Tiscali Press Release

Research by Tiscali's money channel finds that 21% of UK consumers pay monthly mortgage repayments through a combination of loans, credit cards and overdrafts

Tiscali, the broadband telephone and media company today releases new research conducted through its Money Channel revealing that UK consumers are facing a daily battle to stay afloat and out of negative equity.

Tiscali's Personal Finance Barometer reveals the fragile predicament faced by millions of homeowners nationwide, with 40% of homeowners stating that their mortgage payments had gone up in the last 12 months and over half (59%) said a monthly mortgage rise of just £200 would make it impossible for them to keep up with repayments. This figure is particularly worrying,given that an interest rate increase of only 1% from 5.5% to 6.5% on a £250,000 mortgage would mean a £210 increase in monthly payments (*calculated using Tiscali's mortgage rate repayment calculator).

The research also analysed borrowing, savings and pensions and the results suggest many consumers are barely coping with the immediate threat of increasing costs and are struggling to put money away for the longer term.

Borrowing Increases & Bank Charges Bite

Faced with rising bank charges and increasing food and fuel prices, many consumers felt they had no option but to borrow further amounts to keep up with their mortgage repayments. Nearly a quarter (21%) of respondents said that they were getting themselves further into debt by paying monthly mortgage repayments through a combination of loans, credit cards or their overdraft. With a predicted fall in house prices of up to 10% this year, a number of homeowners will not only find themselves further in debt but also locked into negative equity, while 37% said that they did not know what rate of interest they were paying on their mortgage.

Half of consumers (48%) said they have had to pay bank charges over the past year and over a third (36%) had incurred credit card charges with 13% suffering late payment fees.

No Room for Savings

The Barometer suggests that the current squeeze on the economy is forcing UK consumers to restrict the amount they are able to save. Nearly half (41%) of consumers said that the amount that they saved had decreased over the past 12 months. Only 4% of respondents said that they saved 25% of their monthly salary while the largest group (36%) said that they were currently saving less than £100 a month. The key reason for such meagre savings being low interest rates, 23% said their savings rate had gone down over the past 12 months discouraging additional investment.

Pensions Suffer from the Crunch

31% of respondents said that they did not have a pension. A significant factor being that 42% said their employer did not offer a contributory pension scheme.

Those that do have pensions seem to have little awareness of the value. 47% admitted that they never checked what their pension is worth, with only one in four (27%) saying that they knew its current value. When asked if they were worried about their pension, 19% said that they would deal with old age when it happens.

Alex Hole, online media director, Tiscali UK says, "Clearly the credit crunch has had a damaging effect on the confidence of UK consumers. Today it is easier and faster than ever to get advice and compare and switch financial products online. Despite this, uninformed attitudes are leaving a number of consumers vulnerable to unnecessary bank and credit card charges and ultimately further debt."

*www.tiscali.co.uk/money/calculators/mortgagerates

Calculating The Cost

The Money Channel www.tiscali.co.uk/money on Tiscali's award winning portal offers consumers a wide range of information, advice and tools to help them manage their finances more effectively. Tools on the site include The Bank Interest Calculator, enabling consumers to work out the net interest and related tax deduction on their bank accounts as required for self assessment; The Debt Consolidation Calculator to help work out how to reduce monthly outgoings by consolidating existing debts and The Savings Calculator, to work out how personal savings are likely to mature over time.

Research methodology

The survey commissioned by Tiscali polled a representative sample of 1100 UK adults who visited the Tiscali Money Portal in April 2008.