This week it was announced that the changes to ISMI (Income Support for Mortgage Interest) will be brought in in January 2009, instead of the proposed date of April 2009. Currently you can claim ISMI if you claim Income Support, Pension Credit or income-based Jobseeker’s Allowance if you are facing problems paying the interest payments on your mortgage. However at the moment ISMI is paid after 39 weeks of unemployment and only on mortgages up to the value of £100,000.

The changes to ISMI are good news as the waiting time has been reduced to 13 weeks and the value of the mortgage has been extended to £175,000, bringing help faster to more people. The fact these changes have been brought forward by three months is also good news as it will hopefully bring relief to those that are feeling burdened by the interest on their mortgage repayments. Although ISMI only helps with the interest, it will provide a welcome respite to those that are really struggling in this tricky financial times. For information on how to claim ISMI contact your local Jobcentre Plus.

Let’s now review the top money stories of the past week commencing the 20th October 2008.

Tuesday 21st October

Manufacturing industry feels the crunch – A survey conducted by the Confederation of British Industry (CBI) has shown that the UK manufacturing industry is feeling the credit crunch in more ways than one. Confidence in the industry has fallen to a 28 year low says the CBI, as 46% of firms revealed they had seen orders fall in the last three months. With a fall in demand many firms are now reducing the amount they produce, which is leading to fear of job losses in the industry. Manufacturing firms are also struggling as many have encountered problems with their lenders, who have reduced overdrafts or raised interest rate charges. According to the CBI these factors have left only 4% of the firms they surveyed feeling more optimistic than three months earlier, against 64% who were feeling less optimistic.

The number of homes sold falls further -The latest figures from HM Revenue and Customs (HMRC) has shown that house sales in September totalled 59,000, which, when compared with the 126,000 sold in September 2007, shows a drop of 53%. These figures confirm that the housing market is still in a depressed state.

Wednesday 22nd October

The Barnsley Building Society is to be taken over - Today it was announced that the Barnsley Building Society is to be taken over by the Yorkshire Building Society. The Barnsley had £10m on deposit in Kaupthing Singer & Friedlander (KSF) and with the Heritable bank, owned by Landsbanki, the failed Icelandic bank. Because the Barnsley had millions on deposit they fear that they will not get that money back as they are not covered by the UK's Financial Services Compensation Scheme. The takeover by the Yorkshire should be completed by the end of the year.

Repossession will be a last resort – Gordon Brown announced today that the pre-action protocol for mortgage arrears which was due to be brought in in the new year has been brought forward and will be put in place from November. This will give those homeowners that fear repossession a greater degree of protection should the case come to court. The protocol states that lenders must prove they have done everything possible to avoid repossession, for example by offering mortgage payment holidays, interest only deals or reduced payments. Figures from the Council of Mortgage Lenders (CML) have shown that there were 18,900 repossessions in the first six months of this year which is an increase of 48% from the first six months of 2007. There are thought to be many more people facing possession claims, which are the earliest stages of the steps to repossession. If you are worried about repossession it is vital that you contact with your lender and discuss your options as well as seeking advice from an independent charitable agency such as the Consumer Credit Counselling Service (CCCS).

Thursday 23rd October

Retail sales slow - The latest figures from the Office for National Statistics (ONS) have revealed that UK retail sales have grown at their slowest annual rate for the last two and a half years. Annual growth on the high street was 3.3%, yet in September it fell to 1.8%. Although this still indicates that the high street is growing, the falling percentage highlights the effect of the credit crunch on consumers, as they choose to spend less. These statistics from the ONS show a slightly less gloomy view than those reported by the British Retail Consortium (BRC) last week, which highlighted a 1.5% drop in sales in September. However many of the big-name retailers have reported a fall in sales.

Mortgage approvals fall - New figures from the British Bankers’ Association (BBA) have revealed that 21,342 mortgages were approved by UK banks in September which is 57% lower than the amount approved in September 2007. The good news is that this September figure shows an increase of 2,080 mortgage approvals by UK banks from August of this year. However, recent figures from the Bank of England- which covers all lenders and not just big banks, shows that mortgage approvals are down by 70% when compared with last year.

Friday 24th October

Petrol falls again - The price of a litre of unleaded petrol has fallen twice this week to reach an 18-month low of 94.4p at many forecourts. On Monday the price of unleaded fell to 97.9p, yet from today many supermarkets are cutting the price further to reach 94.4p – the last time petrol dipped below 95p a litre was in April 2007. This is good news if you rely on your car, and have been noticing that it was costing more and more to fill up your tank.

On the brink of recession - This week there has been much debate as to whether the UK is heading for a recession, or whether the UK is already in recession – a period defined as two or more periods of negative economic growth i.e. when the economy isn’t growing, it’s contracting. Earlier this week the governor of the Bank of England, Mervyn King predicted that the UK will slide into recession in 2009. This view however, was different from that of the Ernst & Young Item Club who said that the UK is already in a recession. Today it was announced by the Office for National Statistics (ONS) that between July and September this year the economy shrank by 0.5%, which is the first time in 16 years that the UK economy has experienced negative growth. So we are not in a recession yet, but if the economy shrinks again between October and December the UK will enter into 2009 in a recession.

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