Tag Archives: budget
BSA calls for more financial help for young UK home buyers
The UK’s annual Budget will be unveiled next week but ahead of the announcement the Building Societies Association has written to the Chancellor of the Exchequer asking for urgent help for buyers. The BSA says that younger buyers in particular need concerted help to buy their first home and has suggested a way in which money could be raised to give it to them. The money raised by the government from the sale of the NS&I 65+ Pensioner Bonds, estimated to reach £15 billion by the current closure date of 15 May, could be used to offset an initial investment in affordable housing projects, the letters says. Specifically, the BSA letter says that this money could make a lasting difference if it was used as seed funding for perpetually affordable housing developments using a model such as a Community Land Trust. ‘Using the money raised from the Pensioner Bonds to make affordable housing available to young people seems a neat way for a scheme that benefits those 65 and over, to also help younger people who face such a chronic shortage of affordable housing,’ said Robin Fieth, BSA chief executive. The letter also calls for the government to boost the range of providers within the house building sector, including specific support for small to medium size builders, custom and self build builders and co-operative and shared housing models. ‘The UK’s volume house builders alone cannot alleviate the acute shortage of housing in the country,’ it adds. Next week, two days before the Budget, the BSA will launch its housing manifesto for the forthcoming general election which will include a call for the creation of a new housing ministry with a Secretary of State with a seat in the Cabinet. It says this would be better than the current situation when housing is spread among a variety of government departments. The BSA is also backing the idea of a cross political party 15 year plan for the UK’s housing market based on national and regional long term demographic changes, employment, environmental concerns and infrastructure. Continue reading
Research shows UK mortgage holders think they will struggle with interest rises
One in five mortgage holders in the UK have said they would really struggle to find the extra money to cover any increase in repayments, new research has found. Nearly half would find it difficult to cover up to £150 extra per month and over a quarter don’t know what their current mortgage interest rate is,’ according to the Money Advice Service which is urging home owners to plan ahead for anticipated rises in interest rates. The study, of 3,007 UK mortgage holders, found that 56% have no contingency plans should interest rates rise, 47% would find it difficult to meet an increase of up to £150 in monthly repayments and 8% said they were unaware that rates are likely to rise at all, increasing to 16% for those under 35 years old. Many mortgage holders said that their finances are stretched already. Some 69% described themselves as already financially stretched when they took out their existing mortgage and this rises to 77% for those aged under 35. Also 13% admitted they are currently living beyond their means. As a result 19% said they would really struggle to cover any rise in interest rates in their monthly repayments. A significant proportion admitted to little understanding of their current mortgage deal and what impact a rise in rates would have on them. Some 28% of mortgage holders said they didn’t know what their current mortgage interest rate is, with 59% saying they had not calculated the impact that a modest one per cent rise would have on them. And 3% admitted that they didn’t even know what their current monthly mortgage repayments are. The vast majority of respondents, 84%, said an increase in interest rates would impact their finances. Many would therefore have to take immediate action to cover the increase in repayments. Although over half, 56%, admitted they would find the money to cover any increases by cutting back on day to day basics, 35% said they would have to use money from their savings, while 15% would find an extra job, 5% would have to turn to credit cards, and 2% said they would take out a payday loan. ‘Mortgage holders need to be more mindful of the fact that a rise in interest rates is widely predicted, even for those on a fixed rate, as their deal will come to an end sooner or later. Those who purchased their first property in the last five years will have only ever known historically low interest rates, but less than 10 years ago the interest rate set by the Bank of England was 5% higher than today,’ said Nick Hill, a money expert at the Money Advice Service . ‘The smallest increase in mortgage repayments can make a significant impact on a family budget, especially for those people who are already financially stretched. So it’s a good idea to review your personal finances, start looking at where you can cut back, and plan ahead now,’ he pointed out. ‘Unexpected costs often… Continue reading
US Congress ends default threat, Obama signs debt bill
US Congress ends default threat, Obama signs debt bill (Reuters) / 17 October 2013 Another budget showdown could loom next year WASHINGTON – The US Congress on Wednesday approved an 11 th -hour deal to end a partial government shutdown and pull the world’s biggest economy back from the brink of a historic debt default that could have threatened financial calamity. Capping weeks of political brinkmanship that had unnerved global markets, President Barack Obama quickly signed the spending measure, which passed the Senate and House of Representatives after Republicans dropped efforts to use the legislation to force changes in his signature healthcare law. Govt employees ordered back to work on Thursday The White House moved quickly early on Thursday to get the US government back up and running after a 16-day shutdown, directing hundreds of thousands of workers to return to work. The White House budget director, Sylvia Mathews Burwell, issued a directive to employees minutes after President Barack Obama signed legislation that ended the shutdown and raised the U.S. debt ceiling. Her message: Get back to work on the next regularly scheduled work day, which for most workers is Thursday. “All employees who were on furlough due to the absence of appropriations may now return to work. You should reopen offices in a prompt and orderly manner,” she said. Burwell said that in the days ahead the White House would work closely with departments and agencies to make the transition back to full operating status as smooth as possible. The White House budget office told hundreds of thousands of federal workers, the bulk of whom had been idle for the past 16 days, to be ready to return to work on Thursday. The down-to-the-wire deal, however, offers only a temporary fix and does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until Jan. 15 and raises the debt ceiling until Feb. 7, so Americans face the possibility of another bitter budget fight and another government shutdown early next year. With the deadlock broken just a day before the US Treasury said it would exhaust its ability to borrow new funds, US stocks surged on Wednesday, nearing an all-time high. Share markets in Asia also cheered the deal. Taking the podium in the White House briefing room on Wednesday night, Obama said that with final congressional passage, “We can begin to lift this cloud of uncertainty and unease from our businesses and from the American people.” “Hopefully next time it won’t be in the 11 th hour. We’ve got to get out of the habit of governing by crisis,” Obama said. He outmanoeuvred Republicans by holding firm in defence of “Obamacare” to win agreement, with few strings attached, to end the 16-day shutdown. World Bank President Jim Yong Kim said “the global economy dodged a potential catastrophe” with congressional approval of the deal to raise the $16.7 trillion US debt ceiling. The standoff between Republicans and the White House over funding the government forced the temporary lay-off of hundreds of thousands of federal workers from Oct. 1 and created concern that crisis-driven politics was the “new normal” in Washington. While essential functions like defence and air traffic control continued during the crisis, national parks and agencies like the Environmental Protection Agency have been largely closed. Senator John McCain, whose fellow Republicans triggered the crisis with demands that the Democratic president’s “Obamacare” healthcare reform law be defunded, said earlier on Wednesday the deal marked the “end of an agonizing odyssey” for Americans. “It is one of the most shameful chapters I have seen in the years I’ve spent in the Senate,” said McCain, who had warned Republicans not to link their demands for Obamacare changes to the debt limit or government spending bill. Polls showed Republicans took a hit in public opinion over the standoff. In the end, the Democratic-led Senate overwhelmingly passed the measure on a 81-18 vote, and the Republican-controlled House followed suit 285 to 144. Obama signed the 35-page bill just after midnight. Political dysfunction Although the deal would only extend US borrowing authority until the first week of February, the Treasury Department would have tools to temporarily extend its borrowing capacity beyond that date if Congress failed to act early next year. But such techniques eventually run out. In addition to lifting the federal debt limit, the deal calls for creating a House-Senate bipartisan commission to try to come up with long-term deficit-reduction ideas that would have to be approved by the full Congress. Their work would have to be completed by Dec. 13, but some lawmakers say the panel faces an extremely difficult task. The agreement also includes some income verification procedures for those seeking subsidies under the 2010 healthcare law. But it was only a modest concession to Republicans, who surrendered on their latest attempt to delay or gut the healthcare package or include major changes, including the elimination of a medical device tax. The congressional vote signalled a temporary ceasefire between Republicans and the White House in the latest struggle over spending and deficits that has at times paralyzed both decision-making and basic functions of government. The political dysfunction has worried US allies and creditors such as China, the biggest foreign holder of US debt, and raised questions about the impact on America’s prestige. The Treasury has said it risks hurting the country’s reputation as a safe haven and stable financial centre. Senate Majority Leader Harry Reid and Republican leader Mitch McConnell announced the fiscal agreement on the Senate floor earlier on Wednesday, and its passage was eased when the main Republican critic of the deal, Senator Ted Cruz of Texas, said he would not use procedural moves to delay a vote. The agreement stacked up as a political achievement for Obama, who refused to negotiate on changes to the healthcare law, and a defeat for Republicans, who were driven by Tea Party conservatives in their ranks and suffered a backlash in public opinion polls. There was no immediate sign that House Speaker John Boehner’s leadership position was at risk despite having conceded defeat in the budget battle. Several Republican lawmakers suggested he may have strengthened his standing among the rank-and-file, who gave him a standing ovation at an afternoon meeting. But Cruz, a Tea Party-backed senator with 2016 presidential aspirations, denounced the fiscal accord as a “terrible deal” and accused fellow Republicans of giving in too easily in their bid to derail Obamacare. Obama’s Democrats avoided claims of victory. “The bottom line is, millions suffered, millions didn’t get pay checks, the economy was dragged down,” said Senator Charles Schumer. “This is not a happy day, it is a sombre day.” The fight over Obamacare rapidly grew into a brawl over the debt ceiling, threatening a default that global financial organisations warned could throw the United States back into recession and cause a global economic disaster. Fitch Ratings had warned on Tuesday that it could cut the US sovereign credit rating from AAA, citing the political brinkmanship over raising the debt ceiling. A resolution to the crisis cannot come soon enough for many companies. American consumers have put away their wallets, at least temporarily, instead of spending on big-ticket items like cars and recreational vehicles. “We’re sort of ‘crises-ed’ out,” said Tammy Darvish, vice president of DARCARS Automotive Group, a family-run company that owns 21 auto dealerships in the greater Washington area. Continue reading
