EDF customers face higher bills
July 26, 2008
EDF Energy has announced it is putting up gas prices by 22% and electricity prices by 17% for domestic customers.
The firm has blamed the increase, which comes into effect on 25 July, on record wholesale energy costs.
Energy companies have been widely expected to raise the costs of utility bills this summer, as wholesale prices have been rising.
EDF is the first of the major suppliers to raise prices this summer and others are expected to follow suit.
The company said it had been absorbing higher costs in recent months but it now needed to pass on costs to domestic and small business customers.
It is the second rise for EDF customers this year.
Tim Wolfenden, head of home services at price comparison website Uswitch.com, estimated that the average annual bill for dual-fuel EDF customers would rise by £200 to just over £1,200.
Call for action on payday loans
July 26, 2008
Debt advice groups are calling for urgent action over payday loans that charge extremely high interest rates.
They want the market regulator to make lenders behave responsibly, as some companies have lent money at a rate equivalent to almost 2,000% annually.
Payday loans typically involve a lender advancing a customer cash, usually for a month, against a post-dated cheque.
The Office of Fair Trading (OFT) said they would be covered by investigations of the issue of responsible lending.
Although the loans, often used by people to tide themselves over until they get their wages, generally attract high rates of interest, the businesses offering them are properly licensed and they say they are professional and responsible.
One company providing payday loans, The Money Shop, told BBC Breakfast it offered a valuable service to those “who may alternatively be faced with high unauthorised overdraft costs”.
It said the cost of its lending products reflected the levels of risks it took.
Prepay energy meters are ‘unjust’
July 19, 2008
Millions of UK households are paying energy tariffs that are “unjust”, the Energy Minister Malcolm Wicks has said.
Mr Wicks said he would be prepared to legislate to force energy providers to lower their charges for the four million people on pre-payment meters.
Pre-payment tariffs can be up to 70% higher than the lowest rates available, said charity National Energy Action.
Mr Wicks said he had asked energy watchdog Ofgem to investigate the matter and report back.
Mr Wicks said: “The extra costs that people on pre-payment meters are now having to meet seem totally disproportionate.
“The gap between what they’re paying and what other people are paying has grown to a very unjust extent.
“Depending on what the report says, we’re well prepared to legislate to ensure this injustice doesn’t occur in the future.”
Soaring oil prices could push energy bills up by more than 60% within the next few years, according to a report for the energy supplier Centrica.
This has led to concerns that consumers are having pre-payment meters installed because they cannot afford their energy bills.
Mortgage squeeze tightens further
July 19, 2008
The mortgage squeeze is continuing to tighten with a further drop in lending, according to new figures.
The fall in gross mortgage lending is accelerating, with a 3% dip from May to June, according to the Council of Mortgage Lenders (CML).
The CML said gross lending declined to an estimated £23.8bn in June, some 32% lower than the same month a year ago.
CML director general Michael Coogan said borrowers on tight budgets must plan ahead as the trend will continue.
Credit crunch
The more sturdy quarter-on-quarter figures show that lending declined by 1% from the first three months of the year to an estimated £74bn in April to July.
But spring and early summer are usually times when the housing market is more buoyant, with people more likely to look to move than in winter.
The quarterly year-on-year decline had accelerated, the CML said, with lending in the second quarter of 2008 down 21% on a year ago, after a year-on-year dip of 11% in the first quarter.
“Market activity during a traditionally a busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand,” said Mr Coogan.
Lenders are taking fewer risks with lending, leading to more expensive mortgages and a demand for bigger deposits.
But the demand from buyers has also fallen as house prices drop. Many are likely to be waiting for a sign of property prices stabilising before they choose to move.
Gas bills ‘to top £1,000 a year’
July 19, 2008
Energy bills could rise by more than 60% within the next few years, a report for the UK’s biggest domestic energy supplier Centrica has said.
It said annual average gas bills could rise from £600 to more than £1,000 early in the next decade.
Continuing high oil prices could lead to rises in the cost of both gas and electricity, it added.
The energy minister said predictions of huge rises were “mere speculation” and may not prove to be accurate.
But Malcolm Wicks told Channel 4 News: “Bills are likely to go up. Certainly that is the case. I agree with the person who said that the era of cheap energy is over.”
Thousands ‘face negative equity’
July 6, 2008
Close to 150,000 homeowners who took out mortgages since early 2007 may face negative equity, research suggests.
According to a CACI survey for the Daily Telegraph, one in eight of 1.2 million who bought a property since then owe more than their home is worth.
If a house loses its value it is not necessarily a problem unless the owner has to move, remortgage, or cannot afford to pay the mortgage.
UK prices fell 0.9% on average in June, according to recent Nationwide figures.
Two lenders trim mortgage costs
July 6, 2008
Two lenders are cutting their mortgage rates slightly - but only for those new borrowers able to pay a large deposit.
The Nationwide and Abbey are reducing the price of some fixed rate and tracker rate deals.
But the biggest drops in mortgage costs are for those who can put down a 25% deposit, which is about £46,000 for an average home in England and Wales.
Earlier this week, the Bank of England said there would be a continued squeeze on the availability of mortgages.
Rate changes
The Nationwide’s fixed rate deals for house buyers will come down by up to 0.07% on 9 July. Tracker rates will drop by up to 0.27% for those with bigger deposits.
This will come three weeks after it raised mortgage rates by up to 0.5%.
The Abbey reduced its rates on 75% loan-to-value fixed rate and tracker deals by up to 0.2%.
On Thursday, the Bank of England’s survey of lenders revealed that the availability of home loans will continue to fall in July to September.
Mortgage suppliers are expecting to ask for bigger deposits in the coming months, instead of putting up the cost of a mortgage, the Bank’s Credit Conditions Survey showed.
Supermarkets to battle on prices
June 28, 2008
Supermarket giants have announced price promotions to outflank discount stores, which have risen in popularity.
Shoppers feeling the pinch have moved to no-frills stores, experts say, with Aldi and Lidl seeing strong growth.
Now Asda is selling 10 staple items such as bread and eggs for 50p over the weekend, and Tesco says it will cut the cost of 3,000 items on Monday.
Rising food prices were the biggest contributing factor to a big lift in consumer inflation in May.
Price cuts
Asda, owned by the US giant Wal-Mart, is advertising a promotion of basics, including sausages and bananas for 50p, from Friday to Sunday.
“Times are getting tough and people are feeling the pinch so we have reduced the price of these 10 staple items over the weekend,” said an Asda spokesman.
“It is going back to the basics, like bread, eggs and butter and fruit and veg as well.”
Meanwhile, Tesco, the UK’s biggest retailer, says it will cut prices on thousands of items in the coming days by up to 50%.
Rival Sainsbury’s has responded with temporary price cuts on summer groceries such as strawberries.
“Whether these are headline-grabbing gimmicks or a longer-term trend, it is just too early to tell. We would urge retailers to keep offering healthier options at affordable prices,” said a spokesman for the National Consumer Council.
“We also hope that concentrating on prices will not distract supermarkets from encouraging shoppers to make greener choices when filling their trolleys.”
10p tax losers ‘need more help’
June 28, 2008
Alistair Darling must do more to help the 1.1m low-income households still losing out as a result of the scrapping of the 10p tax rate, MPs have said.
A £2.7bn emergency package announced by the chancellor last month did not go far enough, the cross-party Commons Treasury committee said in a report.
The money had not been “well-targeted”, with £2bn going to middle-income workers who had not lost out, it added.
Mr Darling has said he wants to do more to help those not already compensated.
The committee’s report said the chancellor’s decision to raise the income tax threshold by £600 in May, at a cost of £2.7bn, was “probably the least bad option” to mitigate the impact of the abolition of the 10p rate.
It found the 5.3m losers from the initial decision were people on low incomes for whom the loss of up to £232 a year had dealt a “significant” blow to their finances.
This, it noted, came at a time of sharply rising prices for essential goods and services.
Some people were still estimated to be up to £112 a year worse off, the report said.
