Credit Action News Round-up (19 August 2011)

Mortgage lending falls amid a “subdued” property market: The Council of Mortgage Lenders (CML) has labelled the current housing market as “subdued but stable” as mortgage lending figures in July fell by 6% compared to the previous year. That was also a marginal fall in gross mortgage lending between June and July this year, which saw a 1% drop from £12.68bn to £12.6bn. Bob Pannell, the CML’s chief economist predicted that the underlying house purchase activity may “drift lower” over the next few months. Moneyfacts announced earlier this week that the average mortgage arrangement fee has risen by 17% over the last year, from £879 in 2010, to £1,030 today.

Private rents reach a new high of £705 per month: Private rents in England and Wales increased by 0.6% last month according to a survey by LSL Property Services. This figure signalled the sixth monthly increase in a row, and means that average rents are now £29 a month higher than last year. The previous year saw rental prices rise the fastest in London to a record high of £1,009 a month; an increase of 7.1%.  The north-east also saw a large annual increase in rental prices of 5.5%. The only region where monthly prices evaded a rise was Wales, where they remained static at £547.

Bank customers face restricted ATM use: ‘Basic’ current account holders of NatWest and its parent, Royal Bank of Scotland have been restricted to using cash machines operated by their own bank. Basic bank accounts are primarily provided for customers who may not be otherwise eligible for a bank account: they do not offer overdrafts or cheque books and are offered by all UK banks as part of financial inclusion policies. RBS has blamed the decision on its inability to cover the charge for allowing its customers to use rival ATMs. Restricted access is already practiced by Lloyds TSB, whose basic account-holders have always been blocked from rival ATMs. A number of consumer organisations including Which? And uSwitch.com have expressed concerns that the change will increase financial exclusion and effect the most vulnerable customers.

Student Loans Company raises rates for former students: 350,000 graduates who took out their loans before 1998 will face an interest rate rise in September due to it being fixed to the previous March’s Index inflation figure. The rates will rise from 4.4pc to 5.3pc. This is due to a clause in their loan contracts which states that if the base rate used by banks plus one percentage point is lower than the March RPI figure, then the student loan rate will fall to that.  The Student Loans Company has ensured that anyone with one of these outstanding loans can defer paying it back if they earn under £27,734. Rates for those students who took out loans after 1998 will see their loan rate unchanged unless Bank Rate rises.

Consumers migrate to discount supermarkets: Bank of England warns that CPI inflation could hit 5% this autumn, forcing consumers to trade down to cheaper brands as their spending power is eroded. Asda, one of the UK’s ‘big four’ supermarket chains, has reported that the number of visits to their stores had fallen by 1.2% in the three months previous to June.  Market research company, Kantar Worldpanel, reported a decrease in consumer purchases and a marked migration to low-cost retailers such as Aldi and Lidl.

Ofgem demands energy suppliers provide billing explanation:  The regulator Ofgem yesterday ordered gas and electricity suppliers to explain how they calculate bills that straddle tariff changes. The request arose from Ofgem’s concern that some customers are being overcharged when their bill corresponds with a period before and after the introduction of a higher tariff. EDF, one of the big-six energy suppliers, admitted that 100,000 of its customers had been overcharged between October 2003 and May 2010. An Ofgem spokesman told the Times newspaper that it wanted suppliers to explain the processes they use when prices are raised to ensure that consumers only pay the higher price for those units consumed following the price increase.

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