Church of England Continues to Dabble in Financial Support

Earlier this year, the Church of England hit headlines when the Archbishop of Canterbury spoke out against high-interest payday loans, particularly when given to the poor and vulnerable. Specifically, he vowed to “compete [them] out of existence.” A move into finance might seem unusual for a church, but he advocated that supporting credit unions was a way to help some of the most vulnerable people in difficult times, and therefore insisted that this was the direction the church should take.

 

After an initial flurry of media interest in these surprising and at times controversial comments, things seemed to go quiet. Now, however, it has become clear that this was not because the Church of England had changed its plans or lost interest. Recently, the Church of England website introduced a series of pages providing comprehensive information about credit unions, the services they offer, and why they are an alternative to short-term, high-interest loans that lead many people into debt.

Though the website of a religious body was not, a few months ago, where you would expect to go for financial advice, the information provided is extensive and covers a range of topics based around the issue. This shows that the church remains serious about playing a part in this industry and helping combat personal debt.

Are Credit Unions Really Useful?

Of course, this is now the pertinent question, and the one that decides whether the idea of a Church dabbling in finances is actually likely to succeed. The answer is that, though credit unions are not well-known for many people they could be an extremely useful tool. In particular, they can be useful for the purpose the Archbishop seems most concerned with – averting the need to build up high-interest debts.

A Credit Union will provide many of the same services as banks. They will be run by and for the benefit of the members, with proceeds shared and with the members’ interests put before profit. They also offer loans, which are designed to have reasonable interest rates and to be tailored to match the realistic repayment prospects of the recipient. This makes them a more manageable alternative to the notoriously high rates of payday lenders, and significantly less likely to cause unmanageable debts. With loans below £2000 – the levels that compete with payday lenders – they are considered the best-value option, though above this level they are usually neither better nor worse than standard banks.

UK House Prices Set To Rise Even Further

UK house prices, according to the Halifax’s latest house price survey, have risen by 5.4% in the year to August. This is the highest annual rate since mid 2010. The measure also revealed the average price of a house also went through the £170,000 mark for the first time in half a decade. One thing to note, is that the figures are still very much below the peak of the market in August 2007, when the average price was almost £200,000. The Surveyors explained that housing market activity was up due mostly to an improving economy, low interest rates, and government-backed schemes such as the much-loved Help to Buy. This scheme offers buyers a government-backed loan of up to 20% of the price of the property.

Nationwide reported, earlier this month, said house prices in August were rising at an annual rate of 3.5%, slightly lower than the rate in July. The Nationwide survey gains its figures by comparing the prices in one month with the same month a whole year ago. The Halifax survey, on the other hand, compares a three-month period with the three-month period in the previous year. The Halifax survey has estimated that the average price of a house or flat in the UK is currently £170,231. The last time average house prices were higher than £170,000 was in September 2008.

Mortgage approvals for house purchases, which are often used as an indicator of completed house sales, rose by 10% between the first and second quarters of 2013. In July of this year, there was a landmark 60,600 approvals made. This was the first time the number has exceeded 60,000 since 2008. The rise in market activity, prices, and the Help to Buy scheme, all have increased fears that the UK could be heading for another property bubble. Mark Carney, governor of the Bank of England, said last month that he was “acutely aware” of the risks, and had a “toolkit” of measures he could employ to combat the seemingly unrestrained mortgage lending.

Matthew Pointon, property economist at consultancy Capital Economics, expressed his opinion: “A short-term imbalance between housing demand and the number of homes on the market is driving price increases. But the rise in wholesale interest rates seen over the past few weeks may soon start to feed through to mortgage rates, dampening demand.” Some experts have pointed out signs that mortgage rates may just have bottomed out, with some lenders increasing rates earlier this week.