Kate Hughes: More gloom in the air but reasons to be cheerful, too

After five tough years for personal finance, there could be light at the end of the tunnel at last

Call me crazy but I'd been relatively upbeat about our collective financial situation this week. Mortgage lenders are considering loosening their vice-like grip on borrowing criteria, personal debt is continuing to fall and even second-quarter gross domestic product looks as if it may be revised up again.

Then came the latest round of money news to shoot me down.

First off was a minor body blow from the Office for National Statistics, which this week released its measure of national wellbeing in personal finance terms. By the time the global crunch was making itself felt in 2008-9, some 7.5 per cent of people in the UK were already saying they were finding it difficult to manage financially. By 2010-11, average income was down to £359 a week, from £373 the previous year. In April this year, more than a quarter of the population said they expected their money situation to worsen over the next six months.

Great.

And then there was another of those impending doom stories when data firm xit2 reported that £116bn worth of interest-only mortgages due to mature over the coming eight years has no specified repayment plan arranged by the borrowers. Representing just under 10 per cent of the whole mortgage market, this is "a legacy of unsustainably high interest-only lending prior to the financial crisis," said managing director Mark Blackwell.

"If lenders fail to help these borrowers find a repayment vehicle, it will come back and give them a nasty bite around 2020 when the big batch of high-LTV interest-only loans granted in the mid-2000s mature. Eighty per cent of these borrowers have no repayment plan."

"Interest only should be for people with a genuine strategy for repaying the capital at the end of the term," adds Jonathan Harris of mortgage broker Anderson Harris. "Historically, these mortgages were often given away to people who were not in this position, so for lots of borrowers it will be a ticking time bomb. If you have got eight to 10 years until your mortgage term ends, the likelihood is that you bought your property some years ago, so will have enough equity to repay the capital and buy a smaller home to live in. If not, you have time to plan a strategy but you need to take proper advice and crack on with it rather than ignore the problem and hope it goes away. It won't."

But I'm not about to give in so easily. People often don't disclose their plans for repayment when they do have them. Plus, eight years is still time for many to sort it out – provided that lenders show willing of course.

Which is a fair point. Even I have to admit that plenty has happened that has been largely out of our control over the last five years of credit crunch and global meltdown. You certainly don't need me to tell you what you already know – that the employment market has been shot, savings rates are painful, property is temperamental at best, and annuity rates have dived. Among other things.

In hindsight, my good mood may have been something to do with £30 tax rebate that unexpectedly dropped onto the mat earlier in the week. But after five years of precious little good news to report amid the deluge of disaster, I'm determined to hold fast to that optimism.

With renewed hope for the mortgage market, unemployment figures stabilising, repossessions falling and the number of households saving money trebling since 2008 despite truly rubbish rates – according to that same ONS study – not to mention auto-enrolment all set to boost retirement income, we may now have an opportunity to help ourselves. It is one that it seems we are determined to grab with both hands.

And it's not just me who thinks things could be looking up. Some 22 per cent of us expect their personal finances to improve over the next six months.

Even the likes of Martin Taylor, former chief executive of Barclays, a member of the Independent Commission on Banking and chairman of global chemicals company Syntenga among other things, said in the Financial Times this week that he felt there was a renewed buzz in the City this autumn.

"There comes a time when people tire of being miserable, and animal spirit returns," he said. Count me in.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
people'It can last and it's terrifying'
News
people Emma Watson addresses celebrity nude photo leak
Arts and Entertainment
tv
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
PROMOTED VIDEO
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
footballRadamel Falcao and Diego Costa head record £835m influx
News
i100
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Arts and Entertainment
Danish director Lars von Trier
filmEnglish-language series with 'huge' international cast set for 2016
Life and Style
tech
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Derivatives Risk Commodities Business Analyst /Market Risk

    £600 - £800 per day: Harrington Starr: Derivatives Risk Commodities Business A...

    Power & Gas Business Analyst / Subject Matter Expert - Contract

    £600 - £800 per day: Harrington Starr: Power & Gas Business Analyst/Subject Ma...

    Infrastructure Lead, (Trading, VCE, Converged, Hyper V)

    £600 - £900 per day: Harrington Starr: Infrastructure Lead, (Trading infrastru...

    Planning Manager (Training, Learning and Development) - London

    £35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

    Day In a Page

    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York
    Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

    'I like Orwell's writing as much as the next talented mediocrity'

    Will Self takes aim at Orwell's rules for writing plain English
    Meet Afghanistan's middle-class paint-ballers

    Meet Afghanistan's middle-class paint-ballers

    Toy guns proving a popular diversion in a country flooded with the real thing
    Al Pacino wows Venice

    Al Pacino wows Venice

    Ham among the brilliance as actor premieres two films at festival
    Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

    Neil Lawson Baker interview

    ‘I’ve gained so much from art. It’s only right to give something back’.
    The other Mugabe who is lining up for the Zimbabwean presidency

    The other Mugabe who is lining up for the Zimbabwean presidency

    Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
    The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

    The model for a gadget launch

    Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
    Alice Roberts: She's done pretty well, for a boffin without a beard

    She's done pretty well, for a boffin without a beard

    Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
    Get well soon, Joan Rivers - an inspiration, whether she likes it or not

    Get well soon, Joan Rivers

    She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering