How are you feeling about your financial situation at the moment? Worried? Uncertain? Completely confused by all the financial related news floating around? Well, you are not alone if you’re feeling any of the above. Last week was a stark example of how quickly things can change in the world of finance and when the chiefs of banks, insurance companies and even governments are uncertain about the financial future it can make us all lack confidence in the complicated world of finance.

But, all this uncertainty is part of the problem at the moment. Underneath the events of the credit crunch - investment banks going bust, mortgage rates rising - is a lack of confidence. Because banks are feeling the pinch after millions of loans have been defaulted on, they don’t want to lend to each other in case the loans they make won’t get paid back. As is the case whenever we get scared, it isn’t always the most rational thing to do, but at that time we are all about making sure we don’t get hurt. This drying up of confidence in financial markets, has meant that lending costs between you and your bank will most likely be higher as they are feeling a little nervous about lending. In the coming months it will be interesting to see how banks and governments try and inject some confidence into the markets, to calm these turbulent and uncertain times.

Let’s now review the top money stories of the past week commencing the 22nd September 2008.

Tuesday 23rd September:

Tough outlook in the mortgage market – Statistics from the British Bankers’ Association (BBA) have shown that UK mortgage lending fell to a record low in August, with approvals for house purchases 64% lower than a year ago. The members of the BBA (who account for about two-thirds of mortgage lending in the UK) also reported that only 47, 765 approvals for remortgaging were granted in August which is 28% lower than last year, which is the lowest level since 2001. These figures show that it is particularly difficult for you if you are trying to remortgage or obtain a mortgage for the first time. If you are experiencing difficulties paying your mortgage, and are worried about the consequences this may have then you may want to look at this helpful advice from the Credit Action website.

Thursday 25th September

Superfuels might not be so super –Research from Which? Car has revealed that the so-called “superfuels” which are available at most petrol stations might not be worth the extra money. Which? Car tested three “superfuels” but found that they made little difference to the car’s performance, didn’t save you money in the long run and they didn’t do much to reduce your environmental impact. These results might be worth considering if you are someone who chooses to fill up your car with a “superfuel”. By filling up with standard fuels you could save around £100 a year and in times where your budgets are being squeezed, you might be better of switching back to standard fuels.

Friday 26th September

Economic growth slows –Andrew Sentance, a member of the Monetary Policy Committee (MPC) has said that the economy is teetering on the edge of recession as economic growth continues to slow. This view from a member of the MPC, agrees with the hints of Kate Barker (another member of the MPC) that interest rates may be cut from 5% in November.

OAPs are struggling to make ends meet – Research from Age Concern has shown that 60% of older people are struggling to make ends meet. Their research has also shown that two-thirds of pensioners are cutting back on the amount of gas and electricity they use, half are buying less or “poorer quality” food and 1 in 10 are being forced into debt. Yet at the same time 1.8 million pensioners are failing to claim pension credit worth £1,477 a year, which overall means £2.8bn is going unclaimed a year. If you are one of those older people struggling to make ends meet, or you know someone who is call the Age Concern helpline 0800 009966, to find out what you are entitled to.

Mortgage lenders change rates – Mortgage lenders are reflecting the global economic uncertainty by raising mortgage rates. Many banks are feeling the brunt of volatile markets, which as last week showed, have the power to change overnight, and because of this they are experiencing higher costs of lending to each other. For example banks were lending to each other at a rate of 5.2%, yet yesterday this rate rose to 5.54% and three major lenders have taken the decision today to raise their mortgage rates. Because of the speed at which markets can move, it’s particularly hard for consumers to try and guess what will happen to their mortgage rate. What does seem likely is that most mortgage lenders will be changing their interest rates in the coming weeks, with some following the example of the three major lenders that raised their rates today. However there have been some reports of lenders who are lowering their rates, but be warned- the best deals are available to those with around a 25% deposit, which for most of us is unrealistic.

House prices are falling – The Land Registry has reported that house prices fell by 1.9% in August, which means that the average property now costs £174,493 which is £8,320 less than a year ago, with £3,871 of that drop occurring last month. This report from the Land Registry is now conveying similar findings to the reports of the Nationwide and Halifax who have reported prices to be 11% lower than last year. Property valuation website zoopla.co.uk do still report that prices vary according to which area you live in, but news from the Halifax is that house prices are falling at their fastest rate for 25 years. In recent years many people have placed a huge amount of faith in property prices continuing to go up. These falls show that this certainly isn’t always the case and so making sure we look into other forms of saving and investment is key.

Supermarkets accused of charging too much – The Office of Fair Trading (OFT) is investigating several supermarkets and leading brands over claims that they have colluded on the price of food and health and beauty products. When firms such as supermarkets are said to have “colluded” it means that they have been in talks sharing information. In this instance the information they (allegedly) shared was about prices and if these claims are true then it is likely that supermarkets have been overcharging us, by as much as hundreds of millions of pounds. Consumer Focus, the government body who fight for the rights of consumers, have supported the OFT’s investigations. It may take some time for the truth to come out, but if the claims are true then supermarkets could face fines of more than £300million.

US bail out on hold – Going back to talking about confidence the US Treasury have been discussing all week the plan of spending $700bn (£380bn) to buy up the “bad” loans which are burdening banks, and causing them to fear lending to one another, businesses and consumers. Discussions in the US government are still ongoing and as yet there is no agreement as to whether this plan will go ahead. With confidence in the financial system at a low, it seems likely that these discussions will continue into next week, but with government aware that action needs to be taken soon, I feel quietly confident that next week’s round up will contain a story of how the US will act to intervene in markets to restore some much needed optimism, although it is not clear exactly what shape this will take or, unfortunately, how effective it will be.

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