The host of Christmas past: celebrations cancelled as households look to save money

The cost of living crisis threatens the Christmases of 11m Britons as concerns over energy prices prompt them to cancel or abandon plans.1

According to smart money platform, Credit Karma, nearly a third (30%) of adults have no money set aside to cover the energy costs of the holidays this year as high rates sting families hosting Christmas dinners, throwing parties and enjoying seasonal movies.

The total gas and electricity used for festivities, such as roasting a turkey, listening to music and running Christmas lights is set to add another £24 to the bill2 – that’s on top of increased standing charges, making it a whopping 173% more for gas and 84% higher for electricity than recorded over the holidays last year.3

As such, nearly a quarter (23%) will need to rely on credit, such as personal loans, credit cards and overdrafts to cover Christmas expenses, including food and presents, and the majority (52%) admit they’ll need to limit their energy consumption over the holidays as prices for gas and electricity continue to rise.

Others will need help from friends and family, nearly a quarter (22%) will be reliant on guests chipping in financially, or bringing things with them, such as food or decorations to keep costs down, while others are hoping to attend gatherings hosted by friends and family to avoid the expense of Christmas hosting altogether.4

Ziad El Baba, General Manager at Credit Karma UK commented: “With many households struggling to cover even basic expenses at the moment, plans for Christmas are understandably far from front of mind. For those struggling to cover payments, or worried about how they’ll manage to keep up following the next energy price cap in January, consider keeping an open dialogue with creditors and utilities providers, and taking advantage of any government help you’re entitled to.”

Footnotes
1, Opinium estimates that there are 52.6 million adults in the UK. 93% report that they celebrate Christmas (52.6 x 0.93 = 48.92). Of these 23% will be unable to host Christmas this year due to rising expenses (48.92 x 0.23 = 11.25 million adults)
2, Based on October prices from the Centre of Sustainable Energy and expected use of each item per household
3, According to the Commons Library Briefing on Domestic Energy Prices (November 2022), Page 20
4, 25% will only attend celebrations hosted by friends and family over Christmas to keep costs down at home. 

House prices: first glimpse of mini-budget carnage, with more horror to come

House prices fell 1.4% in a month – the biggest monthly fall since June 2020. They’re up 4.4% in the year to October – down from 7.2% in September. Nationwide puts the average house price at £263,788.

Someone with a 20% deposit, borrowing 4 times their income, in London and the South East, would need to be in the top 10% of earners to afford a typical first-time buyer property. In the South West they’d need to be in the top 20%.

More people have been priced out since the onset of the pandemic. In the East Midlands, West Midlands and East Anglia they would have to be in the top 30% of earners – before the pandemic they would have needed to be in the top 40%.

Nationwide has released its house price index for November: Annual house price growth slows sharply in November.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “The carnage wrought by the mini-budget may have tipped the property market over the edge. The delay in sales being completed means this is just a first glimpse of the horrors that may lie ahead, and it’s looking like the next few months could be something of a nightmare. Prices fell 1.4% in November, their biggest monthly drop in two and a half years.

“Kwasi Kwarteng’s ill-fated budget, caused a horrible spike in mortgage rates, which spooked the market, and buyers deserted in droves. Zoopla figures have shown that demand plummeted 44% in the following months.

“We’re not seeing anything like the full impact of this in the figures, because on average it takes around three months to complete a sale, so it’s likely to include only around a week of sales agreed after mortgage chaos was unleashed. Even at that point, sales being settled were highly likely to have been funded by mortgages agreed well before everything kicked off, so all we’re seeing is the effect of a sudden and possibly catastrophic loss of confidence.

“In theory, buyers always knew rates would rise, because they were already on their way up. However, the speed and scale of the hikes made them all-too aware of the risk. Meanwhile, fear spread that prices could be on their way down before long.

“Affordability was being stretched to the limit, with only the top 10% of earners in London able to buy with a 20% deposit and a mortgage worth four times their salary. So buyers started to ask themselves why they’d push themselves, and risk being pressed even harder when it came to remortgage, only to risk seeing the value of their property fall away next year.

“In the intervening weeks, mortgage rates have backed off, and are expected to fall further, but the damage may well have been done. Bank of England figures show that mortgage approvals are down – a sure sign of subdued activity – and assuming we get confirmation that we’re in a recession, it could be the nail in the coffin for market confidence.”

Money means more than health and family to over-50s

Having enough money is more important to the majority of the UK’s over-50s than their health or spending time with their families, a new survey has revealed.

More than half (56 per cent) of more than 2,000 50-90 year-old Britons chose financial stability and maintaining their standard of living as the most important priority in their lives.

Spending time with family came second – with 52 per cent making it their most important concern – while 50 per cent prioritised maintaining and improving their health and almost a third (32 per cent) put enjoying their retirement at the top of their priority list.

The responses come from the LiveMore Barometer, a comprehensive survey of the priorities of the UK’s 50-90+ year-olds by LiveMore, the mortgage lender for the over-50s.

Those surveyed were asked to tick three of the most important priorities in their personal lives from a list which included financial stability/maintaining my standard of living, family life/spending more time with my family, maintaining/improving my health, enjoying retirement, helping family financially, holidays/travel, hobbies, personal development and work opportunities.

The responses also challenged the perception that parents are happy to run “the bank of mum and dad” – less than a quarter (22 per cent) of those surveyed put helping their families with money as their main concern. And even fewer (17 per cent) prioritised holidays or hobbies (13 per cent).

However, the picture differed across the UK. In the West Midlands, Northern Ireland and Scotland, the majority of over-50s did place spending time with their families above financial security.

Those in the South East were most likely to put financial stability first, with 61 per cent doing so. They were also the least likely to help family with money, with just 19 per cent making it their top priority. Nor were the findings consistent with age – more 80-89 year-olds put family life above financial security and 70-79 year-olds made enjoying retirement their top priority.

LiveMore’s head of intermediary sales Phil Quinn said: “The findings of our survey reveal that financial stability is the top priority for people over 50, coming before their health or spending time with their families.

“However, it might be useful for brokers in different parts of the UK to know that this is not always the case. For example, those living in the West Midlands, Northern Ireland and Scotland put family first over financial security as do more 80-89 year-olds.

“As LiveMore lends specifically to the over 50s we want to understand their needs and priorities so we can tailor our products to this growing but underserved sector of the market.”

IncomeMax and Vanquis partner to launch messenger service helping customers in financial difficulty maximise their income

IncomeMax has partnered with Vanquis, part of PFG, to launch a new online platform to offer customers digital access to one-to-one, expert advice to help maximise their income. The service, IncomeMax Messenger, has been developed in response to the growing preference of customers to have conversations digitally about sensitive financial topics, such as debt, rather than over the phone.

UK credit provider Vanquis has been working with IncomeMax since 2015 to help vulnerable customers take control of their finances and maximise their household income.

Vanquis refers customers in financial difficulty to IncomeMax for an assessment of their financial and personal circumstances, to identify any unclaimed benefits, grants and financial support for household bills. They provide one-to-one support, helping people overcome tricky obstacles like phone calls to government departments, claim forms and incorrect benefit decisions.

To date, the partnership has found £1.3m in additional income for nearly 800 Vanquis customers. Among those who have been referred to the service, nine in 10 have gained extra income as a result.

Fiona Anderson, Managing Director of Cards at Vanquis comments: “Our long-standing partnership with IncomeMax has provided invaluable support for our customers, helping to identify unclaimed income, which is an important lifeline for many.

“IncomeMax is committed to innovation and continually evolving the way they work with customers. We’re proud to be part of this journey, by helping to fund IncomeMax Messenger and by being their launch partner for this essential service.

“We feel confident in entrusting our customers to a team who truly care about what they do, providing empathetic, practical support and advice.  IncomeMax put people at the heart of what they do and in doing so reflect our own purpose of helping to put people on the path to a better everyday life.”

Lee Healey, Founder and CEO of IncomeMax added: “We’re incredibly grateful for the ongoing support from Vanquis. At a time when the cost of living crisis is having a big impact on vulnerable customers, this funding has enabled us to build a new digital channel to help even more customers access the support they need. We’ve seen the transition to digital accelerate, with all sectors having to adapt the way they interact with customers. Through our IncomeMax Messenger digital service we hope to be able to help even more customers and the funding we’ve received from Vanquis will support not only their own customers but will enable us to offer this platform to other partners to support their own financially vulnerable customers at this critical time.”

This year, IncomeMax has, with support from Vanquis, also built a financial support self-help checklist of tools and resources to help more people find additional income and support without a referral. This has been updated to include valuable sign-posting to cost of living advice.

Households feeling pinch as consumer credit remains supressed – BoE

“Consumer credit volumes remained suppressed in October with the £800m of new borrowing well below the previous six-month average of £1.3 billion.

“This looks to be a combination both of households feeling the pinch from the October energy price cap and a sharp increase in effective rates on personal loans and credit cards. As we enter the Christmas period, all eyes will be on how consumers are managing their finances during the festive celebrations.

“It will become increasingly important that consumers with expensive debt look to consolidate to cheaper options as they reach the end of shortening interest-free periods or face higher interest repayments on credit card debt built up over the year.

“Given the rising cost of borrowing, it is vital that everybody accessing the consumer credit sector is exercising best practise. Shopping around and taking advantage of the latest technologies means would-be borrowers can find the best rates available to them without fear of being rejected and damaging their credit score.”

Emma Steeley, CEO at Freedom Finance

There are still opportunities in the market – comment on the BoE money & credit figures for October

“A fall in mortgage approvals and an increase in consumer credit shows that housing has fallen down the list of priorities as the rising cost of living impacts on a very real level.  However, there are still opportunities in the market as we can see by the increase in remortgaging.

“As the year comes to a close, mortgage lenders will not only need to reach set targets but also keep a close eye on borrowers that may be starting to struggle. Communication will be key in the coming months and lenders will need to have all their ducks in a row to ensure that their systems are set up to deal with any increase in missed payments or defaults.  That said, we are now in the quietest period of the year for house buying, so who knows what the new year will bring?  Perhaps the only reason that housing has fallen down the list of priorities is because we are getting that much closer to Christmas?”

Richard Pike, chief sales and marketing officer at Phoebus Software

The Money Stats – November 2022 – Consumers Turn Away From Traditional Credit As Interest Rates Continue to Climb

While evidence shows that many people are turning to credit in order to pay for essentials, concerns are growing that consumers may be diversifying which forms of credit they turn to, according to the November 2022 Money Statistics, produced by The Money Charity.

As costs and interest rates continue to climb, there are many signs and reports of UK households having to turn to credit and borrowing in order to meet essential costs and cover the basic costs of living. However, recent figures suggest people are not solely turning to the route of accessing ‘typical’ credit. In September 2022, consumer credit lending to individuals, decreased by £93 million, the first time that this figure has fallen since December 2021.

However, widespread reports have pointed to consumer groups needing to borrow to cover their costs of their essential bills. For example, of the one in four students who reported taking on new debt in response to living cost increases, 66% said their student loan was not enough on which to live. Meanwhile between January and June 2022, £5.6 billion was spent on Buy Now Pay Later (BNPL) services, a total not reached in 2021 until October. 42% of people using BNPL have reported having to borrow from other sources to make repayments.

The surprise fall in traditional credit lending could therefore indicate consumers are looking at different places to borrow and away from the most common, highest rates of interest. In October 2022, the average interest rate on credit card lending bearing interest was 21.85%. In comparison, the average APR for a £5,000 personal loan was 9.19%. For a £10,000 loan it was 5.17%, while the average rate for an overdraft was 35.28%, making credit cards and overdrafts two of the most expensive forms of credit. In November, the Bank of England raised the base rate by 0.75% to 3%, the seventh increase since December 2021 as an attempted measure for controlling inflation. As the base rate rises, so too do all other interest rates, meaning consumers might be pressed towards ‘shopping around’ more for their borrowing needs.

This is especially true for more financially vulnerable people, such as the 32% of families with no savings who have reported that they would need to turn to friends and family if faced with an unexpected expense, compared to just 3% for families with some savings. Further evidence can be seen by recent StepChange figures, stating that the percentage of their clients behind on personal loans, overdrafts and short-term credit or payday loans all decreased in September 2022, compared to August, by 44%, 32% and 9% respectively.

Michelle Highman, Chief Executive of The Money Charity says: “This month’s headline numbers are both unexpected and surprising. There can be little denying that many people right across the UK are truly struggling to make ends meet. In that scenario, it would usually be expected that more people would be turning to the most common forms of borrowing and credit, but these areas instead falling suggests people are looking elsewhere.

“Shopping around is not in itself a problem. In fact, it’s one of the areas we encourage people to be aware of and alive to in our Financial Wellbeing Workshops and Webinars. If it indicates households getting the best value for their financial situation, that’s a good thing. Similarly, if friends and family are willing, able and comfortable to support each other, this can also meet a need well. The concern though, is more what we can’t see; people using unregulated and/or unsafe borrowing options, or simply unsustainable options. If that is a route people are finding themselves pushed down, we would urge them to seek out independent, reliable and free advice and support as soon as possible.”

Other Striking Numbers from the November Money Statistics: 

  • The number of people unemployed in the UK fell by 625 per day in the twelve months to August 2022. (P20.)
  • The inflation rate in the year to October 2022 was 1%. (P19.)
  • Unleaded petrol fell by 6 pence per litre in October 2022. (P14.)

GetAgent Ranked 36th Fastest Growing UK Tech Company

Estate agent comparison site, GetAgent.co.uk, has been ranked amongst the UK’s 50 fastest growing technology companies in the prestigious 2022 Deloitte UK Technology Fast 50, flying the flag for the UK PropTech sector.

Deloitte’s UK Technology Fast 50 recognises the tech companies that are going from strength to strength based on revenue growth over the last four years, with GetAgent qualifying with an impressive 1,054 per cent increase during this time period.

The beauty of Deloitte’s Tech Fast 50 Awards is that they are completely objective, with their rankings backed purely by data, recognising those that are truly worthy based on their current trajectory.

This transparency is a sentiment very much shared by GetAgent, not only when it comes to highlighting the best estate agents in any given area of the UK property sector based on market performance, but also via their industry leading, data-led research into the health of the UK property market.

The company regularly provides unique insight on selling times, asking price achieved, buyer demand levels and the average fee charged by estate agents and remains one of the leading and most established forces within PropTech.

Speaking about their latest accolade, GetAgent CEO Colby Short said: “Refining our core product, streamlining processes and implementing improvements across the entire company have contributed to our rapid growth over the past four years.”

He said, “Being recognised as one of the fastest-growing technology companies in the UK is a huge milestone for GetAgent and one we’re incredibly proud of.

“We are extremely grateful to our amazing staff who work hard to help stressed-out homesellers and the country’s best estate agents; our investors, the 7,500 agents who work with us, and finally the >550,000 vendors who have used GetAgent to find the best estate agents in their area.”

Duncan Down, the lead partner for the Deloitte UK Technology Fast 50 programme, said: “The exceptional growth of this year’s Fast 50 is a marker of the ongoing strength and resilience of the UK’s technology industry, which continues to thrive despite considerable headwinds. “Deloitte’s 2022 Fast 50 awards showcase the talent and innovation in the UK’s technology industry today.

“The Deloitte UK Technology Fast 50 awards give businesses the opportunity to be recognised and rewarded for their contributions to the UK technology sector and achievements over the last four years.

“The 50 fastest growing UK technology companies, as ranked by Deloitte, generated around £992mn in total annual revenues in the year 2021/22 and employed more than 16,300 people. The Deloitte UK Technology Fast 50 recorded an average three-year growth rate of 4,568 per cent.”

Home sellers forced to slash prices as buyers head for the hills: Zoopla

11% of homes have had their price cut by more than 5% since September, and one in four (25%)  have had some sort of cut over this period. Demand has plummeted 44% since the mini-budget, and sales are down 28% in a year.

House price growth slowed to 7.8%. Prices are up 0.7% in a quarter – the lowest quarterly rise since February 2020. The average sale is 3% below the asking price.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “Hikes in mortgage rates mean runaway house prices have given way to runaway buyers. Demand has plummeted by almost half since the mini-budget, and one in four sellers are being forced to cut their prices. And this is just the beginning.

“On the face of it, house price growth is still 7.8% over the past year, which seems relatively healthy, and Zoopla says it’s not seeing price falls in any area. However, over the past three months, prices are up less than 1%, and all the signs point to a market that’s starting to struggle.

“Demand has collapsed since the mini-budget unleashed chaos on the mortgage market. Meanwhile sales are down – in some areas as much as 50%. Even once a sale is agreed, the proportion of sales that fall apart during the buying process is rising – and has hit 15%.

“One in four sellers have had to cut their asking price, and increasingly they’re having to accept an offer. For most of the past two years, sellers have on average achieved their asking prices. However, in recent months, a gap has opened up, so they’re having to accept offers 3% below the asking price. Zoopla estimates that when this discount hits 5%-7%, prices will be falling – and that can’t be far off now.

“There’s not an awful lot to be cheerful about in the property market at the moment, but there is one bright spot. Mortgage rates are coming down, and according to Moneyfacts, five-year fixed rates have dipped below 6%. As times get tougher, and the threat of more rate rises starts to fade, we may well see these rates come down further. It’s highly unlikely to be enough to turn the market around, and see buyers return once we’re deeper into the recession. However, more manageable rates may well mean that the market correction isn’t as dire as some analysts had predicted. Zoopla is putting its money on a 5% drop, reflecting a number of analysts forecasting single-digit falls by the end of next year.”

30- and 40-somethings in the danger zone – especially after mortgage hikes

81% of people in their 30s and 40s are worried about the cost of living – compared with 76% overall. 51% of them are spending less on food and essentials – compared with 41% overall. 42% of them couldn’t afford a £850 bill out of the blue (30% overall), 30% have had to borrow more (20% overall),  and 22% are using credit to manage rising prices (14% overall).

They are twice as likely to be behind on energy bills as the overall figure (8% compared to 4%). 53% of people in their 30s and 40s are worried about higher mortgage rates (48% overall).

The ONS released its public opinions and social trends survey today: Public opinions and social trends, Great Britain – Office for National Statistics

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “People in their 30s and 40s are barely hanging on by their fingertips. Assaulted on all sides by the cost of living crisis and the pressures of the squeezed middle years, their finances are being forced over the edge. They’re more likely to worry about rising costs, be cutting back in a desperate effort to make ends meet, and still to be falling short. Meanwhile, the threat of mortgage rates leaves more than half of them in a cold sweat.

“These are often the most expensive years of our lives. The average age to buy your first home and to have a child is 30, so those at the younger end of the spectrum might be wading through all the associated costs of doing up their first property, and caring for young children. The horrendous cost of childcare for the first five years would throw anyone’s finances into disarray.

“Even further up the age spectrum, many families will make compromises around work to care for children outside of school times. Meanwhile, there may be more mouths to feed, growing kids to clothe, and all the associated expenses of suddenly finding your pay packet split infinitely more ways. As you get into your 40s, there’s an increasing likelihood that your own parents need support too – so you could fall into the sandwich caring generation, where your income is spread even thinner.

“It means this group are more worried by rising prices, they’re more likely to have had to borrow more than this time last year, more than half of them have had to cut back on food and non-essentials, and they’re twice as likely to be behind on energy bills.

“They also have less money set aside for the kinds of emergencies that are even more likely when you have so many people depending on you. Some 42% couldn’t afford a £850 bill out of the blue. This is only the second time this figure has breached 40% since the ONS started asking the question this time last year – the last time was during the expensive summer holidays.

“Of those with a mortgage, they’re more likely than any other age group to have a fixed rate (82% compared to 70% overall). However, they’re also more likely to be worried about rising rates: 53% of them are concerned compared to 48% overall. This may well be because plenty of them have bought relatively recently. They may have snapped up a first home, or traded up after having a family, and bought at a time when property prices were sky high. Those who bought during the rush of the past few years may be sitting on an incredibly low mortgage rate, so they’re eying today’s higher rates with mounting dread.”