Car Insurers Debate Over Future Profits

UK car insurers have been running an unprofitable business for 14 years. Independent market analysts, Datamonitor, say 2009 looks to be a profitable year despite the doubts

March 13, 2008

Budget Report Expectations

Chancellor Darling's Budget Report is expected to raise taxes on alcohol, fuel emissions, flights and many other issues concerning the economy. Tax burdens expected to increase on poorer families

March 12, 2008

Card Fraud Rises Again

Card fraud has increased over past year. Whilst chip and PIN technology has been successful in the UK, criminal activity overseas has increased 77 per cent

March 12, 2008

Tax Cuts Needed To Restore Confidence

Appeals for corporate tax cuts are submitted to the Treasury as it prepares its Budget report this Wednesday. Business and banking sectors are worried about the direction of the UK economy

March 10, 2008

First Time Buyers Take Hit From Stamp Duty

Stamp duty tax has not kept up with the rate of increase in house price inflation over the past decade. Yet another hurdle first-time buyers must leap over to get on the property ladder

March 10, 2008

Read all Finance News

Rate Cuts Should Improve Housing Affordability

Last year house price affordability for first-time buyers fell to a dramatic 16-year low. However, the Council of Mortgage Lenders now says that conditions should improve due to the recent cuts in interest rates.

Throughout 2007, property affordability worsened as a result of the successive base rate increases that continued up until July. By December, figures showed that the average first-time buyer paid 20.7% of their income as mortgage interest, compared to 17.9% the previous year. In addition, the typical income multiples for first-timers, the amount borrowed relative to ones income in order to step on the property ladder, reached a high of 3.36 times income.

Although these figures do not reflect the two recent cuts in interest rates, Michael Coogan director general of the CML said, "Affordability has been stretched further in 2007, but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008."

He added, "For first-time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease slowly as the year progresses. The impact of payment shock on the large numbers of borrowers coming to the end of fixed-rate mortgages will also be less than we anticipated last year."

The number of mortgage holders coming off their fixed-rate deals in the early part of this year is expected to be around 1.4 million. Estimates suggest that the average increase to their mortgage repayments on a new deal would be in the region of £200 more per month.

Despite a reduction in the number of loans taken out last year by almost 10%, Mr Coogan said,
"The decline in lending appears to be driven more by funding constraints as opposed to lower consumer demand."

Published on February 13, 2008

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