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Today wasn’t a good day for the UK property market.

We hear from the prediction from Council of Mortgage Lenders (CML) that there will be less mortgage products available in 2008, particularly for the sub prime sector.

We also hear that the number of mortgage approvals fell by 20% in September with the CML making further dire predictions that the growth in property prices will slow to just 1% in 2008, which is a net fall, of course, if you take the effects of inflation into account.

The most concerning statistic that I saw today, though , was that repossessions are predicted to increase by 50% in 2008. When remortgages and secured home loans become more difficult to obtain by those looking for a desperate last measure to safe them from repossession, then this sad statistic looks realistic.

In the finance market, we are already seeing some applicants with high loan to values being rejected by lenders, whereas they would have been welcomed with open arms a few months ago. Others with very poor credit histories are also facing difficulties securing loans at the moment too. It is these people who are at most risk of being repossessed.

So who can feel optimistic about the property market now? Not me.

I wrote about some of the benefits of debt consolidation loans yesterday and promised the follow up on some the reasons why you should think carefully before taking out a secured loan to resolve debt problems. Well here it is!

A quick recap. A debt consolidation loan is a single loan, mostly secured against your home, that replaces unsecured loans such as credit and store cards which charge high interest with one loan with lower interest charges because you are house as security. Total interest charges are less and you can use the loan to pay of all debts and get your life and finances back on track.

It sounds a good idea, and for some it is.

Here are a few things to think about though.

Firstly, you still owe the same amount of money with a debt consolidation loan. Yes, the loan can resolve overdraft situations and their associated costs, and save you money on interest rate charges, but at the end of the day, you are still in debt by the same amount.

Also a secured loan is often taken out over ten years or more, so even though the monthly payments are less, you can actually pay more total interest over the term of the loan.

By taking out a debt consolidation loan which is secured against your property, you now own less of your house. Imagine counting all the bricks in your house and then taking some away, because that it what you have given to the lender when you secure a loan against your house.

A debt consolidation can help debt problems but it can’t cure them. This is an important point. If you overspend on your credit cards because you don’t want to wait to pay for nice things by cash then you have to be careful that you don’t continue with that course of action when a debt consolidation loan clears all your credit cards. If you continue to max out credit cards then not only are you in debt again, but that debt is on top of the consolidation loan debt.

You must change the way you borrow money when debts have been cleared by a consolidation loan. The ideal situation is to clear your credit cards and then cut them up!

For those who can modify their spending behaviours, but have encountered unusal circumstances that have created debt problems, a debt consolidation loan can be the ideal solution to get back on your feet again, remebering that your house is at risk if you fail to meet loan repayments.

However for those with no self control when it comes to spending and borrowing, a debt consolidation loan can drive them deeper into debt difficulties and may result in debt management programs, an IVA or even bankruptcy.

Working in the finance industry I see at first hand the reasons why people want to borrow money, particularly if it is not for arranging mortgages for property purchases.

It’s striking to see that debt consolidation is the most frequent reason that people arrange secured loans - in which they use the equity in their homes as security against a larger loan. Around 60 percent of home loans are for debt consolidation reasons.

There are good reasons for taking out a debt consolidation loan - and also strong reasons why they are not a good idea, which I’ll explain in my next post - and this is why so many people rely on them to bring their finances back onto an even keel.

Many types of unsecured debts attract high interest rates and credit cards can top the league in interest rate charges. APR’s of 20% or more is common. Store cards and store based finance can be bad too. Argos, for example, charge a typical APR of 27.9%. This means that each year you are paying almost a third of your purchase cost in interest charges.

So if you are “maxing out” several credit cards and have a store card or store based finance, you are paying huge amounts in interest charges. if the interest charges start to hurt then it’s easy to become overdrawn and your bank starts geting in on the action by charging you all those unauthorised overdraft fees and associated costs.

In this situation, debts mount and life becomes difficult.

As a secured loan allocates the equity in your house as security, home loan lenders can charge less interest as their risk is reduced - although you risk losing your home if you don’t keep up with loan payments. So a secured loan often costs less than all those credit and store cards.

So by borrowing an amount against your house, you can repay all those credit and store cards and stop the bank form charging exorbitant fees as you put money into your bank account to get it in the black again. Your overall monthly loan payments will be less and you can start to turn your finances around.

It is for these reasons that debt consolidation loans offer an attractive proposition and that is why so many people take them out. There are down sides, though which I’ll explore in my next post.

Sometimes I wonder what the UK Government have against pensions. It is not very long since Gordon Brown raided the pensions piggy bank in a move that is estimated to cost UK pensioners £100 billion.

Now it seems the Government is interfering with pensions again. They are considering reducing the amount that an employer has to pay into a pension scheme when an employee leaves their job.

Currently an employer has to increase the amount it pays into its pension fund for early leavers in line with the retail price index. This ensures that the pension is protected, to some degree, from inflation.

The new proposals mean that employers would only have to pay a maximum contribution of up to 2.5% a year, but as the current retail price index is 3.9%, this means that over time someone who changes their job will see decrease in their pension against inflation.

This sounds like good news to employers who need pay less into their pension schemes for people who have left employment with them. However it reinforces the belief that the Government isn’t interested in supporting company pension schemes. As usual it also seems badly thought through as people made redundant or taking career breaks - maternity leave, for example - would also be affected.

It strikes me that you have to take ownership of your own pension provision, through long term savings and investments as well as with conventional pension plans. This news only re-inforces my belief in this stance.

However if you object to these proposals by the Government then you can particpate in the “e-petition” on the 10 Downing Street web site here.

House prices in the UK could tumble, according to the International Monetary Fund (IMF). They predict that the fall in property values could be as savage as those occurring in the USA.

One major house building company in the USA has seen half its house sales cancelled as buyers flee the market, or are unable to borrow sufficient funds to complete their purchases.

Although the IMF recognises that there is less sub prime lending in the UK, the fact that houses have become so unaffordable is giving them cause for concern.

Within the finance market in the UK, we have seen three mainly sub prime lenders withdraw from the market following the credit squeeze, however most people who want to borrow money still seem to find lenders willing to lend to them, whatever their credit histories.

So I’m not sure if there will be substantial falls in house prices in the UK, particularly as demand remains strong, however when you see reports that renting is now cheaper than buying a property, it makes you think that investing in property is certainly not as attractive as it was.

The Conservative party will scrap the unpopular Home Improvement Packs (Hips) scheme if they are elected at the next election.

In fact they are so determined to reverse this scheme that Grant Shapps MP, the Shadow Housing Minister, is already preparing the Civil Service and existing HIPs businesses for the abolition of Home information packs, if the Conservatives form the next government.

Of course for the HIPs businesses and the home inspectors who have invested in their training and new careers, this spells very bad news indeed. Grant Shapps is warning them to basically “start looking for a new job”!

Most of the contents of home information packs do seem to be redundant, and of little interest to house buyers, however as I reported yesterday, the energy efficiency report is forcing householders to reduce the energy requirements of their homes.

The Conservatives take a strong stance on green issues so surely they must seriously consider keeping the energy efficiency report even if they consign the rest of the contents of the HIP to the bin.

Home information packs (HIP’s) are still not being seen by house sellers and buyers as adding any value to the sales process, however it does seem that they are forcing people to think about improving the energy efficiency of their home.

I must admit that when I was insulating our loft, it did occur to me that having far better insulation would be beneficial should we ever put the property on the market. The thought of an energy efficiency inspector shining his torch around the loft did spring to my mind when I was rolling out the rolls of Space Blanket insulation.

So this element of the HIPs scheme seems good. Not only does better energy efficiency save you money with lower heating bills, but it also reduces your carbon footprint.

It’s the other parts of the home information packs that seem to be far from useful to house buyers and certainly not to house sellers. If buyers are not interested in the contents of the reports, particularly if the local council searches are more than three months old, then it seems crazy that the house seller has to stump up to compile a number of legal documents without real purpose.

So almost three months into the HIPs scheme, they are still not considered useful, other than for the greater awareness of increasing energy efficiency.

I was a bit surprised to learn today that buy to let mortgages are still one of the most buoyant sectors of the mortgage market.

According to the Council of Mortgage Lenders (CML), lending for house purchases and remortgages fell by 11 percent during the last year, however loans for buy to let investments actually increased during the same period.

Commenting on the general state of the mortgage market, Michael Coogan, the CML Director General, said that “affordability clearly remains challenging but there may be some relief for borrowers with expectations of an interest rate cut, perhaps as early as November.”

So if there is an increase rate cut soon, then this is clearly good news for home owners. But as I said before, in my area, at least, new flats do not appear to be taken up by buy to let investors at the moment.

Perhaps the disparity between what the CML survey shows and what is going on around here is because their survey is for the period for the year to August 2007. As this was before the Northern Rock crisis, their findings may not be a good predictor of what will happen to the mortgage market in the coming months.

House prices actually fell in September, according to the latest survey by the Royal Institution of Chartered Surveyors.

It’s interesting to see that not only did the number of people looking to buy a house drop, but that the number of people looking to sell decreased too.

So the housing market is slowing down - no doubt responding to the rises in interest rates earlier this year and to the uncertainty caused by the recent credit crunch problems.

Confidence is everything in high value asset markets such as housing and it seems to be slipping away at the moment.

I personally don’t think that there will be a house price crash, even with affordability at an all time low, but I am expecting a period of stagnation or even a drift downwards in house prices.

In my opinion, the property market must find a new level as it responds to the new market conditions and the as yet unknown impact of Home information packs.

Buying a car is an expensive business so it really pays to take the time to find the best deals. Although it took me one and a half days of negotiations with a number of different suppliers, I have found a deal on a new car that will save me thousands of pounds over the next three years.

I also learnt something important how the car industry works that can be used to your advantage to save thousands, as I’m doing.

I’ve discovered that the car manufacturers work against quarterly targets and strive to obtain as many registrations in each quarter as possible. As the quarter ends, some manufacturers release a number of vehicles to their dealers at hugely discounted prices. This gives the dealers massive opportunities to sell cars at very low prices at the end of the quarter to boost the number of new registered vehicles.

Some of these vehicles are released to car leasing companies who can offer them at massively discounted rates. As the car manufacturers want to sell a number of cars as quickly as possible, they often add to the incentive by releasing vehicles with a high specification.

This means that you can lease a high specification car at absolutely rock bottom prices. These prices are way below what you’d pay for a personal contract purchase plan. You can, in effect, save the amount that you’d pay for the deposit in a PCP plan and often get a superior car as well. You save thousands of pounds!

The slight downside is that the cars released by the manufacturers are already built so they are at a set specification, but as long as you aren’t too fussy with your requirements, you can buy an absolute bargain, which is what I have done.

All you need do is to try and time your purchase for the last few weeks of the quarter and then speak to as many car leasing or car brokers as possible. These incredible bargains get snatched up quickly, but huge discounts are there for you, if you do that bit of work.

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