The Richest Streets In Britain Revealed

Monday, November 17th, 2008

Britons who are on the hunt for a cheap property in the current adverse financial climate may do well to avoid Kensington and Chelsea, it has been revealed.

New figures from Halifax note that while the famous London borough has long been considered a haven for the rich and famous, half of all the top 50 most expensive streets in Britain are located there. And while there are plenty of high-value postcodes found in the area, residents in the Vale may take a certain satisfaction in knowing that they live on the most expensive road in the country. According to the financial services provider, the typical house price on this street totals 4.68 million pounds, more than 200,000 pounds dearer than its nearest rival, which is Ingram Avenue in Barnet.

For those people who are setting their sights a little lower as they look to put their foot on the first rung of the property ladder, taking out a cheap loan may prove an effective way to boost deposits and make their offer more appealing to lenders during this difficult period.

And for homeowners looking for cheap property in the capital, they may find plenty of houses that are out of their price range after Halifax figures showed that 39 of the 50 most expensive roads were located in London. Meanwhile, house hunters may also like to avoid the south-east and Poole in the south-west, as these areas filled out the remaining 11 positions in the top 50 most expensive postcodes.

Indeed, Panorama Road in Poole was the only street outside of London to make an appearance in the top five, with house prices there totalling a typical 4.16 million pounds, putting it in fifth position, behind two more Kensington and Chelsea postcodes which came in fourth and third.

Commenting on the preponderance of the borough of Kensington and Chelsea addresses in the list, Martin Ellis, chief economist at Halifax, said that the area had always been considered a cool place to live among celebrities, although in recent years house prices may have received a further boost from the financial sector.

“Chelsea and Kensington have some of the most expensive streets in England and Wales. The Royal Borough has been a highly fashionable area to live in since the swinging 60s. In recent years, its prime location in central London has attracted affluent celebrities and ultra wealthy foreign businessmen helping to drive up house prices,” he said.

For buyers who have struggled to get ahead in the property market in recent months as access to cheap mortgage lending has dwindled and acceptance criteria has tightened up, taking out a personal loan may prove a lucrative weapon in the battle to secure the keys to their own home. By boosting the size of their initial deposit, consumers could find they are able to encourage banks to extend a competitive mortgage deal for the purchase of a new property. Opting for a loan for this purpose may become increasingly important after the Council of Mortgage Lenders warned that the availability of home purchase loans may constrict further as the country moves towards a recession.

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Workers Queue Up To Ply Their Trade Abroad

Friday, November 14th, 2008

Nearly one third of Britons have been employed overseas at some point in their lives, new figures have shown.

According to Lloyds TSB, Europe is the most common destination for those who have jumped ship and earned a living abroad, with more than half (56 per cent) of people doing so. However, a fifth (20 per cent) of Britons have headed further east, going to work in Asia. Furthermore, nearly the same proportion (18 per cent) said that they had worked both in North America and the Gulf.

For those who are planning on heading abroad in the coming months, whether for work or leisure purposes, taking out a personal loan may prove an effective way to pay for travel and accommodation during the early days of such a trip. This type of loan may be of particular interest to those who are heading abroad to expand their career horizons, with nearly a quarter (24 per cent) of those Brits who have done so citing this as the primary reason for leaving. Meanwhile, 25 per cent said that working abroad was necessitated by a new job. However, nearly a third of people said they were drawn overseas to absorb new cultures and experiences.

However, Lloyds TSB was quick to point out, moving overseas to take on a new job sometimes left people in difficulty. While more than half (53 per cent) said that they had trouble being away from friends and family for extended periods, some experienced problems dealing with lifes financial practicalities. Of those questioned, a fifth said that they had difficulty setting up bank accounts, managing their mortgage and making payment arrangements on items such as credit cards, personal loans or other debts owed in the UK.

Commenting on the findings, Stephanie Cousin, head of operations at Lloyds TSB International, said: “Were certainly a nation of intrepid travellers and whether its to gain international work experience or simply escape the weather, its clear that many of us may be working overseas for part of our career. Living away from home can be stressful, so you need to do your homework and sort out the important things, like finances, before you depart.”

Doing so may be of particular importance to men after further findings from the group showed that they are almost twice as likely to work overseas as women are. While some 22 per cent of females said they had done so, 42 per cent of males said they had spent time abroad working.

Whether planning a winter getaway or preparing themselves for an occupational exodus, consumers who are planning on going abroad may wish to take out a personal loan to help cover costs. Meanwhile, a loan may also be of use to those who have got their sights set on overseas adventure after a study by Cater Allen Private Bank revealed that more than half (54 per cent) of British holidaymakers plan their trip with a view to doing some form of activity such as scuba diving, skiing or horse-riding.

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Bank Makes Historic Cut

Friday, November 7th, 2008

The Bank of England has made the biggest cut to the base rate of interest in its history in an attempt to stimulate economic recovery.

At its monthly meeting yesterday (November 6th), the Banks monetary policy committee (MPC) decided to reduce the base rate by 150 basis points, taking it to three per cent, its lowest ever level since the creation of the group in May 1997. Before yesterday, the lowest base rate witnessed under the MPCs command was 3.5 per cent. Following the decision, homeowners may well see mortgage rates start to drop, in addition to personal loan and credit card rates.

Explaining its decision to make its largest cut ever, the MPC said in a statement that the UK and global economy had experienced the most severe disruption to financial stability witnessed in nearly a century. It claimed that while the recent raft of measures to inject liquidity into the banking system and ease the burden on struggling consumers has gone some way to mitigate the effect of the financial collapse seen in September, it is likely that the resulting adverse economic conditions will remain prevalent for some time to come. It noted that as a result of the banking crisis, many consumers will have found it more difficult to obtain credit and loans as lenders have become decidedly risk averse. So too, the group noted that equity conditions in countries throughout the world have also declined sharply in the last two months.

The Bank went on to note that in the UK, figures indicate that the country is likely to enter a recession, with data showing that the economy contracted during the third quarter of this year. It noted that there have been substantial declines in consumer spending as shoppers have found their finances challenged by high bills as credit and loan availability dwindled. So too, both the residential and commercial property market was found to have declined, while the prospects for new business investment have also worsened considerably.

It continued: "Since the beginning of the year, the committee has set bank rate to balance two risks to the inflation outlook. The downside risk was that a sharp slowdown in the economy, associated with weak real income growth and the tightening in the supply of credit, pulled inflation materially below the target. The upside risk was that above-target inflation persisted for a sustained period because of elevated inflation expectations. In recent weeks, the risks to inflation have shifted decisively to the downside. As a consequence, the committee has revised down its projected outlook for inflation which, at prevailing market interest rates, contains a substantial risk of undershooting the inflation target."

As such, it said that by reducing the base rate by such a degree, the UK should be able to avoid entering a period of negative inflation.

The move follows another historic cut made last month, when it slashed rates by 50 basis points a day ahead of schedule. This was the largest single cut made by the MPC. An announcement from the Bank followed a statement by chancellor Alistair Darling in which he called upon the MPC to consider the needs of Britons struggling during the downturn.

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Watchdog Says Banks Need To Put People First

Tuesday, November 4th, 2008

The government should take the opportunity to ensure that consumers are put at the heart of UK banks business model, Which? has insisted.

An announcement from the group came as it launched a major new campaign to reform the UK financial services industry. Research carried out by the firm has found that for many Britons, there is little faith that the current organisational structure of the banking industry can prevent another downturn from occurring. When questioned, more than four-fifths (81 per cent) of the 1,001 adults questioned by the group said that they thought reform is necessary to avoid the recent financial turmoil from resurging in the future.

Indeed, more than two-thirds (67 per cent) of respondents said that they blame the banks directly for the current economic contraction and the dwindling availability of credit and loans. Meanwhile, 73 per cent of people said that they had personally been exposed to banks and other loan providers offering money in an irresponsible manner.

Following the survey, Which? embarked on a new campaign urging the government to do more to ensure that consumers are protected from unsound lending practices and other similar problems. In a letter to chancellor of the Exchequer Alistair Darling, the group demanded that banks are required to do more to insulate their customers from recent corporate failures. Among the requests made by the watchdog was that all of the UK institutions which have received public funding as part of the recent bailout should be required to pass on cuts to the base rate of interest immediately. Such action could relieve strain on consumers by increasing the availability of cheap mortgages, personal loans and credit cards.

So too, the group also insisted that there should be an internal review into retail banking practices to make sure that the interests of UK customers are integral to the operations of all financial institutions.

Which? chief executive Peter Vicary-Smith commented: “Banks have had their bailout - now its time for them to deal sympathetically and fairly with the plight of ordinary consumers, many of whom are anxious about their savings or struggling with their mortgage. It is the governments duty, as a major shareholder, to ensure this happens. The government cannot afford to pass up this unique opportunity to make long-term, consumer-focused changes to the banking industry and in the short-term were after a fairer deal for consumers. We want to see an independent review leading to an overhaul of an industry that is characterised by weak competition [and] irresponsible behaviour.”

He said that many banks have a poor track record of making sure that customer services and support standards are up to scratch.

The announcement from Which? follows a raft of measures designed to add buoyancy to the banking industry. This was matched by a cut in the base rate of interest enacted by the Bank of Englands monetary policy committee, which slashed rates by 50 basis points last month. Such a move may soon be followed by a fall in mortgage and personal loan interest rates.

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BoE Says Attitudes To Risk Need A Fundamental Rethink

Tuesday, October 28th, 2008

Regulators and banking institutions across the world needs to reassess the way that financial risk is handled, the Bank of England (BoE) has warned.

In its biannual Financial Stability Report, the group claimed that the recent bust in the credit market had been far sharper than analysts had imagined. It explained that while some parties - including the Bank - had foreseen that the large scale extension of loans and credit to high-risk borrowers could cause problems for banks, investors and consumers, no one had predicted that the problem could grow so big.

And while it noted that central banks around the world have rushed to provide liquidity for lenders who have found their balance sheets dwindle in the recent economic crisis, the BoE went on to claim that in the long term, a “fundamental rethink” was needed to ensure that adequate safeguards are put in to place to stop such a situation arising again.

The group explained that while the loans and cash that was granted to UK banks would help to stabilise the countrys financial system in the near future, as the globe enters an economic downturn financial institutions will need to grow more cautious about how they provide loans, credit cards and other services. As such, the Bank warned that the growth in loans provision is likely to remain subdued over the coming years.

In the report, the group went on to iterate the scale of the recent financial crisis, which saw bank equity prices fall more heavily than was the case following September 11th, as well as the rise in interest rates in America seen in March 1994. Only Black Monday - which occurred in November 1987 - and the banking crisis of September 1974 were said to have had a bigger negative impact equity prices.

Following on from the report, the Council of Mortgages Lenders (CML) highlighted concerns that in the wake of the financial crisis, mortgage assets were being severely undervalued, which could further inhibit the provisions of loans for house purchase in the future.

Michael Coogan, CML director general, exclaimed: “We continue to find it frustrating that in the US, poor credit quality caused the funding crisis, whereas here in the UK the funding crisis has been a major cause of the worsening credit picture. Underlying UK mortgage credit quality has never been the primary issue, yet the reduction in funding to support new lending has had a detrimental impact on the credit quality of existing mortgages, through house price falls, a narrowing of options for borrowers and the prospect of rising unemployment.”

For those who are concerned about their financial security amid falling house prices, tightened credit and heightened risks of redundancy, taking out payment protection insurance may be of interest. Indeed, David Kuo, head of personal finance at independent advice service the Motley Fool, warned earlier this year that taking out such protection could become essential for Britons as loans and credit cards become harder to come by and the economy shrinks.

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Consumers Unprepared For Recession

Friday, October 24th, 2008

With figures from the Office for National Statistics showing that the country has slipped into negative economic growth, one independent financial adviser has warned that Britons are not ready for a recession.

According to the Motley Fool, concerns about the onset of a recession have abounded for a number of months, but even with figures showing that the economy shrank last quarter, many consumers have struggled to protect themselves against a sustained economic downturn. Research carried out by the group has shown that many Britons have found it difficult to put money aside in recent months as food, fuel and energy inflation squeezed household budgets. Of those questioned by the group, 70 per cent had less than one fifth of their monthly income at their disposal after accounting for household expenses.

Meanwhile, one out of seven said that they have no money at all left over at the end of each month, while one in eight stated that their outgoings are greater than their household income. In such a situation, the group warned that making savings to tide people over in the event of a prolonged recession will be difficult for many Britons.

For those who have found financial responsibilities spiralling out of control in recent months, taking out a debt consolidation loan may be of interest. In spreading out repayments over a longer period of time, consumers may find they are able to alleviate the strain on their monthly income and perhaps put a little aside each month to prepare for disadvantageous circumstances.

David Kuo, head of personal finance at the Motley Fool, warned: “We are only in the early stages of a recession so we have yet to feel the full impact of the economic downturn. Consequently, it is important to tackle our finances head on now before it is too late to do anything about it. Ensuring that we can survive on less than four-fifths of our current income is vital. If you lose your present job through redundancy, your next job could pay precisely that - less than four-fifths of what you now earn. It is, therefore, vital that we cut back on household expenses and start putting money aside immediately.”

Furthering this, he urged Britons to re-evaluate their outgoings and cut back on all areas of non-essential spending in an effort to reduce the drain on finances and to allow people to put money aside for circumstances such as job loss. For those who are unable to do so, they may have to rely on personal loans or credit cards to support them during periods of unemployment.

Mr Kuo concluded by urging people to remember that positive action can help to minimise the impact of a recession, insisting that although employment could come to an end, it need not be the end of the road for financial security.

Consumers may have found it particularly difficult to put money aside as household bills have soared. And figures from the Bank of England published in September show that many consumers fear that inflation may get worse in the year to come. For those who have been unable to keep up with payment commitments, taking out a debt consolidation loan may prove effective in getting finances back on track.

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Car Insurance Premiums Move Up A Gear

Monday, October 20th, 2008

The burden of car insurance premiums does not look set to lighten any time soon, the AA has warned.

New data from the group has shown that for the third quarter in a row, the typical cost of car cover has rocketed, with a 3.1 per cent rise recorded in the last three months. Such an increase is equivalent of an additional 22 pounds for annual cover. For the average motorist in the UK, annual car insurance will cost a typical 724 pounds and 28 pence, the firm noted.

And while average policies have risen, the AA warned that not even searching around will insulate drivers from car cover inflation. Its Shoparound index - which measures usual premium quotes for those who have compared different providers before committing to a deal - showed that even bargain-hungry drivers can expect to pay an extra ten pounds for their car cover, taking usual annual policy prices to 486 pounds. While this represents a two per cent increase on figures from the previous quarter, it also marks an 8.7 per cent rise when compared to prices last year, equivalent to 39 pounds.

In being exposed to escalating car insurance costs - in addition to an increased fuel burden - consumers could find their ability to keep up with other financial commitments is compromised. Such areas could range from personal loans to heating bills.

The AA pointed out that trying to cut back on cover in an effort to reduce motoring costs will also bring less rewards than in the past. According to the group, typical quotes for third-party, fire and theft cover are 11.6 per cent higher than they were a year ago. Such a rise amounts to a hike of 62 pounds and brings typical minimum cover to 591 pounds.

Commenting on the statistics, Simon Douglas, director of AA Insurance, said: “Despite these rises the car insurance industry continues to make an underwriting loss: for every 100 pounds taken in premiums, more than 105 pounds is paid in claims. Insurers are particularly concerned about increasing legal costs and personal injury claims which last year rose by 22 per cent.”

He added that young male drivers are a particular drain on the industry as a whole, although they also pay the highest premiums.

“The average car accident insurance claim for a young male driver is nearly 4,500 pounds compared with 2,700 pounds for their female peers. For drivers aged over 30, the average claim is 1,400 pounds for men and 1,200 pounds for women. The withdrawal of another insurer from this arena suggests that companies are carefully looking at their costs,” he claimed, referring to Allianz recent departure from the market.

For those who are looking to buy a smaller car in a lower insurance bracket, taking out a car loan may prove a cost-effective way of raising the cash. Meanwhile, whether buying a new motor with a car loan or cash, Sainsburys Bank has noted that failing to haggle over forecourt prices could end up knocking drivers finances back into first gear.

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Scottish Savings Forgotten In Battle Against Debt

Monday, October 13th, 2008

With the cost of living rising and the availability of credit withering at an alarming rate, many Scots have prioritised keeping their finances protected against rising debt in the battle with the crunch.

Such is the claim of Lloyds TSB, which explained that while many consumers have attempted to slay their debt demons, savings efforts have dwindled substantially. According to a study conducted by the group, more than two-fifths (41 per cent) are now saving less than they were six months ago, with 36 per cent of people saying they had concentrated on clearing debt as inflation has risen and fears of recession have circulated. Indeed, the bank notes that while the current economic crisis may put a forced end to the buy now, pay later culture which has pervaded Britain, it seems that many people north of the border have struggled to put more of their money aside. More than a fifth (21 per cent) said that they currently have less than 500 pounds in their savings. So too, residents throughout the UK were found to have struggled to stash the cash as the financial climate has grown ever more inimical.

On average, 37 per cent of consumers throughout the UK are now saving less than they used to, with this proportion rising to 43 per cent in the 45 to 54 age group. However, younger generations were said to have bucked the trend, with nearly a third (32 per cent) of under-25s currently saving more than they were six months ago.

For those who have been unable to put money aside in recent months as inflation has soared and payment responsibilities mount, taking out a debt consolidation loan may prove an effective way to get finances back on a firm footing. Taking out a loan for the purposes of debt consolidation may prove particularly appealing for the one in three people who were said to not to save on a regular basis. Of these, 57 per cent said that a lack of spare cash was holding them back from upping their savings efforts.

Commenting on the figures, Mark Cockburn, retail network director at Lloyds TSB Scotland, said: “Saving is a must for everyone. With economic conditions set to become more challenging, having the comfort of a savings nest-egg could be a lifeline for many Scots families during these difficult times. But it is difficult to put money aside with rising bills and ever increasing household expenses. While everyone understands the good sense in saving, what consumers told us they need is more guidance and advice on how to save more when their finances are being squeezed.”

According to Abbey, managing debt commitments has become the number one priority for households across the country. The group noted that 41 per cent of respondents believed paying bills on time was now the biggest aim, compared with nine per cent of people who placed saving at the top of the list.

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Getting To Know The Crisis

Thursday, October 9th, 2008

While stock markets across the world have drawn breath as share prices have stumbled, many may be left wondering how the current economic crisis has come about.

According to Edward Jones, an investment adviser, a simplified explanation starts with the sale of sub-prime loans in the US. This form of lending was designed to extend funding to people with unfavourable credit histories in order to get them on the property ladder. However, while many American firms were happy to offer these bad credit loans, it has become evident that a portion of them will not be repaid because consumers cannot afford to keep up with repayments. And as banks have tallied up how much money they have lost as a result of the unpaid debts, they have also become more wary of handing out cash, with many even cautious of swapping money between themselves.

The group noted that as this has happened, companies that depend on other banks to provide them with short term loans have been brought to their knees as institutions bunker down and withdraw loan offers in an attempt to minimise their exposure to the growing financial storm.

However, the group was quick to point that although conditions may be rough, it looks like the financial climate will brighten up over time. It reminded people that while financial crises can be difficult to cope with, they seem to be a cyclical part of the global economy, with history showing that they tend to strike every 20 years or so.

Advising those who are questioning whether the worst of this particular crisis is over, the group professed: “No one knows for sure. The economy has weakened and there is almost certainly more bad news about some banks. Usually when feelings become as pessimistic about the outlook as they are now, times begin to improve. We know consumer confidence is extremely low, many headlines are negative and many investors are worried. Instead of guessing about the short-term news, stay focused on your long-term goals and your strategy. The worst mistake is to react out of fear and miss the rebound when it occurs.”

For those who are looking to ride on the shirt tails of a resurgent financial system, the group urged investors to keep a keen eye on companies with lots of cash in the bank to tide them over while the storm continues, pointing out that they will be able to extend their business in areas that are underserved as the weaker institutions are washed away. Most importantly, it urges people not to buy into dramatic headlines and instead look for long-term indicators of improvements to the economy as a whole, such as a boost in the housing market or an upturn in consumer spending.

At the end of August, Prudential warned that while the credit crunch seemed to have little effect on consumers on an individual level, many Britons were very worried that price rises would soon be felt. Rising food, petrol and fuel bills were found to be principal causes of concern for consumers looking to limit their outgoings on essential items.

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Bank Makes The Cut

Wednesday, October 8th, 2008

The Bank of Englands monetary policy committee (MPC) has made a 0.5 per cent cut to the base rate of interest at its monthly meeting, one day ahead of schedule and following an earlier announcement by chancellor Alistair Darling in which he urged the Bank to consider the needs of the consumer.

The MPC moved to drop rates from 5 per cent to 4.5 per cent. It was the first time it has decided to alter the base rate since April, when it made a 25 basis point cut. The last time a reduction of this size was made was in November 2001. Following on from the move, consumers could find that their banks drop the rates on a range of products including credit cards, personal loans and mortgages. However, it may mean that returns on savings also decreases.

After the announcement was made, commentators rushed to offer their support for the move, which was welcomed by the price comparison site moneysupermarket as surprising but decisive action. The group added that it seemed that the Bank had retreated in its longstanding battle against rising inflation and rushed to the aid of borrowers, who may soon see the benefit in falling variable loans rates. Indeed, it noted that 4.2 million mortgage holders with tracker products will surely welcome the news as it will bring a significant boost to their ability to put money aside.

“However, as a note of caution this is not a magic cure all and we wont see either the mortgage or the housing market bouncing back to where it was 18 months ago,” the price comparison site added. “Sadly too much water has passed under that bridge to be ended by a quick fix. Lenders wont change their strict attitudes to risk just yet, and the cut may not filter through to rates for new borrowers and first-time buyers, so not everybody will feel the benefit,” it said.

And while many commentators welcomed the move, a number of banks moved quickly to pass the rate cut on to customers, with Barclays, Halifax, Lloyds and Cheltenham & Gloucester among them. For existing customers, the rate cut will come into effect from November 1st, while Barclays will begin offering its lowered rate to new customers from tomorrow (October 9th).

Commenting on the development, Andy Gray, head of mortgages for the Woolwich, said that consumers should take confidence from the decision, which will help to bolster a stagnating housing market and help people who are managing to make their pay packet last the month.

When it met last month, the MPC held the rate at five per cent in order to keep inflation at bay. Following their decision, the Fair Investment Company pointed out that the group had probably stepped back from a cut in the hope that the recent rescue package designed to stimulate the housing market. For those who are encouraged to enter the market after todays announcement, taking out a personal loan may be recommended.

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FSA Slams Bank For Loan Insurance Sales

Tuesday, October 7th, 2008

The Financial Services Authority (FSA) has imposed a seven million pound fine on Alliance & Leicester after it found that it had not given its loan customers adequate guidance on whether to take out payment protection insurance (PPI) on the product.

In an investigation into the firms practice, the FSA found that between January 2005 and December 2007, the bank sold around 210,000 PPI arrangements on its personal loan products, with the average policyholder spending 1,265 pounds on the product.

During this time, it was said to have provided inadequate information about the costs of the loan insurance services, as well as seeking out ways to push the products on to loans customers without considering whether the insurance was necessary or suitable. Furthermore, the FSA ruled that Alliance & Leicester had trained its sale staff to push the PPI products on to personal loans customers who queried the necessity of taking out the cover.

Commenting on the ruling, Margaret Cole, FSA director of enforcement, said: “The failings at Alliance & Leicester are the most serious we have found. This is reflected in the record PPI fine. It is very disappointing that after three years of regulation we are still finding serious problems in PPI sales.” She went on to state that it was essential that consumer interests were protected in the PPI industry and claimed that they should be confident of their lenders extension of free and impartial advice about the products, adding that it was particularly inappropriate for loans providers to actively train staff to promote PPI to those who are sceptical of their necessity.

“[Banks] must change their behaviour where necessary and if they are either unwilling or unable to sell this product in a compliant way, making sure that customers are treated fairly, they should not be selling it at all,” Ms Cole continued. In the announcement, the FSA pointed out that while this is the largest fine imposed for PPI sales failings, the levy would have been higher had the bank not entered into an early settlement of the case. Because it did so, it qualified for a 30 per cent reduction on the total fine of ten million pounds.

Following the announcement, Alliance & Leicester said in a statement that it would contact customers who were sold a PPI product with a personal loan during the investigated period and invite them to air any grievances as to the way that they were treated. It explained that if the bank was found to have acted inappropriately, remedial action will be sought. While the FSA has clamped down on the mis-selling of PPI products, the protection they offer may become increasingly important in a period of economic uncertainty, it has been claimed.

According to David Kuo, head of personal finance at the Motley Fool, the heightened risk of redundancy may make them a more attractive option in the coming months. However, the website pointed to research indicating that many people were looking to cut back on PPI products.

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Inflation Expectations Hit Series High

Thursday, September 11th, 2008

Britains expectation of further inflation in the next 12 months was at a series high in August, new figures from the Bank of England and GfK NOP show.

When asked what they expected the rate of inflation will be in a years time, UK residents questioned in the poll gave a median answer of 4.4 per cent, up from 4.3 per cent in May, which was in turn the highest result recorded in the data series. Meanwhile, the median result for the perceived level of current inflation was 5.4 per cent, compared with the previous series high of 4.9 per cent. Furthermore, fewer people than ever thought that inflation was at about the right level, with 39 per cent saying they believed this to be the case.

As inflation has continued, many consumers may have found that their ability to pay for everyday living costs such as food and petrol have been constrained. This, in turn, could have a wider impact on their ability to meet mortgage or personal loan repayments.

Indeed, when it comes to getting some respite in repayment rates in the next 12 months, 54 per cent expected that interest rates on products such as mortgages and loans would rise in the next year, compared with 48 per cent in May. Meanwhile, ten per cent said they thought the Bank of England would enact an interest rate cut in the next 12 months, down from 12 per cent in May, showing that a declining number of people expect loan and mortgage commitments to lessen.

This is despite the balance of people believing that interest rates should go down rather than up. While nine per cent said they thought higher rates would be best for the economy, 40 per cent said that rates needed to fall.

For those looking to take advantage of current interest rates in anticipation of a future increase, taking out a cheap low-rate loan soon may be of interest.

It appears that fewer people are satisfied with the current job that the Bank of England is doing in terms of limiting inflation, the net satisfaction index - which measures the number of people who are happy minus those who are not - stood at 18 per cent, down four percentage points from May.

Commenting on the findings, Howard Archer, chief UK and European economist at analyst firm Global Insight, told the Times: “This highlights how sharply higher food and energy prices are shaping peoples perception of the overall inflation level. The further rise in inflation expectations in August is obviously not good news for the Bank and could reinforce the monetary policy committees reluctance to cut interest rates in the near term, despite the likelihood of recession.”

For those who have been struggling to keep up with payments for food and other areas of expenditure such as mortgages and fuel costs, taking out a debt consolidation loan may be of interest. Indeed, a recent statement from the Council of Mortgage Lenders has warned that the Bank of England will be unable to reduce interest rates until the “super spike” in inflation subsides.

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