UK Loans Criteria Tighten

UK banks are planning to toughen the criteria on loans to companies and houses in these three months due to tensions in wholesale funding markets which is likely to hamper investment as well as slow down economic growth. As published in London Today, the Bank of England in its fourth quarter credit conditions survey said that UK lenders are expecting tightening of credit scoring criteria for granting mortgagees and tightening of covenant on loans to large and medium-sized companies. Bank also said that development in the areas affected by euro crisis and their impact on banks funding is a determining factor of credit availability over the coming quarter.

According to the Central Bank, there was a little change in mortgage approval as of Novembor’11 highlighting the delicacy of housing market. In December, The Bank of England said that eurozone sovereign debt crisis have enhanced the risks to the UK financial stability and concrete measures need to be taken to withstand such potential shocks and they can continue to lend. The Bank of England said that lender although expected a tiny increase in credit availability in upcoming months, however factors like economic outlook and tough wholesale funding conditions are expected to have a negative impact on credit availability.

On the contrary, according to another report, the UK services improved in December with an index rising to 54 from 52.1 in November. Moreover factory and building activities also witnessed a significant in December. Vicky Redwood, an economist at Capital Economics Ltd. in London said that recovery gained momentum last few days of year 2011. He added, but this recovery is expected to be short-lived not because of persistent weak lending from banks. Another Bank of England survey recently conducted revealed that mortgage demand already fell in 4th quarter and banks are expecting it to fall further in these three months. It is also estimated that demand for loans from small sized companies will fall in first quarter after it drop in the fourth quarter. The Central Bank survey showed that loan demand will also drop in this quarter for medium and large-sized companies.

Lenders said that they expected the number of loan applications approved dropped in this quarter because of tighter loan criteria. There were changes regarding household disposable incomes seen in some banks which affected the affordability of taking new secured loans. If euro debt stress continues then the credit conditions may tighten materially this year. For mortgages demand fell from 15.3 in last 3 months to minus 21.2 in the fourth quarter. The index of credit availability from 3.9 roused to reach 11 in the fourth quarter and the measure in first quarter was 8.1. Demand among large companies is minus 5.2 in first three months of 2012 and for medium sized companies it is minus 9.2 for the current quarter.

BOE survey was conducted among UK lenders and it also showed that index of mortgage default rates reached minus 24.4 from 12.3. A gauge of losses from default was 0.8 and it reached 14.6. Whereas expectations index on losses were 9.7 for next three months.

Travel Insurance

Last week two insurance companies announced the launching of their newest travel insurance policies. This announcement was just in time for those who are heading out for their holidays to distant lands in order to enjoy their festival break. Hiscox, an Insurance provider has launched a new travel insurance policy, which covers all the members of your family no matter where they are travelling, be it Europe, Asia or anywhere else on the globe.

The policy from Hiscox offers the insured person medical cover of up to 10 million pounds, legal expenses of up to 50 thousand pounds along with 10 thousand pounds of cover in case there is an evacuation because of a political unrest or any unavoidable circumstances like a natural calamity. There are also other additional features in this policy of travel insurance for trips that are specialised in nature, like the protection for individuals going out this holiday on a winter adventure sports trip like taking a winter skiing holiday or a snowboarding holiday. Skiing and snowboarding are some of those adventure sports and specifically winter sports that are not covered by almost 13 % of the single trip insurance policies. This came out as a result of a survey conducted by the company Defaqto. However you will have to be careful as to where you go for skiing this holiday season after opting for this policy as Hiscox’s policy cover you up only if your skiing activity or any winter adventure sport activity takes place within the boundaries set for skiing and also which belong to a recognized skiing resort. Some of the other activities that involve high risk and that fall under adventure sports, which are covered under this policy are white water rafting, quad biking, kite surfing etc. The Managing Director of Hiscox UK, Steve Langan said that the comprehensive policy, which his company is offering to its customers, is an annual policy. Opting for this policy will mean that you can go out without any worries and holiday as you like. Anything from a spontaneous holiday in Italy or a well-planned out African safari in South Africa will be covered under this policy and you will have a relaxed mind knowing that if anything goes wrong in foreign lands, you will get the desired help as quickly as you can to get things back to normal. The new travel insurance policy by Hiscox is available both on the phone and on the internet on their website Hiscox.co.uk.

Another travel insurance product especially designed for women was also launched alongside the last one in the last festive week. A travel insurance policy by Bikini Travel provide you the usual cover against medical costs or repatriation costs, cancellation of holidays and other similar unwanted items or phenomenon during your travels. However, this also covers your female specific requirements for products like watches, handbags, hair straighteners, shoes, jewellery clothes etc. it is somewhat similar to the Hiscox policy as it provides cover for your winter adventure sport equipment also.

Private Student Loans

Private student loans are far easier to get compared to federal student loans. Although private student loans carry higher interest with them but their terms and conditions are very flexible unlike the strict limitations applied by federal government when they provide loans to students. Usually there is not a better option for students than to go for private student loans in order to pay for their college; even students with bad credits go for them. Studies have shown that over the past ten years, students borrowing private loans have increased by 25 percent every year. At the same time, students availing federal loans went up just by eight percent every year. I guess private student loans will pretty soon put the federal student loans out of business.

There are several financial companies that offer private student loans. However, it is important that student picks the best one suiting his or her financial conditions. The best part if that the options out there for private student loans are numerous therefore a student can easily end up finding a package that would match his or her condition perfectly. There will be many private companies offering just what you want.

Some of the big names in the market of private student loans are of the companies like Citizens Bank, Chase, and Wells Fargo Private Student Loans. Students can easily apply for loans at these firms and get them approved without going through any complications. The interest will be higher than a federal student loan but the terms and conditions will be flexible enough that the student does not face any difficulty in the future. This is the main reason that is gaining private student loans so much popularity. Students do not have to go through all those formalities, a lot more paperwork, and then more difficulties in case the loan is paid back late.

It was never this easier to find the right type of student loans than it is right now with private student loans being available commonly everywhere. Even if a student faces hardship to pay back the loan amount; there are companies offering private student loan consolidation as well. So this makes it far easier for a student. It becomes a peace of mind that at least the student will not get bounded with limitations or has to face financial crisis before or after graduation. Private student loans are the best for taking help in order to carry on with college education.

Recession risk in UK Finance.

On Tuesday, a survey conducted by the British chamber of commerce showed that the UK’s economy faces a risk of getting shrunk in the first half of 2012 owing to the crisis in the Euro zone during the last year. Britain’s economy had already been at a stagnant level in the last quarter because of the same reason.

John Longworth, BCC Director General said, “A new recession is not a foregone conclusion. However, action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing euro zone crisis.” Nearly 8000 members were polled by the BCC to reach to this conclusion and it just fell short of announcing a recession. This represents those firms who have one in every six British worker. However, it has said that everything depends much on the efforts of the Government to help the business sector. This forecast by the BCC is in tune with the reports submitted by the Bank of England and also other Economists. The data submitted by the retail sector and the property market lately also clearly points out to this fact that a recession or an Economy crunch is on the way. Both the manufacturing sector and the service sector companies were covered in the survey. The weakest domestic sales growth since Q3 in 2009 was reported by the manufacturing companies while the orders saw the fastest decline since Q2 2009. The service sector however showed better signs with the sales showing growth at the end of the last month of 2011 because of which the firms expected the profits to become constant since Q3 of 2009. BCC chief economist David Kern said, “A new recession is not a foregone conclusion. However, action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing euro zone crisis.” A growth of just 0.7 per cent is being predicted this year by Office of Budget Responsibility which is the independent forecasting unit of the Government. However, any kind of fiscal boost to the business is limited by the Government’s commitment to eliminate the budget deficit by the time of the next elections which are due in 2015. In the month of October, the bank had restarted its program to quantitatively ease the situation by an extra seventy five billion pounds of gilt purchases over a period of four months.

Apart from this, the bank is supposed to add more fifty billion pounds at the meeting which will be held in the month of February. This will make the total amount to three hundred and twenty five billion pounds. However, the British Chamber of Commerce has warned in advance that this policy adopted by the Bank of England will not be of much help to pull out the Economy out of its crisis. Mr. Kern said, “QE will not achieve its full potential in supporting growth unless supplemented by the early introduction of a sizable and effective credit-easing program.” He also said that the government needs to cut red tape and reallocate its spending.