For several months the Office of Fair Trading (OFT) has been investigating the vast number of Sale and Rent Back schemes that have sprung up as homeowners struggle with their mortgage repayments. In these schemes homeowners sell their home to the Sale and Rent Back firm (normally at a discount price) and then stay on as tenants, renting their home from the firm. The findings of the OFT show that these firms often target those facing repossession- those consumers that are in a particularly vulnerable situation. There are approximately 1,000 Sale and Rent Back firms operating and approximately 50,000 consumers have taken up a Sale and Rent Back offer. The outcome of the OFT’s investigations is that these firms need to be much more tightly regulated, so that vulnerable consumers are not tricked into selling their home for a discount price, and then potentially facing rising renting costs. If you are considering selling your home and then renting it back, remember to always seek advice from organisations such as your local Citizens Advice Bureau (CAB) to make sure this course of action is right for you, as there might be other steps you could take to avoid having to sell.

Let’s now review the top money stories of the past week commencing the 13th October 2008.

Monday 13th October:

£37 billion injected into three banks - Gordon Brown today injected £37 billion into the Royal Bank of Scotland (RBS), HBOS and Lloyds TSB. This injection will mean that the government will have a direct say in how the banks are run and Gordon Brown has already said that the big bonuses that the banks are famous for giving will be scrutinised by the government. This large amount of money means that taxpayers will own approximately 60% of RBS and 40% of the merged HBOS and Lloyds TSB. This means that the three banks have been nationalised in part, although it is not the same situation as was seen with Northern Rock and Bradford and Bingley- the crucial difference is that the remained percentages of the three banks are still owned by private shareholders.

Tuesday 14th October:

Inflation hits 5.2% – The latest figures from the Consumer Price Index (CPI) have shown that inflation reached 5.2% in September – a 16 year high. It is thought that the higher energy bills which we have all been experiencing can partly account for this increase. Yet, it has been estimated that these figures shield the real cost of living, as research from the Institute for Fiscal Studies (IFS) commissioned by Age Concern has shown that the real cost to pensioners has risen by 9%. The research also confirmed that the rising costs of food and fuel have taken a bigger share than before of what the elderly spend their money on. However, analysts have predicted that inflation has reached its peak and will now begin to slow, as the price of oil falls and unemployment rises. This could also see interest rates falling further, although we will need to wait and see before we make any firm predictions.

Wednesday 15th October

Slow growth in the housing market – The Council of Mortgage Lenders (CML) has said that the number of people taking out mortgages is at the lowest level since 1974. First time buyers are finding it especially hard to get onto the property ladder as the average deposit required is now 16% of the value of the property, which is the highest amount required since 1980, and for most of us, that amount of money is out of reach. 26,600 first-time buyers were given loans last month, which may still sound like a lot, but when compared with those given loans last year, its 61% less. Estate agents are now, on average, selling less than one property a week as customers struggle to get mortgages. Housing experts think that house prices will continue to fall, maybe for as long as the next 18 months.

Unemployment rises – The latest unemployment figures were released today, along with a stark warning: that unemployment could reach two million by Christmas and three million by 2010. The official figures showed that the number of people unemployed increased by 164,000 from June to August to reach 1.79 million, the sharpest rise in 17 years. If these predictions come to pass then in 2010, one in 10 of the workforce will be out of work. Rising unemployment is a symptom of slowing economic growth and these figures make the probability of a recession seem even more likely. If you are feeling worried about the possibility of being made unemployed, it is vital that you stay on top of the situation – check out Moneybasics advice “When things go wrong.”

Thursday 16th October

Price of petrol falls – It is good news for those of you who have cars, as overnight several leading supermarkets cut the price of petrol to just under £1 a litre. This is the first time since December last year that petrol has dipped below a £1 a litre. There are also rumours that the prices might fall further as the price of crude oil has fallen dramatically since the summer. In July this year oil reached the dizzy heights of $147 a barrel but now oil has fallen to a 13 month low of just over $70 a barrel. Edmund King, president of the AA, said that motorists should expect lower petrol prices this winter. "It does seem that, led by the supermarkets, we are getting a more realistic pump price, which will ease the pressure on inflation and the economy in general," he said. In a similar vein two airlines announced that they would cut their fuel surcharges. Price cuts are signs that the pressure on inflation (which hit 5.2% on Tuesday) is easing. The price cuts in petrol and in the aviation industry have put pressure on energy firms to cut prices. The drop in the price of oil hasn’t filtered through in the form of cheaper gas and electricity yet, but as you might remember this wasn’t the case when oil prices shot up in the summer as energy prices immediately rose. It will be interesting to see how energy firms respond in the coming weeks, as the pressure grows on them to lower prices.

Northern Rock: repossessions rise – It has been revealed that the mortgage lender Northern Rock has been one of the most aggressive when it comes to repossessions. Northern Rock has taken into possession 4,201 homes in the 3 months to the end of September. This is a 20% increase on the previous three months and 50% more than any other lender. If you are worried about repossession it is vital that you stay on top of the situation and don’t bury your head in the sand. The Consumer Credit Counselling Service (CCCS) can be contacted on 0800 138 1111 or locate your nearest Citizens Advice Bureau (CAB) to discuss how you can do all you can to avoid repossession.

Friday 17th October

Food price rises are slowing – A survey conducted for the BBC by the research group Verdict has revealed that that rate at which food prices have risen is starting to slow. From January to September of this year food prices rose 9%, yet between August and September they increased by 0.6%. This means that although we have all experienced the extra cost of our weekly shop this year; things are looking up as prices are not rising nearly as fast as they have been. Indeed, the prices of meat, fish and fruit and vegetables have even begun to fall.

Prepared for Moneybasics by Joanna Parsley, Advocacy Officer (Credit Action).