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The number of fresh mortgages approved for house purchase by the big UK banks remained close to a decade-low in January, industry figures revealed yesterday, reinforcing economists’ forecasts of significant falls in house prices this year.

Figures from the British Bankers’ Association showed the number of fresh home-loan approvals in January was down 31% on the same month of 2007 at 44,288.

This was up marginally from the December number of 42,343, but this figure had been the weakest since comparable records began with the formation in September 1997 of the “Major British Banking Groups” constituency following conversion of the larger building societies. The BBA numbers are adjusted for seasonal factors.

Data from the Association of Payment Clearing Services (Apacs) reveal that the UK’s 31.5 million credit card holders spent £32.3 billion in the last three months of 2007 - the second-highest sum on record, beaten only by the final quarter of 2004, when cheap credit card deals were more readily available.

Although some of the increased spending on food in December can be attributed to higher prices, recent figures show that the cost of food and drink has risen by only about 6 per cent in the past year, raising fears that more households are relying on credit to fund essential spending.

Chris Tapp, of Credit Action, a debt charity, said: “As household budgets are squeezed, people may start to use their credit cards to pay for shopping. This is a warning sign. While some people will be taking advantage of special credit card deals to earn points or cash back, many others will be simply using their card to put off paying the bill.”

Car insurance is costing drivers 5% more on average than a year ago, figures have shown.

And it is motorists aged 40-50 who have endured the biggest increases, statistics from Sainsbury Car Insurance found.

While the average insurance premium has gone up 5.24% in the last 12 months, the average rise for drivers aged 40-50 is 7%.

Forget worming pills and a flea collar - a trip to the vet in Britain these days could be about heart surgery, joint replacement, chemotherapy or a host of other cutting-edge procedures.

Britain is one of the few countries in Europe to offer many of these complex treatments: devoted British pet-owners have fuelled a fast-growing insurance market that helps fund care which would otherwise take a big bite out of a bank account.

Research firm Datamonitor has forecast the country’s pet insurance market will grow to almost STG600 million ($A1.28 billion) in 2011 from nearly STG380 million ($A812.14 million) in 2006.

“It wasn’t that big a market a few years ago but now it is growing,” said Kelly Ostler-Coyle, a spokeswoman for the Association of British Insurers. “It is a combination of how much people value their pets and (the fact) that there are more providers in the market.”

At Davies Veterinary Specialists, the largest private clinic of its kind in Europe, a lobby full of barking dogs is evidence of the lengths pet-owners are prepared to go for treatments for their pets, which can easily cost thousands of dollars.

U.K. house prices rose in February for the first time in four months after two interest-rate cuts by the Bank of England encouraged sellers to demand more for their homes, Rightmove Plc said.The average asking price climbed 3.2 percent to 237,856 pounds ($466,000) from January, compared with a 0.8 percent decline the previous month, Britain’s most-used property Web site said today. In London, values increased by 0.9 percent.

“With a couple of interest rate drops,” homeowners seeking to sell “are probably thinking the outlook is more positive,” Miles Shipside, commercial director at Rightmove, said in an interview with Bloomberg Television. “They’ve got the whole year to pitch their asking price. It’s not the return of a boom.”

Other reports have shown the property market slumped after the benchmark interest rate reached a six-year high in 2007 and credit costs rose. Bank of England Governor Mervyn King said last week that further price drops are “possible” as economic growth slows and banks curb loans to consumers.

The average time a property spent on the market rose to 93 days from 78 days a year earlier, Rightmove said. Average stocks per real-estate agent increased to 64 from 54 in February 2007.

Morgan Stanley will cut 1,000 jobs from its mortgage business and shut the UK sub-prime home loan division that it bought just over two years ago amid worsening market conditions.

The American investment bank blamed a “dislocation” in mortgage markets for redundancies in the United States and Britain, which will involve the closure of Advantage Home Loans, its UK mortgage division. About 160 jobs are likely to go at the business based in Ellesmere Port, Cheshire.

Anthony Meola, chief operating officer at Morgan Stanley, said: “Given the dislocation in the mortgage markets, we have restructured our residential mortgage business to ensure we are appropriately positioned for the environment going forward.”

Morgan Stanley bought Advantage at the end of 2005 as a way into the then-lucrative British sub-prime mortgage market. One of the bank’s headline-grabbing deals was a loan aimed at first-time buyers that offered some borrowers seven times their income.

Britons are twice as likely to have a credit card as people in any other country in Western Europe, a report shows.

The average Briton had 1.4 credit cards in their wallet at the end of 2006, twice as many as second-place Norway, where people had an average of just 0.7 of the cards each, according to market analyst Datamonitor.

At the other end of the scale only one in every 16 cards in Germany is a credit card, rising only slightly to one in 10 in Sweden, Denmark and France.

Britons’ extensive use of credit cards has seen them collectively run up £54.93 billion in plastic debt at the end of 2007, according to Bank of England figures.

Datamonitor said people’s approach to credit cards in the UK was different to their counterparts in Europe, with consumers having a more relaxed attitude towards debt.

At the same time, people in the UK are also increasingly taking advantage of 0% introductory offers to shift outstanding balances from one card to another.

Author of the report Andrew Fabricius, said: “The high penetration of credit cards in the UK is due to consumers being happy to pay for goods and services by using credit and enjoy the flexibility of paying for purchases over a longer period of time.”

He said by contrast, consumers in Germany had a far more disciplined attitude towards expenditure, and as a result credit cards were far less popular in the country.

The UK also has the highest number of payment cards overall, with the average Briton having 2.8 credit or debit cards in their wallet at the end of 2006, and the number looks set to increase to an average of three by 2011.

The UK is well ahead of other European countries in terms of payment cards per adult, with even second place Norway lagging considerably behind, with Norwegians having an average of just 2.3 cards each, while people in France have an average of only one payment card per person.

Northwest Consultants said today that income insurance is not a necessity for everyone, but it may be very important for some.

Harry Katz, principal independent financial advisor (IFA) for the firm, suggested that people should think about what would happen to them if they could not work and then decide whether they need income insurance or not.

If, for example, it is likely that a person’s house will be repossessed if they are unable to work then he says income insurance “looks cheap, because contemplating what would happen if you didn’t have it doesn’t bear thinking about”.

However if the person’s partner earns enough to support the household then income insurance may not be something that is needed

Mr Katz advocated “saving money for a rainy day” as the best solution, but said that current spending habits make this an unfeasible solution for most people.

A recent survey from financial services provider Axa found that 20 per cent of Brits currently have income insurance, but high numbers of people in the UK have life insurance policies.

UK House prices fell by £4,000 (2.1%) in January 2008 (Halifax), the average price falling to £191,275, down £9,806 (4.8%) from the August 2007 peak of £201,081.

The Market Oracle forecast as of August 2007 is for a fall in average house prices of 15% over two years to August 2009.

UK interest rates were cut yesterday by a further 0.25% taking interest rates down by 0.5% from its peak of 5.75% (Forecast December 2006), the cuts to date and further anticipated cuts during 2008 are being mistakenly taken by many market commentators, economists and large mortgage banks such as the Halifax to imply that UK House price inflation will be neutral during 2008.

Therefore this article illustrates why house price inflation will start going negative by April 2008.

Egg credit card holders who have had their accounts cancelled were today told the move would not have a detrimental effect on their credit rating.

Credit reference agency Experian said 160,000 customers who have had their cards withdrawn need not be concerned about ending up with a black mark against their name.

It said cancellation of a card by the issuer would be recorded on a credit report as a “settled” account, once any outstanding balance had been cleared.

Any lender checking the customer’s record in future would not see the name of the card issuer, only that the card had been settled.

This is the same as if the cardholder had cancelled the card himself.

James Jones at Experian said: ‘[Lenders] all make their own decisions on whether they want to grant credit or a credit card, based on credit reference agency information and other information provided by applicants.

“In fact, depending on the circumstances of the individual and policies of the lender, it could have a positive effect on your credit rating as a lender might view an application from someone with a lower number of cards as more attractive.”

However, Neil Munroe, external affairs director at credit reference agency Equifax, said the decision by egg was indicative of a general tightening of credit across the UK and consumers could still have problems applying for cards even if their records were perfect.

He added: “Knowing that a consumer will be able repay the credit extended is obviously the number one criteria.

“But I think consumers also need to recognise that lenders need to be able to make money as commercial organisations and, therefore, they will also look at customers from a profitability perspective.”