Money Stand

Repossession Rising

Home repossession has skyrocketed throughout 2008, the Bank of England has disclosed that more than 500,000 homeowners are now in negative equity however other sources have said the figure could be breaking 1 million. It is expected that 45,000 homes will been repossessed by the end of the year.This figure equates to 123 repossessions per day and is set to rise to 205 per day in 2009.

The government has recently declared that a 1 billion pound scheme has been agreed with the 8 largest lenders (HBOS, Abbey and Nationwide) to help struggling homeowners. The package is estimated to benefit around 9000 people and will be available to those that have recently lost their jobs or have suffered a loss of income i.e. a bonus.

The bailout will let households with mortgages of up to £400,000 defer their interest payments for up to 2 years however the exact terms of the suspension of payments and how much of the payments are deferred will have to be agreed between the individual and the bank. The scheme is effectively a form of mortgage interest insurance and has been classed as more of a reassurance tool. It is targeted at middle income families and to qualify they must not have more than £16,000 in savings, currently those who are unemployed with mortgages of £200,000 or less can apply for housing benefits

I personally feel that even though the government is stepping in to try and help homeowners it still won’t be enough to fight this economic downturn, there needs to be some serious action to help relieve the millions of people who will feel the burden of debt and money worries. Yes I know they’re trying but all these packages the government puts together have been very rushed and probably not thought through very well. The amounts used for all the different bailouts in recent months (banks etc) have to come from somewhere and taxes will not fully cover it, so what will be happening in a few years time? I see more of us in debt, taxes skyrocketed and prices on goods will be far higher than expected (£8+ a pint!!!) and of course wages will the same!

What do you think of the government bailouts and what do you think the future holds for the economy and the cost of living?

Leave a Comment December 12, 2008

VAT Cut – What it means for you!

On December 1^st the government decided to help consumer spending by cutting the rate of standard VAT from 17.5% to 15%, this is the lowest allowed rate of VAT permitted by the European Union and will remain at this low until the midnight 31^st December 2009.

What is VAT

VAT (Value Added Tax) is a tax you pay when you buy goods and services within the EU; normally included in the price of the item/service unlike the United States where it is added on at the checkout. There are 3 different VAT rates.

Zero rate (0%), goods you don’t pay VAT on such as food, books, public transport, children’s clothes and shoes, and special exempt items i.e. Equipment for the disabled.

Reduced rate (5%), goods include domestic fuel and energy, children’s car seats, services such as installing energy saving devices and domestic conversions.

Standard rate (now 15%); is the default rate of goods and services that are not mentioned above.

So what does the rate cut mean for you and can you take advantage of the situation?

The first question to ask is whether the shops will pass on the rate cut to me, and it seems that many high street stores have. The prices on their items may be the same but when you go to the till you will find you’re getting a 2.5% discount off the marked price. Couple this with huge Christmas discounts available during the holiday season and it can add up to a nice saving.

If you have been planning to buy a new TV, some high end electrical equipment or a car now would be a great time to buy as you make a saving of £25 on every £1000 from the VAT reduction alone and throw in the Christmas discounts can help you save lots of money. Outside of the Christmas period or a sale season the reduction won’t be as noticeable and stores may slyly decide to not pass on the saving on anymore in a bid to increase their dismal credit crunch profits.

Don’t go crazy

Just because prices have dropped by 2.5% does not mean that you should go crazy and have a massive spending spree, flashing plastic willy nilly in December can give you one hell of a debt hangover in January so spend wisely and only splash out if you can honestly afford it.

Leave a Comment December 11, 2008