UK Remortgage Offer

Spending habits are always good indicators of how a country is managing in times of economic crisis, and a recent analysis of the UK offers some interesting insight in how people are managing their financial debt loads. It is not a stretch to imagine that many citizens are tightening their belts, making changes that will impact monthly outflow. In an interesting article at http://www.bbc.co.uk/skillswise/inthenews/numbers/0130.shtml, the BBC reveals the answers to the questions of how people are spending is all in the numbers. The biggest category of weekly spending was in Transport, at £57.70. Recreation and culture was the next category listed, and one guess is that this would be income dependent — those who made more would spend more in this category. Then came the significant categories of housing, food, and fuel. For the poor, the website states that “the poorest 20% of incomes spent 21% of their total weekly expenditure on this. In contrast, the top 20% spent just 7% of their total weekly expenditure on keeping warm”, pointing to a clear divergence in spending patterns.

In general the numbers point to some serious alteration of lifestyles for most citizens, especially those with lower income. This is a period of declining revenue and increasing cost of living, a state which is putting many into deeper and deeper holes economically. For the generation of people now in their 30s who have grown up on convenience foods for example, moderating eating habits to return to “a simpler time”, using less money on food, may well be an impossibility. Nonetheless, to get out of debt many are trying to reduce their takeaways and follow a debt management scheme. The article points out that “the average amount they spent on takeaways each week was £6, with the over 75s spent just 80p a week on average”, indicating that perhaps finding out how the older generations manage might be a good source of
savings!

Gaining control over spending the limited incomes people generate is only one-half of this economic teeter-totter. The cost of goods and services must come down to help balance the equation or it will become impossible to maintain control over debt. Rather than see this become a cascading situation, people can join together online and in real life to form adhocracies to help analyze the situation and see what can be done to level the playing field.

Last week’s market turmoil left interbank lenders unsure of the future which could lead to more expensive mortgages for UK homeowners. LIBOR rates are on the rise as a result making it more difficult for lenders to borrow at affordable rates thus passing on the savings to customers.

If you’re a first-time buyer or have a small deposit (10% or less) then you may be edged out of the market as lenders do not want to risk higher than 90% LTV. Mortgage holders coming off 2 or 3-year fixed rates will also experience the financial strain.

Speaking of remortgaging, Ray Boulger, of mortgage brokers John Charcol urges homeowners to seek out a new deal now, especially if your fixed rate is ending within the next 6 months.

Mr Boulger goes on to say, “On the basis that mortgage finance might get significantly worse, there is a strong argument for anyone looking to remortgage in the next six months or so to sort out a new deal now.”

Lehman Brothers’ collapse at the beginning of last week brought home the severity of the financial crisis in the US. However, here in the UK the merger of HBOS by Lloyds TSB looks like the beginning of a UK financial super bank which would command a respectable 28% of the mortgage market.

Some fear this “super bank” would lead to less competition.