21 November 2013

Funding Christmas is not for life! Are rates to go up sooner than expected?


Christmas lights are up, Christmas trees are up, Christmas adverts are on the TV and Christmas songs are being played in the shops.  Christmas really has come early this year.  I’m not a total bah humbug but just remember that if you intend to fund Christmas on credit, it will have to be repaid at some point!  I’m currently being bombarded by 0% balance transfers on credit cards and increasing credit limits, when I’m not even using them.  The temptation is huge.  The problem is, these companies need you to use their cards and they will do everything to tempt you.  However, they are also the quickest to jump should a payment be missed or late.  Be wary that one or two late or missed payments could result in a default registered against you that you may not even know about until you next apply for credit, insurance or some other financial requirement.  Christmas is for Christmas, make sure it’s not for longer..
There is a 40% chance that rates will go up in 2014, according to the new Bank of England Governor Mark Carney.  Following recent comments that rates would not rise until unemployment fell below 7 per cent, a recent report suggested that national unemployment had fallen to 7.6 per cent in the three months to September.  The Bank’s quarterly inflation report forecast now suggests that there is a 40% chance of a rise in 2014, a 60% chance in 2015 and a two-thirds chance in 2016.  
Nationwide Building Society has reported its best half year of lending for five years.  The lender advanced £14bn in the first six months up to end of Sept.  This is 37 per cent up compared to the same period in 2012.

Finally, one of the mortgage trade magazines suggests that the Financial Conduct Authority is in talks with 21 firms ahead of them applying for full bank licences.  Although at ‘informal pre-application’ stage, this is positive sign that funding is available and competition is likely to return to all sectors of the market.   This can only be good news for the end consumer!

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