September 2010

A recent survey conducted by property information company Hometrack has revealed a growing disparity in the supply and demand of residential property. Whilst housing supply increased over the quarter to September by 7.3%, new registrations of prospective purchasers actually fell 6.5%, further depressing house prices. The fall in new registrations is being attributed to an increased reluctance by consumers to take on additional debt given the uncertain economic outlook and looming public sector job cuts.

According to the Council of Mortgage Lenders, house prices are likely to fall considerably if the Financial Services Authority’s plan to restrict ‘excessive’ lending is approved. The FSA are proposing, amongst other measures, to restrict lending to those who cannot provide any evidence that they can afford to repay the debt, which it believes continues to pose a serious risk to long-term economic stability, pointing to the first 3 months of 2010, which saw non-verified loans make up 43% of all approved mortgages.

A recent survey from discount website Goupola.com has revealed desperate consumers are increasingly living beyond their means and in their overdraft. A staggering 18% of those surveyed said the were constantly in the red, whilst 24% claimed that they could not manage without their overdraft facility. Perhaps most staggeringly, 34% believed that an overdraft was not a form of debt to be worried about and 38% did not know how much interest they were being charged.

Recent figures released by the Office of National Statistics (ONS) have revealed new public sector borrowing reached a historic high figure of £15.9bn in August, which also saw interest payments treble on the same month last year to £3.8bn. The rise has been put down to higher inflation leading to a rise in interest payments on index-linked government bonds.