel Tunnel.
What is the higher rate of IPT? The higher rate of IPT is 17.5%. It applies to insurance sales in three trading sectors where insurance is sold in relation to goods and services which are subject to VAT: • sales of motor cars, light vans or motor cycles • sales of electrical or mechanical domestic appliances (warranties) • sales of travel insurance.
Surely then the higher rate must be decreased in line with VAT?
Credit Card Insurance is Essential in Credit Crunch
In a recent press release Sara-Anne Burgess of Burgesses highlighted the dangers of not having adequate or possibly no credit card protection insurance.
As important as all your other monthly outgoings, have you considered how you are going to pay all your credit cards if you suddenly lose your job and become unemployed? Are you aware of credit card payment protection insurance? At least you will have to struggle to find the minimum interest repayment. What if you can't find a job that quickly? The BBC Panorama program recently highlighted the plight of homeowners houses being repossessed for unpaid credit card debt. You can avoid this happening to you for very little if you buy through independent credit card protection insurance and lifestyle protection insuirance specialists such as Personal Accident and Safety First
The Council of Mortgage Lenders (CML)today published quarterly data and analysis on buy to let mortgage arrears and repossessions for the first time, having previously published data twice a year.
The Council of Mortgage Lenders reports that 1.44% of mortgages were at least three months in arrears as at the end of September 2008.
*This was up from 1.33% at the end of June. The number of cases in arrears at the end of September was 168,000, 8% higher than the 155,600 at the end of June.
Due to the credit crunch the number of households in arrears by the end of the year is likely to exceed the previous forecast of 170,000.
The report also states that 0.1% of all mortgaged properties were repossessed in the third quarter of 2008, up slightly from 0.09% in the second quarterto 11,300. This is 12% higher than the 10,100 in the second quarter. The CML expects the total number of repossessions by the end of 2008 to be around 45,000.
Buy-to-let mortgages have in the past shown better performance than the overall mortgage market in terms of payment defaults. But in the third quarter the payment defaults of buy-to-let landlords has worsened more rapidly than the rest of the mortgage market. This is probably due to falling rents and an over-supply of rental property in some localities, resulting in many landlords being unable to let their property or achieve high enough rents to support their borrowing commitments leaving them with a mortgage shortfall. with the housing market stagnant, it is becoming more difficult to sell. At the end of September 2008, 1.58% of buy-to-let loans were in arrears (up by nearly .5% from 1.10% at the end of June), compared with 1.44% of all mortgages.
The number of buy-to-let mortgages taken into possession in the third quarter in the UK was 900, the same as in the first and second quarters of the year, representing 0.08% of all buy-to-let mortgages (compared with 0.1% across the mortgage market as a whole). A number of factors will affect the number of buy-to-let mortgage repossessions, including the extent to which buy-to-let mortgage lenders appoint 'receivers of rent' as an alternative to repossession. Mortgage lenders may prefer this route in many cases where the buy to let tenants are paying their rent however the landlord is not paying the mortgage.
Landlords can protect themselves and purchase rent guarentee insurance from UK landlord and buy to let insurance comparison site http://www.landlord-insurance.net.
On the day that Inflation figures are published showing a slight drop due mainly to the correction of oil prices, retailers are reporting massive drops in sales over the last quarter and the usual pre-Christmas rush to the High Streets just isn't happening. TV channels have been interviewing the public and it seems just like house prices the canny consumer is waiting more than ever this year for Sales.
Some industry commentators are predicting record Christmas sales for online businesses as consumers shop around in the Internet for the best bargains.
At Insurance Blog we're more prone to take a cautious view of events as, for example, these very same consumers will need a credit card in order to purchase online and as credit card debt is everywhere and has yet to be properly addresssed by the lenders, we predict that the Internet Sales will suffer just as much as the High Street, which at the end of the day may well fare better given the last minute Christmas rush that is bound to occur.
Given this background UK Insurance distributor TESCO is offering a massive giveaway of fifty percent on its home insurance Quotes are valid for 90 days and must be made before the 7th January (twelth day of Christmas included). With exceptional cover at what were already low prices this has got to be one of the Insurance Bargains of the year - so far.
* - Further 5% discount for Tesco Car Insurance customers * - Clubcard customers get an even better price * - We'll pay any switching fees up to £25 when you switch from your mortgage lender * - All our calls are answered in our UK Call centres * - 24-hour emergency helpline * - Home Repair network – all repairs are undertaken by vetted builders and all costs are paid directly to them with no fuss or hassle * - Any work undertaken is guaranteed for 12 months * - More price options available with Value cover offering basic essential cover and * - Finest cover offering inclusive benefits such as a Concierge service and free ID Fraud assistance
The financial turmoil and dramatic drop-off in business conditions over the past two months have darkened the economic outlook for 2009 even further, the Confederation of British Tndustry (CBI) warned today.
In its revised economic forecast, the CBI predicts that the recession which it says, started in the third quarter of 2008 will now run for most of 2009 and see unemployment peak close to 2.9m. Some unofficial figures already report unemployment to be in excess of 3 million. Officially Unemployment is expected to reach the two million mark by the end of 2008, with the jobless rate rising to 6.5%. The number out of work is currently expected to peak at around 2.9 million (9%) by mid 2010. With this in mind it would be prudent for those still in work to purchase income payment protection insurance.
The CBI has downgraded its growth predictions for 2008 and 2009, following the severe impact on confidence and business activity from the financial turmoil in October 2008. GDP growth for 2008 has been revised down from 1.1% to 0.8%, and in 2009 the CBI now expects the economy to contract by 1.7%, against its forecast in September of 0.3% growth. These figures are closely paralleled to those of the Treasury predictions The economy is expected to shrink quarter-on-quarter by 0.8% between October and December this year, and to contract again for a subsequent three quarters before beginning a slow recovery through 2010.
As the economy slows sharply over the coming year and commodity prices continue to ease, CPI inflation is expected to fall from 4.2% this quarter to 1.7% by the end of 2009, undershooting the Bank of England’s 2% target. Into 2010, inflation is likely to fall back further to a low of 1.1%, averaging just 1.2% over the year. The drop in inflationary pressure will give further room to the Bank to make a series of rate cuts over the coming six months to bring the Bank rate to possibly as low as 1.5%.
John Cridland, CBI Deputy Director-General, said: “Since the last forecast in September the banking system has come under immense strain, sending consumer and business confidence has plummeted in its wake. Given the speed and force at which the economic downturn has occurred, we have reassessed and downgraded our expectations for UK future economic growth. But the fast-moving and global nature of this crisis means it is impossible to look far ahead with any certainty. What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting. An unwelcome consequence of the downturn will be a significant loss of jobs, many of them in sectors that have been relatively insulated until now.”
Lack of confidence among consumers will dampen household spending and the CBI predicts that household consumption will contract by 1.8% in 2009.
Investment forecasts have also been downgraded on the back of the falls in business confidence. The CBI predicts fixed investment will shrink by 3.8% in 2008 and 10.5% in 2009.
The CBI estimates that public borrowing will increase sharply during the recession. Net borrowing for 2008/09 is expected to hit £69.9bn and £93.8bn in 2009/10, which represent 4.8% and 6.4% of GDP respectively.
Ian McCafferty, CBI Chief Economic Adviser, said. “This latest forecast shows that 2009 is going to be a very tough year for business, with the sharpest fall in GDP since 1991. Most worrying are the increasing signs that the credit crunch is now reaching the corporate sector. Since October's financial turmoil, companies have started to report that, for the first time, they are finding it increasingly difficult to access capital. If this were to be more than a temporary phenomenon, it would result in otherwise healthy companies going to the wall for lack of short term finance. This would have serious implications for both employment and investment."
Watford based secured loan broker, Loans.co.uk, one of the biggest employers in Watford, is to close to new business, taking with it some 276 jobs.
Last month the broker announced that it was struggling to ride out the Credit Crunch – explaining that the third party loans it relies on were in danger of drying up.
In a statement released yesterday the broker said it could no longer operate in this current environment and expected to complete its last customer loan early next year.
The statement read:
“A number of factors have led to this difficult decision. As a loan broker Loans.co.uk relies on third party providers to provide loans to its customers.
“A number of key partners have tightened lending criteria or are unable to accept new business. At the same time, house prices have been declining, making it more difficult for customers to fit within lenders’ (tighter) loan-to-value criteria.”
“Looking forward the company expects house prices will continue to decline and lenders will continue to be cautious. (Insuranceblogger agrees whole-heartedly, see our other credit crunch label posts.) The company cannot confidently project a recovery at Loans.co.uk in the foreseeable future and regretfully the decision has been made to run off the existing business. This will happen in an orderly fashion.”
The company confirmed that 276 positions would be lost. The broker has two other smaller offices in Preston in Lancs. and Fareham in Hampshire.
Recently Loans Directory - loans-uk.org.uk announced that the directory format of it's site (once one of the key loan reference points and authority sites) was no longer viable as a business format due to the number of loans available online being negligable.
Landlords and buy to let Insurance to beat credit crunch
Many people who bought into the 'buy to let' dream of owning additional property for income or retirement are now suffering not only from falling house prices ( and in some cases negative equity) and empty properties, unable to be let due to too many available in the market.
Whether your additional property is let or empty, Landlords must protect their investments against unforeseen risks with Landlord Insurance.
At UK Commercial Insurance owned Landlord-Insurance.net you can save money and beat the credit crunch by comparing most of the Landlord Insurance policies and covers available to Landlords in the UK.
The site allows you to purchase cover whatever type of property or tenants you have. Cover is available for properties let to Professionals, Students, Flats, Asylum seekers, DSS and Holiday Homes. Additonally Unoccupied property insurance cover is available for up to nine months for properties that are empty or difficult to let.
For a small fee Landlords can also have peace of mind by purchasing Landlord emergency assistance insurance which provides tradesman to carry out immediate repairs at your property, which otherwise could take two days or more to arrange, leaving unhappy and unsatisfied tenants and perhaps putting your property at risk to flooding etc..
The Financial Services Authority (FSA) has increased the compensation limit for bank deposits from £35,000 up to a total of £50,000 for each customer's claim.
This increase applies from midnight Monday 6th October 2008.
Customers with joint accounts will be eligible to claim up to £100,000.
Whether this will be enough to stop funds flowing overseas remains to be seen. Both Ireland and Greece have unilaterally declared to protect all depositers funds. This move has caused great uncertainty within EU markets and at the weekend German Chanceller Angela Merck suggestede that German banks may take the same action.
We await further moves from Gordon Brown and Mr A Darling. The situation could be worsened further this week as the Bank of England are erxpected to cut Interest Rates by up to 1% to deal with the ongoing banking and insurance credit crunch crisis.
Mortgages are being squeezed as Banks reduce lending further.
The latest Credit Conditions Report from the Bank of England has indicated banks and building societies are likely to further reduce lending activity over the next quarter.
Noting lenders had reduced the availability of secured credit to households in the three months to mid-September by more than they had anticipated in the Q2 survey, due in part to declining house prices and the economic outlook, it added a further decline was now expected.
A spokesperson for UK Loans said "Confidence in the market is the catalyst for increasing the circular flow of capital. The downward trend in mortgage and public lending reflects the lack of liquidity flow between the lenders. We dont expect any deceleration in the downward trends until after the US general election, when confidence may enjoy a dead cat bounch. Whether this honeymoon period in the US will be enough to halt the downward spiral in the UK remains doubtful, given that the UK growth figures were based soley on overvalued housing stock and a general election victory for whoever in the UK will not enjoy the honeymoon period that the end of the Bush administration will inevitably bring."
With artificial inflation the bubble will always burst.
Nationwide gives false hope to housing market prices
U.K. house prices dropped 1.7% in September compared to the same point a year ago, according to data compiled by the Nationwide Building Society.
The monthly fall means that house prices fell 12.4% on annual basis, thought to be a direct knock on effect from ongoing turmoil in the mortgage market.
The average house price now sits at £161,797 a fall of £2,857 from last months average of £164,654.
Nationwide's Chief Economist, said:
“House prices fell by 1.7% in September. This brings the price of a typical house in the UK to £161,797, 12.4% less than at this time last year.
House prices have now fallen for eleven consecutive months, but the monthly rate of fall has been almost unchanged in the last three months.”
“The less volatile three-month-on-three month series has also barely changed for the last three months, after accelerating in the first half of the year. This may suggest the beginning of some stabilisation in the pace of house price falls."
Insuranceblog is inclined to strongly disagree with this analysis from Nationwide.
House prices in the middle bracket of 250000 to 500000 have dropped in most cases 25 to 30 percent in order to sell. In fact ask any estate agent and they will tell you that it is only those who bite the bullet that sell.
The problem with the whole housing market is that this mid-sector price range is the most bound, with owners hanging onto unrealistic valuations and prices.
Unrealistic owners are refusing to drop their prices because many paid over the odds in the first place. In some cases a 30% drop would put them in negative equity.
A 30% adjustment in the market downwards would be a realistic correctional target in order to see liquidity and movement in this mid-sector, which is the only solution to the current credit crunch crisis.
When it happens - watch Nationwide eat their words!!
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