Food
Cheryl Asterley lives with Rory, her 13-year-old son, in a three-bedroom home
in Hoylake, Mersey-side. Her mortgage deal is fixed for five years, coming
to an end in 2012. “I’m very relieved I’ve got a long-term deal,” she said.
“I couldn’t afford any increase in my repayments.”
However, increases in the cost of groceries, utilities and petrol are eating
away at her disposable income. Cheryl, 46, earns £20,088 as a restorative
justice worker for the Youth Justice Service in Liverpool, but the lion’s
share of her take home pay goes towards the repayments on her £86,000
mortgage, which are £595 a month.
Cheryl receives child maintenance from Rory’s father and child benefit, but
she does not collect child tax credits because she believes she would not be
able to afford to return the money if the Treasury overpaid her. “I can’t
believe how much more food costs, and gas and electricity prices are a
really big issue for me too. Both are hitting people like me really hard.”
Fear factor 8/10 (no change from March 25)
Holidays David Ward, 35, and his wife Amanda, 36, go on holiday to
Majorca, Spain, every summer with their two young children, but this year
the couple are considering staying in Britain. The falling value of the
pound against the euro has meant family packages are up to 20 per cent more
than last year. David said: “I’ve really noticed how much the price of a
holiday in Europe has gone up”.
If they do not stay in Britain, the couple are considering reducing the length
of their break.
Flights and accommodation usually cost about £2,000 and David and Amanda
usually spend about £1,000 while they are there. “It isn’t just the cost of
the hotels you have to consider,” David added. “The weak pound makes things
like food and leisure activities a lot more expensive too.”
The Wards have also seen their mortgage repayments jump by roughly £100 a
month for the last three months, and living costs, like food and utility
bills, are soaring. “The main problem is the uncertainty,” David added. “We
do not know how much our mortgage or living costs are going to rise by in
the next few months.”
Fear factor 8/10 (up from 7/10 on March 25)
Fuel
Frank and Dorothy Beevers travel about 6,500 miles every year in their
motorcaravan, but this year they are struggling to cope with the rising fuel
costs. The retired couple, from Bexley, southeast London, live on the state
pension and a private pension of about £4,000 a year. They have a
three-bedroom house worth £350,000 and some savings and investments.
“The garage down the road didn’t put their prices up straight away, so I
filled up my tank before they rose,” said Frank, 65. He added that his
finances were being hard hit by the soaring price of diesel - now 116p a
litre. The couple are members of the motorcaravaners club and go out most
weekends. In summer they take a longer break, driving up to 500 miles around
the country. They said that they were planning to go away less often. “It is
not just the price of diesel,” Mr Beevers said. “It’s more expensive for us
to heat our home and pay for our food.”
Fear factor 5/10 (up from 4/10 on March 25)
Mortgages
Graham Smith, 41, and his partner, Candice Niven, 34, want to sell their
two-bedroom flat in Newcastle upon Tyne and move to a larger home with their
ten-month-old baby daughter, Rosie. They are not worried about the falling
value of their flat because the cost of the properties they are looking to
buy is falling, too. “The big problem is getting a mortgage”, Graham said.
“I doubt we’ll have enough equity to get a 25 per cent deposit required for
the best deals. We will have to lower our expectations of what we can buy.”
The couple are both physiotherapists. Graham has been self-employed for the
last three years and supplements his income by teaching. Candice works for
the NHS. Their total income is about £40,000 a year.
They have been told by a mortgage broker that they could get a mortgage of
about £225,000. “We could probably afford an interest rate of about 6.5 per
cent, but any more and we would be struggling,” Graham added.
Fear factor 8/10 (up from 6/10 on March 25)
But on the other hand . . .
Anna Saggerson, 30, is keeping her fingers crossed that house prices in London
will fall in line with the rest of the country. The PR executive, who earns
£25,000-£30,000 a year, rents a room in a shared house in Denmark Hill,
South London, but is desperate to buy a property.
To afford a two-bedroom home in her area (currently about £300,000), Anna
thinks that house prices would have to fall by about 25 per cent in a few
years. “A drop in house prices would be really positive for me. It is really
the only way I will be able to get on the property ladder,” she said.
Fear factor 4/10 (down from 5/10 on March 25)
Key questions
Why did many mortgage rates go up yesterday? The banks have been
finding it difficult to get funding during the credit crunch. Loans between
banks have been used traditionally to fund cheap mortgage deals. These loans
have dried up, and so have the cheap mortgage deals.
But what’s the point of the rate cut, if it won’t make any difference to my
mortgage or to inflation? There is huge pressure on the Bank of England
to act to shore up confidence. The quarter-point cut may not have the impact
that the Bank would like, but not acting would have sent shockwaves through
markets.
I thought interest-rate cuts hurt the pound. If the pound weakens further
against the euro, won’t I have less money for my holiday (and second home)
and feel poorer? Most probably, yes. The pound slumped against the euro
yesterday, which means that £1 buys you fewer euros. Anyone exchanging large
amounts of currency can minimise the impact of currency fluctuations by
using a foreign exchange broker such as HIFX or Moneycorp, which charge less
commission than traditional bureaux.
My fixed-rate mortgage is about to come to an end. What should I do?
Sticking with your lender’s standard variable rate is rarely the best
option. Brokers say that fixed-rate deals, though expensive, are still more
competitive than discount trackers – home loans that track the base rate. If
you can fix for five or even ten years, some lenders are now offering a
better rate on these long-term deals than on a two-year fix.
What is going to happen to my savings? Early announcements indicated
that some savings banks are not going to cut savings rates – which is good
news for their customers. Kaupthing Edge, the Icelandic bank, said it would
keep paying customers 6.5 per cent. However, what happens to your rate
depends very much on where you keep your money. While some banks are likely
to continue to offer attractive rates in an effort to boost their liquidity,
others may cut rates to save some money.
Everyone knows you can't earn £400 a week and spend £600, it's immposible, money isn't elastic. I think people have realised how fragile the economy is and confidence will not come back for a while. 11 years to get to this, what a waste of time and effort. Still, look on the bright side, labour is dying a death, I love it.
preddo53, leeds, UK
Nobody was listening,
Gordon was forever telling us about "Prudence'
Even he ignored his own advice and now we are paying for it.
Ed Corbett, bridgend, wales
Everything is not OK.Even AD says the credit crunch is the worst since the 1930's at the G7 summit.Contrast this with what he said last August at the start of the credit crunch which I believe to be 9th August 2007.
stephen hulton, eure, france
Fear Factor - Taxation 10/10 keeps on going up with little benefit to people paying it.
steve tea, manchester, cheshire
The polls are bad for Labour now. But on this evidence, only city traders who saved last year, government contractors and the non-tax paying super rich of Chelsea are still going to feel rich next year.
So a Tory landslide seems inevitable, since Gordon will stick it out pathetically until 2010.
He always wanted to destroy the Tories by moving to their right and being authoritarian to capture Worcester Woman. But now eves she can see that Labour's legacy is teenagers with knives and jobcentres full of immigrants. It may be full scale exodus time. We can't all move to Ireland and Australia in disgust.
1992 is now: Will the last person to leave Britain please turn out the lights.
Andrew, Oxford,
Whats hurting here is the price of tap water.My water bill for the last 6 months was 810 euros.It is cheaper to drink wine in France than water.Perhaps someone could perform a miracle and turn wine into water?
stephen hulton, eure, france
'No more boom and bust' , as our beloved leader Gordon would say .
It's just going to be bust, I'm afraid.
Mr. Pike, London,
Everything will be ok, Mr Darling told us all it would be ok in the budget a few months ago didn´t he.
paul h, bristol,