Lunchtime news Monday 7 July 2023

Almost 150,000 homeowners who took out a mortgage since early 2007 are facing negative equity. According to a CACI survey for the Daily Telegraph, one in eight of the 1.2 million people who bought a property now owe more than the home is worth, and if house prices fall by 20 per cent, up to 360,000 mortgages could be in negative equity by the end of 2008.

Pensioners’ spending on goods and services outstripped inflation during the past 10 years. Increases in the cost of housing, council tax and maintaining property contributed to raising their cost of living by 36 per cent, according to the study by insurer Clerical Medical. A spokesperson for the Department for Work and Pensions said that the government wanted to do more to help pensioners with food and fuel bills, adding that average net incomes for pensioners, after they’ve paid housing costs, have increase by 43 per cent since 1997.

The Bank of England’s monetary policy committee is meeting on Thursday to decide whether to hold interest rates on at 5 per cent. With concerns that the economic downturn is continuing, the Bank is anxious to bring inflation back to its 2 per cent target.

Meanwhile, the government is pocketing an extra £150 million in tax as a result of the worsening in commercial occupancy rates. The new empty building tax, introduced in April, was aimed at stopping property companies from leaving buildings vacant. However, since the tax was imposed, the number of empty buildings has increased by 15 per cent, resulting in the worst downturn for the industry in 15 years. This year, the government is set to raise £950 million from the tax.

And propertyfinder.com believes that dwindling housing stock could lift property prices within the next two years. The housing website says that buyer demand remains strong, and the decline in the number of homes being built is contributing to supply failure. ‘Unless there is a major expansion in building, housing prices can only go in one direction over the long term, and that is upwards,’ said a spokesperson. According to its research, the number of available properties is rapidly declining, and on current trends, supply will disappear altogether by 2011.

And finally, school children will be taught about how to handle money in three-year £11.5 million programme called the financial capability action plan. As part of an initiative led by the Treasury and the Financial Services Authority pupils will be shown how to draw up a budget, and learn how interest and different types of mortgages work. In 2006, the FSA warned that an entire generation was growing up with no savings, no pension and massive debts.