How The Credit Crunch Cost You £31,000

The international credit crunch, and the subsequent recession, brought the banking industry to the edge of catastrophe and led directly to pay cuts, redundancies and rapidly-rising unemployment throughout the UK.

For those who have lost their jobs, and possibly their homes, the effects on their personal finances have been all too obvious.

But there has been a wider effect on the accumulated personal wealth of the nation.

The BBC can reveal that in the course of 2008 alone, £815bn was knocked off the wealth of households in the UK.

That amounted to an average of nearly £31,000 for every household in the UK.

Going down

The huge dent to personal wealth last year has been calculated, for the first time, by the Halifax bank, exclusively for the BBC.

The biggest impact was from the sudden slump in house prices which led, according to government figures, to a 9% cut in the market value of all residential property, from £4,077bn to £3,693bn.

Taking into account the effect of a 3% rise in the value of the mortgage debts held by home buyers, to £1,225bn, then the nation’s housing equity – the surplus of market value over existing mortgages – shrank by a massive 15% last year, down from £2,890bn to £2,468bn.

Meanwhile, the financial assets of households, such as the value of pension funds and investments, also dropped by 9%, to £3,687bn.

Last year, the stock of consumer credit loans that still had to be repaid – such as credit card debts, hire purchase agreements and bank loans – rose by 5%, to £234bn.

So the effect was that net financial wealth, as opposed to housing wealth, dropped by 10% in 2008 to £3,453bn.

Adding the housing equity of £2,468bn to the net financial wealth of £3,453bn produces a figure for net household wealth of £5,921, down by £815bn or 12% in just one year.

“It is a huge drop to happen in one year,” says Martin Ellis, chief economist at the Halifax.

“But we have had the biggest house price fall yet seen in just one year, combined with a fall in equity prices,” he adds.

In fact, if you think that last year’s house price slump was the 17% fall measured by the Halifax’s own index, then the overall fall in personal wealth amounted to a whopping £1,104bn.

Source: BBC News – http://news.bbc.co.uk/1/hi/business/8241480.stm

Payday Credit Loan Benefits

Payday credit loans do have many benefits over loans that are offered by hig street banks.

Although the interest rate for a payday credit type loan will be much higher than a loan from your high street bank, payday loans are easier to obtain, especially if your credit score isn’t as high as it could be. And it is this reason why payday credit lines have a higher interest rate.

This doesn’t make them a bad form of borrowing – a payday loan, because they can be paid out so fast, may actually save someone from not being able to pay their rent or other important financial payment.

We all find ourselves in times of need at some point in our lives and we do what we have to do – if that means borrowing a sum of money via a payday credit loan then so be it.

A payday credit loan may just be a knight in shining armour for some people which is why they shouldn’t be classed as ‘evil’ forms of credit.

We also have another article about payday credit loans which you can view at

http://ukcreditsecrets.co.uk/blog/payday-credit-loans/

Don’t forget to check out our Payday Loans section