The Swedish town of Trollhattan is set some 70 miles or so inland from the port of Gothenburg – Sweden’s second largest city. It’s situated on the banks of the Gota Canal and just above Trollhattan Locks and the area around is magnificent. There are the Trollhattan Falls – a spectacular sight when the sluices are opened and the water cascades down the valley, by-passed by an equally impressive flight of locks, blasted into the rock of the hillside, rise up in staircase style with pine forests and pastel-painted houses accompanying the journey up from the locks into a bright and picturesque town.

In the summer, pleasure boaters moor there for a while, to restock and enjoy the area before continuing on towards the crossing of Lake Vanern and eventually across Sweden and “out the other side” – Baltic bound. In the winter the traffic is solely commercial and as the canal can be frozen for months, a passage is kept open by the ice-breakers, making a terrific din as massive sheets of ice are forced to either side to allow the boats a passage through.

As you leave the town, there’s a massive road bridge and then on one side of the canal there’s a Volvo plant. On the other the Saab factory seems like its own small town and occupies a vast area.

There’s a black cloud hanging over the winter blue skies in the Saab area at present – and no doubt in Trollhattan in general, following an emergency meeting by the Saab board. Trollhattan loves Saab and are the Swedish people are very faithful to their brand. Saab’s been a way of life and they’ve been there since 1940.

General Motors have owned Saab for some years now and they have to cut 47,000 jobs worldwide to shore up its home base and to assure Congress that US federal aid will save American jobs rather than leaking overseas. As a result, the company have made the threat of walking away from Saab unless the Swedish government help out.

Maud Olofsson is the Swedish enterprise minister and she made the statement “The Swedish state is not prepared to own car factories. “We are very disappointed in General Motors. But we are not prepared to risk taxpayers’ money; this is not a game of Monopoly,”
GM has long struggled to make money from its Swedish venture, but the losses have become a torrent in recent months. This begs the question “Has there been a level playing field or have Saab become a pawn in the game?”
For the people of Trollhattan it is beyond belief that their own government is not prepared to back their beloved brand. The future of which is very much in the balance.

Results of a poll of more than 1,400 people, on behalf of personal finance pfeg, show that British children are more financially aware than their parents were at their age.

It showed that even 10 year olds were using their parent’s debit or credit cards to make purchases on-line. The average age for owning their first mobile phone is just eight and their weekly pocket money now averages 6 pounds and 32 pence.
Contrast this to their parents, who received the equivalent of 3 pounds and 77 pence, but weren’t expected to help out with household chores until they were ten or older.

It seems that today’s youngsters are realising a few facts about the value of money, with seven year olds offering to carry out chores to earn pocket money.

They’re fully conversant with the internet and two out of five children between the ages of seven and 15 were likely to use it to buy computer games, music or books. 40 per cent had bought games and ringtones for their mobiles.

The online survey, carried out by Populus in January, involved 1,435 people, including 546 children aged seven to 15, 676 parents and 759 grandparents in England, Wales and Scotland.

It seems that making financial decisions helps some children to feel more in control of their lives and it’s felt that this will help them to be more responsible with their money and better at managing their finances as they reach the age where it matters and before they get credit cards of their own.

It goes back years. First of all, it was convenient. They had a branch in a large supermarket near to where we lived. With the coming of the debit card and eventually on-line banking it became irrelevant where the actual bank was situated.

It’s been a good relationship really. Until now. Everything’s changed due to a break in at our village supermarket. The thieves broke in and stole the in-store cash machine. I went in to use the cash point and there it was – gone. In its place was a large stack of family packs of crisps. Not to worry, it would be replaced – or wouldn’t it?

A day or so later my husband needed to speak to a customer accounts adviser at the same bank (they don’t seem to have bank clerks any more) and mentioned the problem– she assured him that to their knowledge the cash point was still there, in store.

We looked. It wasn’t there and still isn’t. I miss it being in its place in a well lit store which opens until late every single night. The girl at the till says it might come back, but probably not.

And the point of all this?

The Office of Fair Trading report into personal current accounts says that only 6 per cent of bank customers switched accounts in the past year, even though they could probably find accounts at other banks that are better suited to their needs and possibly would charge them less.
At the same time, it’s estimated that around twenty per cent of energy customers changed providers in one 12 month period. Mind you, I did that once, and never again.

The general view is that customer inertia is the main reason behind customers staying put - with some staying at the same bank where they opened their first account.

Maybe the time has come to shop around?

The bidding started at just 5,000 pounds and rose to 9,000 before the hammer fell on an end of terrace house in Teesside.

A house for just 9,000 pounds clearly has to be a bargain, although admittedly it’s in a rundown state and slightly lacking in a roof. However the estate agent reckoned the house should be renovated for around 27,000 pounds and have a finished value of somewhere around 45,000 pounds.

Properties in the North East don’t appear to have fallen too sharply recently, so the state of the economy doesn’t seem to be blamed for the low price – rather the lack of roof!

As for the rest of the UK, it’s reported that the average cost of a house is now 25 per cent lower than a year ago – standing at 180,000 pounds.

They say you can tell if some-one’s from the Staffordshire pottery area as soon as they walk into a café or restaurant. They immediately turn the tableware over to see who produced it.

As an adopted “almost Potter” – living for several years in Staffordshire - I was really pleased to hear that two Wedgwood family members are possible contenders in taking over the Wedgwood pottery business. Tom R and Tom D Wedgwood are leading a team of investors in a bid for Waterford Wedgwood, who have been in administration since early last month.

Design and production will be coming back to the Potteries if their bid is successful – back to where the company started back in 1759.

The best of luck to them, they deserve it, and to the workers who make the people of the Potteries so proud.

Some more news for the people who were so sad to see the name of Woolworth’s disappearing from the High Street. They’re not gone altogether. They’re making a comeback as an on-line business, after being bought by the owners of the Daily Telegraph.

That’s the wonder of Woolworth’s.

It’s a lovely morning – if you’re sitting inside looking out at the sunshine – otherwise it’s still a bit chilly out there.

What a super day to be up in the Lake District, where there’s an interesting property coming under the auctioneers hammer soon. The starting price is 145,000 pounds but don’t expect to move in just yet. The property is a farmhouse has been unoccupied for several years but it idyllically situated along a dirt track and a couple of miles to the nearest public road.

It may be a bit tumbledown but it has an impressive name – Sleddale Hall, and it’s near Shap, in Cumbria. The farmhouse was used in the film Withnail and I, which starred Richard E Grant and Paul McGann and in the film the property was known as Uncle Monty’s Cottage.

The farmhouse has, as the estate agents like to put it, “many original features” and it sounds as though it’s all ready to make a really lovely family home for someone looking for a restoration project.

The agents are Savills and the auction is in Mid February – just in time to appreciate the snowdrops and daffodils in that lovely part of the country.

There’s not a great deal of good news for us today – and amongst the bad bits we learn that it’s expected that more than 600,000 UK jobs could be lost during 2009.

If you’re lucky enough to keep your job, it’s probably too much to expect a rise and the British Chambers of Commerce says companies are in “survival mode”. In actual fact, many companies are putting their workers on to a shorter working week to preserve jobs and retain skills.
Looking at the rest of the news there’s “Freak Weather hits Australia”, “Meteor Strikes Across Sweden” and a second meteor strike over in the USA. Not to mention the inauguration of their new President Barack Obama- this must be doing much to raise the spirits of the USA people. A report says that around 70 per cent of them think that Obama is going to be a great president and have confidence in him to lead them out of the bad times.

Just a glimmer of ever so slightly better news, depending how you look at it – we learn that the Council Tax payers of England are facing a lower rate rise this year. Still a rise, though. The Local Government Association said that councils were doing their best to hold down tax increases at a time of economic hardship. The opposition were not too impressed and described the rise as a “kick in the teeth” for families and pensioners at this really awful time for them.

The conservatives have criticised business minister Baroness Vadera for her comments, which she made to ITV, regarding her claim that she could see “a few green shoots” of economic recovery.

Business minister Baroness Vadera has denied she is out of touch after claiming she could see “a few green shoots” of economic recovery. She went on to say “Is this a positive straw in the wind, or should we say one swallow doesn’t make a summer? It’s too early to say.”

Now I’m all for being positive and offering encouragement, but maybe these remarks were not the most sensitive due to the fact that they were made as the job loss figures in the UK sounded like the football scores being read out. A slump in the price of shares of virtually 5 per cent didn’t do a great deal for everyone’s spirits, either.

Later the Baroness defended herself, saying she had been referring to improvements in the credit market, where one particular large company had just been successful in raising hundreds of millions of pounds. The fact that this was fresh in her mind seemed to raise her spirits – and is this a sin, at such a miserable time? It just could be, to the thousands of people who’d just heard that their jobs had been lost.

We await the good news, in the belief that it’s just around the corner - albeit a very long one. But as every gardener knows only too well, the earliest green shoots can be attacked by the frost, before they re-appear as the green leaves of summer – or not, as the case may be.

Just when we thought we’d got away with it, it’s finally happened. We are being told to recycle and risk a fine of something like 1000 pounds if we fail to do it, apparently. There was a notice attached to our wheelie bin this very morning. It’s official.

Not that I personally have anything against it. I’ve long thought it’s a good idea for other people, but when it comes to it – I haven’t a clue. I’ve been really good about going along to our local station car park and happily tipping bottles into appropriately marked bins. I’ve saved newspapers for the boy scouts, helping them to make money – but apparently no one wants them any more. (Newspapers that is – I don’t think boy scouts are endangered species yet).

Cardboard boxes in theory go to the tip, but in actual fact the other half has a thing about “what if we need to take something back – we’ll need the box” so they’re taking up valuable shed room. We’ve composted too – although it never seems to break down quite how it’s supposed to.
So – it’s finally come to it – just at the same time as we hear that there’s a glut of waste and they don’t know where to put it. But can anyone tell me – if there’s a cardboard tube with a metal top and bottom – do I separate it or treat it as one or the other? If I chop my finger off washing out a corned beef can, will my household policy cover?

And where shall we put this multiplicity of containers, I ask. Don’t tempt me!

Unemployment figures are rising, that’s a sad fact. Even a brand new degree and the proudly displayed cap and gown ‘photo doesn’t mean a job.

Certainly not the sort of position that rewards the newly qualified, after all the years of studying and exams.

That’s what makes the news of 3 months paid internships for 300,000 of the 2009 graduates all the more encouraging. A drop in the ocean, maybe, but it’s 300,000 who’ll not be counted in the unemployment figures for a while.

Now if I was being cynical – which I must admit I am inclined to be in these matters - I just might dismiss this as messing about with the employment figures, but in actual fact it’s not a bad idea at all.

The intention is that the internships will, if nothing else, give the participants some valuable experience in the right environment. There’s a double edge to this, too. Employers will be able to judge their abilities and it could lead to job offers and three months is a fair trial to judge potential.
The pay they’ll receive will only be marginally more than their income as undergraduates, which they receive via grants and loans, but they true value is that they should become more employable.

The scheme is being drawn up by Universities Secretary John Denham and the Conservatives reaction was predictable – shadow skills secretary David Willets stated that the small number of firms offering the scheme (four at present) was welcome, but “does not match the scale of the crisis facing young people trying to find jobs.”

I have to agree with that, but it’s surely a start!

Happy New Year Readers,

Dot Piper
Editor

Todays’ historic Mortgage Rate cut has taken the Uk mortgage base rate to 1.5%

But will it have any effect on us the little people I hear you ask.

Many industry experts expect the todays cut to have very little - if any - effect at all on mortgage borrowing.

This is for two reasons.

1) Mortgage rates are so close to the level that mortgage lenders can effectively lend the money and still make a profit. This means that many mortgage lenders still have not passed on the previous rate cuts and there is little evident to suggest that this will change.

2) House price is still VERY high and with lenders demanding a much higher deposit ( upto 25% for the cheaper deals ) many first time buyers simply cannot affoard the depost. Even some remortgagers are now in a sticky wicked with many dropping into negative equity with their fixed rate deal finishing.

Finally I read in the paper Gordon is considering following Mugabe’s lead in fiscal management.

Good work Gordon.

More updates to follow as the news breaks

TTFN

BB

The list of companies forced into administration or going to the government with a begging bowl continues.

Today it has been announced in the news Jaguar and Landrover have gone to the government for a bailout to save its 15,000 jobs.

At the same time Savills, the upmarket estate agent, has give a sever profit warning.

Royal Worcester has been forced into administration.

Yesterday the fate of Woolworth’s was decided with an announcement that the high street giant would be closing the doors of its stores by the 5th of January.

Unfortunately this is likely to continue with more institutional companies closing their doors over the coming months.

Cheers,

BB

Figures released today show that amount of people claiming benefit in the UK has risen beyond 1 million.

The total number now on state benefits is 1,072,000 and is the highest since 2001. This is particularly worrying because unemployment usually occurs a significantly longer time after a country enters recession. This in turn indicates that the recession could be much more sever and longer lasting than experts had previously been forecasting.

*GROAN*

The recession continues to be strengthened by poor decision making by the Bank of England.

The 1% rate cut announced in early December was actually almost a more significant cut. The minutes show that many in the committee felt a larger cut maybe necessary to slow the recession down. In the end a 1% cut was settled on and when the minutes of the meeting were made public (yesterday according my sources) the pound fell sharply against the Euro.

At the same time rate setters in the US cut th interest rate down to 0% in a much more decisive move.

Gordon Brown won international acclaim for his bank bailout strategy, however since that point to me it seems that the international community has been less than positive about the UK’s handling of economic strategy.

Cheers,

BB

The economy is shrinking at a speed not seen since the 1980’s crash.

It appears that we are fast approaching a DEPRESSION rather than a RECESSION.

A depression is a sustained period of reduced GDP a recession is a reduction in a countries GDP.

For the most part this is due to reduced spending caused by low consumer confidence and the lack of availablity of credit to fund spending.

The government has tried to remedy this by increasing government spending and by lending the banks money.

However with the banks still not increasing their lending and the interest rates still not being passed on to the customers by the banks the governments efforts so far have had a negliable effect.

Over the month of December we are not likely to see any improvement.

We need to look to January for a recovery.

Merry Chrtistmas

BB

More info on the shrinking of the UK ecomomy can be found below.

UK economy shrinks by 1% in 12 weeks

The UK economy shrank by 1% in the three months to November as the pace of the downturn quickened, a leading think-tank warned today.

The National Institute of Economic and Social Research (NIESR) said “there was every reason to believe” the figure would be worse for the last three months of the year.

In a further sign of the deepening economic woe gripping the country, the organisation also revised its output contraction for the three months to October to 0.8%, from 0.5%.

The figures “make clear that the rate of output decline is accelerating”, NIESR said.

Latest official UK data showed the economy shrank 0.5% between July and September — the first contraction for 16 years.

Initial estimates for how output during the three months to December has fared are due out from the Office for National Statistics (ONS) next month, but they are widely expected to show that the UK is officially in recession.

NIESR — which is one of Britain’s largest independent economic research bodies — said the reduced availability of bank lending was the main problem for policymakers to address.

It said: “The Government faces the real risk that, despite the measures it took in last month’s Pre-Budget Report, output will fall more sharply than it expected to the end of next year.

“The main problem it needs to address very urgently is the availability of bank credit.”

The Bank of England has slashed interest rates by 2.5% in two months in the battle to stave off a deep UK recession.

The Government has also provided billions of pounds of funding to the UK’s banking sector to boost lending to homebuyers and small businesses.

It is being paid for by increased Government borrowing. The Chancellor, Alistair Darling, was due today to face a grilling from MPs over his plans.

The NIESR report follows data from the ONS which showed that UK manufacturing’s biggest slump in almost 30 years had deepened.

The ONS said that in October, output had fallen more heavily than expected, by 1.4%.

The dire performance represents the eighth successive month of decline in the worst run since 1980.

This leaves annual output 4.9% down after September’s figures were also revised lower.

Overall industrial production, which also includes the mining and utility sectors, fell 1.7% between September and October, at the peak of the crisis in the banking sector.

Paul Dales, of Capital Economics, said “activity all but fell off a cliff” at the start of the final quarter of 2008.

Ok,

So lets pick appart the new mortgage scheme announced by Gordon Brown.

1) None of the baks have given agreement whatsoever. They have meerly agreed in principle.

With further investigation it looks very much like Grodon rushed in to this new ’scheme’. Not only did Labour rush into the planning of the scheme but also announced it before the details were actually finalised by all parties. Will this scheme ever materialise and if it does exactly what form will it be in - time will tell.

2) Borrowers with a second charge on their property will not qualify for the scheme.

People with a second charge on their property usually relates to a loan of somekind. This is likely to be in one of two main forms - secured loans or bank guarantees. People who have taken out a secured loan are more likely to need the help than those who haven’t ( VERY GENERAL comment ) and I fail to see why they should not be included ion the scheme - are they not as much at risk?

3) The subprime lenders have not joined and look very unliely to do so.

This is the most distressing of all points. The sector of the British mortgage market at most risk of repossesions during the credit crunch is the subprime market.

This is for two reasons

i) Their mortgages repayments are much more expensive
ii) When their fixed rate deals ( or other forms of mortgage introduction rates ) end they will be forced either to stay on the standard variable rate or to take potentially even more expensive mortgages ( due to the lack of cheap mortgages available in the British mortgage market today ).

Conclusion

If something looks too good to be true it usally is! In my opinion this new scheme is simply a very impressive piece of spin doctoring. This scheme is unliely to actually help many homeowners at all and is likely to have a very small effect on the numbers of repossesions likely to be observed during the coming months.

For more detailed information please read the article below from

www.timesonline.co.uk

Mortgage scheme rules likely to limit householders’ help

Homeowners hoping to avoid repossession under the Government’s “mortgage holiday” proposals must meet a series of qualifying criteria that could mean fewer than 10,000 are likely to join the scheme.

The Homeowner Mortgage Support Scheme, which was announced last week by Gordon Brown, offers households that suffer a “significant and temporary loss of income” as a result of the recession the chance to defer a proportion of the interest payments on their mortgage for up to two years.

Yesterday the Treasury said that the scheme would be open only to households with a mortgage of less than £400,000, estimated to be about ten million borrowers.

About 1.7 million households will not qualify, including borrowers with a second charge against their home and those with a buy-to-let deal.

Borrowers who apply can also hold no more than £16,000 in savings and will need to already be in arrears on their monthly payments. It was also revealed that borrowers would be required to speak to a debt adviser, such as National Debtline or Citizens Advice, before approaching their lender.

Debt charities will be expected to assess whether a homeowner qualifies and to establish whether they will be able to begin repaying the debt in the near future. However, the final decision will rest with the lender.

The Chancellor announced an extra £15 million for debt charities in the Pre-Budget Report. Approximately £5 million is going to the Money Advice Trust, which runs the National Debtline. It will be recruiting another 50 debt advisers next month.

Last night it emerged that the UK’s eight biggest lenders, including HBOS — owner of Halifax — Abbey and HSBC had not offered concrete assurances that they would sign up to the scheme.

The lenders have agreed only “in principle” to the idea but are expected to come under further pressure at a meeting with ministers due today.

It is also estimated that sub-prime lenders, who are considered to be responsible for approximately half of all repossessions, will not join the scheme.

Last week Margaret Beckett, the Housing Minister, suggested that about 9,000 borrowers will take advantage of the scheme, despite estimates from the Council of Mortgage Lenders (CML), the trade body, that repossessions could top 75,000 next year.

There will be 200,000 households who are more than three months in arrears by the end of the year, according to the CML.

The Government is guaranteeing any loss experienced by lenders in the event that homeowners are not able to repay the interest that has been rolled forward.

Officials said that the Government’s liabilities if people defaulted en masse could be £1 billion. However, the Treasury estimates that the more likely cost will be about £100 million.

Currently, overstretched borrowers with mortgages below £200,000 have their interest payments covered for two years if they are on benefits under the Income Support for Mortgage Interest scheme.

Ok,

So lets pick appart the new mortgage scheme announced by Gordon Brown.

1) None of the baks have given agreement whatsoever. They have meerly agreed in principle.

With further investigation it looks very much like Grodon rushed in to this new ’scheme’. Not only did Labour rush into the planning of the scheme but also announced it before the details were actually finalised by all parties. Will this scheme ever materialise and if it does exactly what form will it be in - time will tell.

2) Borrowers with a second charge on their property will not qualify for the scheme.

People with a second charge on their property usually relates to a loan of somekind. This is likely to be in one of two main forms - secured loans or bank guarantees. People who have taken out a secured loan are more likely to need the help than those who haven’t ( VERY GENERAL comment ) and I fail to see why they should not be included ion the scheme - are they not as much at risk?

3) The subprime lenders have not joined and look very unliely to do so.

This is the most distressing of all points. The sector of the British mortgage market at most risk of repossesions during the credit crunch is the subprime market.

This is for two reasons

i) Their mortgages repayments are much more expensive
ii) When their fixed rate deals ( or other forms of mortgage introduction rates ) end they will be forced either to stay on the standard variable rate or to take potentially even more expensive mortgages ( due to the lack of cheap mortgages available in the British mortgage market today ).

Conclusion

If something looks too good to be true it usally is! In my opinion this new scheme is simply a very impressive piece of spin doctoring. This scheme is unliely to actually help many homeowners at all and is likely to have a very small effect on the numbers of repossesions likely to be observed during the coming months.

For more detailed information please read the article below from

href="http://www.timesonline.co.uk">www.timesonline.co.uk

Mortgage scheme rules likely to limit householders’ help

Homeowners hoping to avoid repossession under the Government’s “mortgage holiday” proposals must meet a series of qualifying criteria that could mean fewer than 10,000 are likely to join the scheme.

The Homeowner Mortgage Support Scheme, which was announced last week by Gordon Brown, offers households that suffer a “significant and temporary loss of income” as a result of the recession the chance to defer a proportion of the interest payments on their mortgage for up to two years.

Yesterday the Treasury said that the scheme would be open only to households with a mortgage of less than £400,000, estimated to be about ten million borrowers.

About 1.7 million households will not qualify, including borrowers with a second charge against their home and those with a buy-to-let deal.

Borrowers who apply can also hold no more than £16,000 in savings and will need to already be in arrears on their monthly payments. It was also revealed that borrowers would be required to speak to a debt adviser, such as National Debtline or Citizens Advice, before approaching their lender.

Debt charities will be expected to assess whether a homeowner qualifies and to establish whether they will be able to begin repaying the debt in the near future. However, the final decision will rest with the lender.

The Chancellor announced an extra £15 million for debt charities in the Pre-Budget Report. Approximately £5 million is going to the Money Advice Trust, which runs the National Debtline. It will be recruiting another 50 debt advisers next month.

Last night it emerged that the UK’s eight biggest lenders, including HBOS — owner of Halifax — Abbey and HSBC had not offered concrete assurances that they would sign up to the scheme.

The lenders have agreed only “in principle” to the idea but are expected to come under further pressure at a meeting with ministers due today.

It is also estimated that sub-prime lenders, who are considered to be responsible for approximately half of all repossessions, will not join the scheme.

Last week Margaret Beckett, the Housing Minister, suggested that about 9,000 borrowers will take advantage of the scheme, despite estimates from the Council of Mortgage Lenders (CML), the trade body, that repossessions could top 75,000 next year.

There will be 200,000 households who are more than three months in arrears by the end of the year, according to the CML.

The Government is guaranteeing any loss experienced by lenders in the event that homeowners are not able to repay the interest that has been rolled forward.

Officials said that the Government’s liabilities if people defaulted en masse could be £1 billion. However, the Treasury estimates that the more likely cost will be about £100 million.

Currently, overstretched borrowers with mortgages below £200,000 have their interest payments covered for two years if they are on benefits under the Income Support for Mortgage Interest scheme.

Correct me if I am wrong but the housing market is the engine room of the modern British Economy. It is from here that confidence to spend ultimately stems, be it to buy new homes, sell exising ones or just release disposable income.

So assuming I am correct, the housing market needs to be nurtured, coxed and healed for this blasted recession to end….

Then what the heck are government doing by expanding the already ridiculed HIPS scheme!

Just when buying ans selling houses needs to be as easy and painless as possible they add another barrier - FARCE.

Britian desperately needs the housing market to begin to repair - this can only happen if several things change.

1) The banks must have sufficient liquidity to begin lending again. ( new large scale lenders such as insurance companies and investment funds are looking at lending money to help in this area.)
2) The general populaton needs to be reassured that prices are unlikely to fall much further. (If you think that you are going to get your home 10% cheaper in 3 months why would you not wait to buy.)
3) Additional charges and red tape must be minimised to make the purchase / sales of your home as cheap and easy as possible.

Below is the article in more detail feel free to read and question….

Now Labour makes it even HARDER to sell your home (just as buyers finally return to the market)

In a move which triggered a furious backlash, Ministers have tightened the rules on the widely-condemned Home Information Packs.

They will now have to be available on the very first day a house goes on sale, rather than 28 days later. And they have been made even more complicated with the addition of a six-page questionnaire.

Experts described the rule changes to the £300 packs as ‘absolutely farcical’ and ‘utterly bonkers’.

The shock announcement by Housing Minister Margaret Beckett was said to show ‘a complete lack of understanding’ of the paralysed property market.

Experts said homeowners already desperate to sell, such as young couples starting a family who need a bigger home, will be horrified that it could become even more difficult.

Those waiting for a better time to put property on the market could be further deterred. By a bleak coincidence, the bad news on HIPs came as the Royal Institution of Chartered Surveyors offered a glimmer of hope for the housing market. RICS said continuing price falls had finally sparked a small increase in expressions of interest from potential buyers - the first for two years.

But the decision to tighten the HIPs rules enraged the industry. Experts said it ran completely counter to other policies such as pumping billions of taxpayers’ money into the banking system, Gordon Brown’s mortgage bailout pledge and stamp duty holiday schemes. Ministers claim research on 16,000 transactions showed they were completed up to to six days earlier when a HIP was available.

But Tory spokesman Grant Shapps said: ‘The housing market is on its knees and Labour’s response is to make it more difficult and more expensive to sell your home. ‘If anything, Ministers should be using their emergency powers to suspend HIPs and provide a shot in the arm to the ailing market.’

Peter Rollings, of estate agency Marsh & Parsons, said his clients see HIPs as a complete waste of time and money. About 150 homes go on sale at his chain every month, but he has never heard of a buyer asking to see a HIP. ‘It is utterly bonkers and absolutely ridiculous,’ said Mr Rollings.

Nicholas Leeming, of the property website Propertyfinder.com, said: ‘It shows the Housing Minister is totally detached from the crisis in the property market. ‘The market is completely paralysed. It is farcical that HIPs will be allowed to make life even more difficult.’

HIPs are meant to provide all the information needed to sell a property, although they have been scaled down from the original plans.
At present, it is possible to put up a home for sale as soon as a HIP has been commissioned and paid for, with a 28-day grace period before it needs to be produced.

The concession was due to be scrapped on December 31 but, given the problems in the market, it had been widely assumed that the deadline would be extended indefinitely. Now the grace period will go in April. If a HIP is not largely completed, it will be illegal for an estate agent to market a property, with fines of £200. To make matters worse, the packs are to be made even bigger and more complicated. Sellers will also have to complete a new six-page Property Information Questionnaire. Its long list of questions includes complicated issues such as boundary changes and planning permission. If sellers fill in an answer incorrectly, they could be held liable for providing misleading information.

The Law Society warned last night that a buyer is unlikely to trust an answer provided by a desperate seller. President Paul Marsh said: ‘This is a recipe for argument. It is yet another example of the Government displaying a complete lack of understanding of the property market and no sign of sympathy with the buyer and seller.’

Mr Shapps, whose party has pledged to scrap HIPs, also expressed surprise at Mrs Beckett’s timing. She recently admitted to MPs that HIPs were ‘not perhaps the perfect vehicle we might wish for’.

Ok! After our second large drop in interest rates in a month you would be right to expect mortgage interest rates to be following suite - WRONG

It seems that Alastair Darlings showdown with the banks to force them to pass on interest rate changes to their customers has been something of a damp squib. For more background I have reproduced a article below found on The Daily Mails website. Click here to view the orginal page <><><><>

I wonder is there any benefit to dropping interest rates if the lenders do not modify their rates? As far as I can tell the answer is no Mr Darling stronger leadership please!!

HSBC pledges £15bn boost to mortgage market for 2009 as Darling backs away from showdown with the banks

HSBC has pledged to pump an extra £15billion into mortgage lending next year, bringing some much-needed cheer for struggling businesses and homeowners.

The High Street giant promised to make £1billion in extra funding available and increase its lending by a massive £15billion in 2009 - a 20 per cent rise on last year.

Its UK chief Paul Thurston said: ‘HSBC has no intention of closing its doors to customers, nor will we compromise our reputation for responsible lending. We remain open for business to the tune of £15billion.’

The boost came as Alistair Darling stepped back from another major showdown with banking chiefs over their failure to pass on interest rate cuts to borrowers.

Ok so the Bank of England reduced the UK Interest rate 1% yesterday taking it down to 2% what does this mean to the little people I hear you cry!

In theory this would reduce the cost of the average household mortgage by approximately £85 per month making life a little easier.

But hang on!

Wait a minute!

Will we actually see this saving ourselves?

Unfortunately for me and you if answer is likely to be a resounding no the reasons for this are stated below.

1) Many people are on a discounted fixed rate mortgage that will remain the same untill the end of the fixed rate period has passed.

2) Many other people are on a tracker mortgage - But surely this is good news if the interest rate falls so does the monthly payment. For the most part this is correct however many trackers include a ‘cap’ and ‘collar’. The cap is designed to limit the upper level the mortgage interest rate can reach and the collar is designed to prevent the mortgage interest rate reaching below a certain level.

Many people have a cap and collar as part of their tracker and maynot have even realised. With interest rates now down to 2% ( the lowest in 60 odd years ) most ‘collars’ will have limited around the 3% range.

3) Many banks have still ot passed on the previous 1.5% drop from 2 weeks ago. Alaistair Darling has been very vocal in the news stating a deadline for this drop to be passed on to the customers. We can expect to have the same kind of problems seing the new 1% drop being passed on to consumers.

Time will tell what kind of effect this will actually have on spending habits and the all important housing market. Remember 2009 is round the corner - lets hope its a better year.

Regards,

Simon
Editor

Below is an article posted on Thisismoney today. To summarise Gordon is putting together a scheme which will allow struggling homeowners to effectively stop paying their mortgages for a period of upto two years. There will be a ceiling of £400,000 on the defferable mortgages and so far eight of the major lenders have agreed to the scheme.

OK lets pull this apart then and ask ourselves what Gordon will achieve with this.

1) Repossesions will fall.

2) Gratitude for the Labour party will increase.

3) A greater percentage of uk mortgages will be Interest Only.

Righty ho then I’m sure there are plenty more outcomes but lets leave it there and have a look at what worries me about all this ( although the scheme recieves grudging aproval from me for the most part ).

1) How can the lenders affoard to do this when they have just borrowed billions from the government. - This is a major concern for me if the mortgage borrowers do not make payments on their mortgage for a couple of years this could put even more pressure on the embattled banks.

This is particularly worrying if the bank has severely underestimated how many people are likely to need this help.

2) Being a Tory Boy I think thats ’nuff said!

3) To be honest giving the borrower a 2 year holiday is a great idea - However by converting them to a interest only mortgage at the same time all we are doing is storing a bigger problem up for later down the line. An interest Only mortgage expects the borrow to only pay the interest on the loan not the capital borrowed. The effect of this is that at the end of the mortgage the full capital sum becomes payable this relies upon the borrower putting some form of savings vehicle in place during that period to make repayment at the end of the term. However please remember that the people entering the scheme will be those who are struggling most asking them to effectively save money up for an event many years in the future, is in my opinion, playing with fire.

Lets hope this turns out to be a possitive move - In this case i think it actually might!

Here’s that article

Struggling borrowers will get mortgage paid

Gordon Brown has thrown the housing market a lifeline by offering homeowners facing repossession a mortgage interest holiday. Families with a loan up to £400,000 can defer payments for up to two years if they suffer a sudden loss of income.

Mr Brown said his offer was aimed at 10m middle income families who live in fear of losing their jobs and their homes.
It covers more than 90% of home loans and the Treasury is praying it will put a floor under a market in freefall by restoring desperately-needed confidence.

Eight major lenders covering 70% of mortgages have signed up to the Homeowner Mortgage Support Scheme even though details are still sketchy.

And last night doubts were already growing about the practicality of the scheme. Housing Minister Margaret Beckett suggested only 9,000 families could benefit from the initiative. Those who qualify will effectively be allowed to reschedule their loan with their bank, but in exchange for a payment holiday will have to repay the money at a later date. The Government will guarantee the banks against default.

Although the potential liabilities to the taxpayer could reach £1bn, the Treasury estimates the actual cost of defaults will be £100m.

The Council of Mortgage Lenders welcomed the move and insisted it was not a charter for ‘won’t pay’ borrowers to avoid their responsibilities.

But director general Michael Coogan said: ‘The devil will be in the detail.’ The scheme was announced amid alarming predictions that repossessions could hit 75,000 next year - near the record peak of the crippling 1991 recession and far higher than the 45,000 expected this year.

However, speaking on BBC Radio Five Live last night, Mrs Beckett claimed the problem was more that people were ‘fearful’ of repossession rather than actually facing the loss of their home.

After mentioning that 9,000 families could benefit, she realised she had played down the extent of help announced by Mr Brown and added quickly: ‘I almost wish I hadn’t given you that number because no one really knows.’

The Prime Minister used his speech to surprise MPs with his mortgage rescue scheme, which had not been included in the Queen’s Speech because it does not require legislation.

Downing Street said the scheme would allow a mortgage holder to defer up to 100% of interest payments for up to two years. To qualify, applicants will have to show their income has dropped significantly and they are unable to pay their mortgage. Those with a repayment mortgage will be expected to switch to an interest-only loan.

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