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How much will you spend this Christmas?

Top Money Stories (3 - 7 November 2008)

How much will you spend this Christmas?

Are you thinking about Christmas yet? With shops already stocking decorations, advent calendars and gift ideas it's hard to escape from the festive season. Yet, have you thought about how you will afford Christmas this year?

A recent survey conducted by GE money surveyed 3,000 people and found that 72% were thinking about Christmas and wondering how they were going to afford it this year.

The survey showed that the average family plans to spend almost £300 less on Christmas this year, as on average in 2007 a family spent £840 on presents, food, drink, and decorations but now they will pay only £550. If you are panicking that you can't afford Christmas this year, calm yourself. We are only in November and it is not too late to take stock of your financial situation and make sure that you don't overspend this year.

MoneyBasics has some useful budget calculators which can help you plan your spending, and for tips on how to cut back on spending this Christmas, Moneybasics has a fact sheet available for download.

Let's now review the top money stories of the past week commencing the 3rd November 2008.

Wednesday 5th November

First-time buyers struggling to find deposits

A survey conducted by the Council of Mortgage Lenders (CML) has shown that almost half of all first time buyers under the age of 30 receive financial help from a family member to help them provide a deposit on their first home.

This shows a marked increase from the same survey conducted in 2006 which showed that 38% of first time buyers received financial help. Although house prices have fallen by 14.6% this year (according to the Nationwide) first time buyers are not able to take advantage of falling prices as lenders now require substantially larger deposits.

The CML reported that the average first-time buyer needed a deposit of £14,500 in 2007, yet in the second quarter of this year, this had risen to £19,000.

Poor sales on the high street - Two of the big high street retailers have announced that they have experienced falling sales.

One of the retailers has seen its half-year profits fall by 34% when compared with last year and another has seen its sales, when compared like-for-like in the 14 weeks up to November 1st fall by 4.4% when compared to a year ago.

This decline is sales is symptomatic of a recession as we look to find areas of our spending where we can cut back- and the high street is often the first place where we do so.

Thursday 6th November

Food inflation is falling

Figures from the British Retail Consortium (BRC) have shown that food prices rose by 7.5% in October. Although this means that food prices still increased in October, it marks a slowing in the rate at which they are doing so.

In September food price inflation was 9.1%, so this fall to 7.5% signals, according to many experts, that inflation has reached its peak and prices shouldn't climb so quickly now.

This new rate of food price inflation is the lowest we've experienced since May of this year.

Sales of new cars falling at record levels

The latest figures from the Society of Motor Manufacturers and Traders (SMMT) have revealed that only 128,352 new cars were sold in October, which is 23% less when compared with a year ago.

This slow down in the motor industry shows that economic confidence is still low on the ground as new car sales are often a indicator of economic confidence.

The SMMT has reported that sales have fallen at the fastest rate for 17 years and this downturn is being sharply felt in the industry as some manufacturers are scaling back production.

Interest rates cut by 1.5%

The Monetary Policy Committee (MPC) of the Bank of England met today and slashed interest rates by 1.5% to reduce interest rates to 3%. This move is an effort by the Bank of England to lessen the cost of borrowing as the UK heads into a recession.

The cut in interest rates has been anticipated by many, as bodies such as the Confederation of British Industry (CBI) have called for a cut of a full percentage point to kick-start the British economy.

However, no-one anticipated that the MPC would cut interest rates by a whole 1.5% - the last time a cut this dramatic was seen was in 1981.

The consequence of this reduction means that mortgage lenders are now discussing how much they will reduce their own interest rates by, although at the moment it is unclear whether all lenders will pass on in full the 1.5% reduction.

This cut will, most likely, mean that you will have lower monthly repayments on your mortgage, for example, if you have a tracker mortgage and your lender is one of those that has announced they will be reducing your interest rate by 1.5%, on an average £150,000 mortgage you could potentially pay £134 less per month.

Friday 7th November

Number of insolvencies rises

The latest figures released from the government have shown that the number of people declared insolvent - either declaring themselves bankrupt or taking on an Individual Voluntary Arrangement (IVA) - has risen by 8.8% in the third quarter of this year to reach a total of 27,087.

The number of firms that have declared themselves insolvent has also risen by 10.5% to reach a total of 4,001.

Declaring yourself insolvent is a big step and one that should not be taken unless you fully understand the consequences. Moneybasics provides information on what bankruptcy and IVA's entail and it is crucial that you receive advice on what is the best course of action for you.

The Consumer Credit Counselling Service (CCCS) can be contacted on 0800 138 1111 and their debt counsellors can provide you with advice and support to help you get on top of your debts.

 

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