With the property market woes, ever increasing cost of living and various financial institutions going under, these are clearly troubled times aren’t they?

If you need any more evidence of this, then look no further than this story, which we felt compelled to share with you all, as it reflects the desperate state of the US property market...and we could see similar things happening here. 

In Akron in Ohio, a 90 year old woman shot herself in the chest as sheriff’s deputies attempted to evict her from the home where she’s lived for almost 40 years. 

Addie Polk, became the sole owner of her home when her husband died in 1995. Two years later, she took out a mortgage loan, which she refinanced several times. When she defaulted on the loan, her lender, Countrywide Home Loans, filed for foreclosure.  The US mortgage firm Fannie Mae bought the house at a sheriff’s auction, and sought to have her evicted.

When sheriff's deputies came to escort the pensioner from her home where she had lived for nearly 40 years last Wednesday, they heard shots from the first floor.

A neighbour found her lying on her side on her bed, a gun beside her, after shooting herself in the chest. She is now recovering in hospital.

Robert Dillon, the neighbour who discovered her after she shot herself, said: "She said it was a crazy thing to do, now that she's had time to think about it."

Local police said Mrs Polk had ignored multiple notices and letters, as well as a foreclosure action filed in court.

Home foreclosure rates are at record levels in the US, in many cases because buyers with adjustable interest rates could not keep up with sharp increases in monthly payments.

There has been a spate of foreclosure-related suicides, including a retired couple in Oregon and a 53-year-old woman in Massachusetts. The latter faxed her mortgage company: "By the time you foreclose on my house, I'll be dead”.

In the wake of Mrs. Polk’s apparent attempted suicide, Fannie Mae has agreed to forgive the mortgage, dismiss its foreclosure action, and allow Mrs. Polk to return home when she recovers from her injuries. 

"Just given the circumstances, we think it's appropriate. It certainly made our radar screen," a spokesman said.

That’s good news for Mrs. Polk.  But what about the other millions of homeowners who fell prey to predatory mortgage lenders in the USA and are now struggling to meet mortgage payments they can’t afford? 

The vast majority of those people won’t attempt suicide and their individual stories won’t make the news, but that doesn’t mean they aren’t every bit as desperate as Mrs. Polk was.

Her story helps put a human face on the victims of the predatory lending practices that created the whole subprime mortgage mess, and which has had a huge effect on our economy.  It should be required reading for all of those clever, greedy mortgage lenders who thought they had found an ideal way to make a quick buck.

One thing is clear; when businesses act unethically, ordinary people suffer for it.

The question is, with the way things are going, will we see these sort of sad events happening here?

We all know that the media are fond of doom and gloom stories.

Apparently it helps them to sell papers because we reputedly prefer bad news to good!

But one of the doom and gloom stories that has appeared repeatedly this year is how much house prices are dropping by.  The latest figures from the Land Registry say that house prices are now 4.8% lower than they were this time last year.  Much more attention, however, has been paid to recent figures published by Halifax that suggest they are down even more, as much as 10.9%.

But is your house really worth that much less?

Here's an interesting opinion on the matter, by our Mortgage Matron's friend in the property business...

There are some circumstances that have not been discussed much in relation to house prices.  To read the press, you'd think that it's all over for the housing market, and that the general uncertainty over the stability of the banking system means that the only way is down. 

But like the stock market, or indeed any market, what people say—and how many people believe them—can have the effect of a self fulfilling prophecy.  Let's take a look at the situation from three different angles which, as far as I can see, not many people are currently discussing. 

1. The only people selling at the moment are those who really have to.

And by the very nature of the fact that they have to sell right now, they are more willing to lower the price of their house than maybe you or I who are not forced to sell in a hurry.

There is an argument that if the various media had not gone on and on about the fact that they thought house prices were going to fall this year, that actually they may not have fallen by that much!

It seems that all of us are very influenced by what the media say.  As early as September of last year there were reports that mortgages were going to be really hard to get and therefore people weren’t going to be able to sell their house and buy a new one with a new mortgage.  The reports said that interest rates would ‘soar’ and that ‘house prices were going to plummet’.

2. The only people buying are those that can't wait.

Of course if you were waiting to buy a house, the predictions of falling house prices were great to begin with—especially for first time buyers especially, many of whom were delighted by the thought of actually being able to get on the housing ladder.

But as talk of the downturn continued, buyers with no time pressure began to think: “Let’s not buy a house yet, let’s wait a bit and see if house prices really do come down”.

As people begin to cotton on to the strategy of waiting for the market to bottom out, this takes a huge number of buyers out of the market.  So all of a sudden there is less demand for house purchases.  Fewer people trying to buy each house means that the seller, instead of seeing people compete to meet or exceed the asking price, instead sees people wanting to pay less—so house prices start coming down.

This then becomes a self fulfilling prophecy: those who are still buying think they are on to a good thing; the media says that prices are coming down so you make the most of it and put in lower and lower offers.

3. The third angle to this is that most sellers want top dollar for their houses and because they think or see house prices are coming down, they decide not to put their house on the market yet

This brings me back to where we started—the people who don’t have to sell their houses, who would have done a year ago because they want to find a bigger property or just fancied a change, now aren’t selling. The people selling are the people who are relocating or have just got divorced or have other life circumstances that mean they have to sell now.  These people are forced to take the lower offers because they cannot afford to wait until things get better.

So the picture we have of current house sale prices are nearly all from those people who have to sell.  No, the figures are not lying—but they are also not representative of the population as a whole.

As things pick up—as they surely must do, be it in a year or three years—look to see a surge of houses going on the market as everyone who would ideally like to move, but is holding off doing so, puts their houses back on the market.

(And as this happens, watch the media trumpet the news and the pendulum swing back again!)

How easy is it to get decent financial guidance these days?

We’ve all noticed how quickly money products are changing.  At Money Hospital, it’s amazing how much there is to keep up with.  This year’s volatile markets have led to a bewildering array of changes from one month to the next.

No wonder it’s hard to know what to do for the best at any one time!

That’s why the boss of Aegon UK, a large Edinburgh-based financial services company, this week challenged Gordon Brown’s government to make financial advice more available for the British public, as part of its response to the current turbulence in the market.

Otto Thoresen, speaking at the Labour Party conference, told delegates that the problem is we simply don’t know where to look for help:

“People from all walks of life are looking for advice, help and guidance to calm their fears and address their concerns.

It’s time to make wider access to professional financial advice a key part of the government’s response to the current crisis.”

The government seems to agree with him.  Earlier this year it approved a National Money Guidance Service, which should be trialled by the FSA in certain parts of the country next year.

If this service goes ahead, it should:

• provide free financial guidance to all kinds of people and families
• help people know where to go to get impartial help on all their money issues
• be accessible through a variety of channels: the Internet, over the phone, and with face-to-face advice.

Yvette Cooper, Chief Secretary to the Treasury explained:

“It could be working out credit card repayments, budgeting for a new baby, or planning for retirement - people have to make serious financial decisions at every stage of their lives. Getting some free, independent and trusted guidance can make all the difference. It could also help prevent people getting ripped off by loan sharks or caught out by the small print on a dodgy financial deal.”

“The Government already offers free debt advice for those with serious financial problems. But plenty of ordinary families could also do with some free money guidance at many points in their lives.”

Now from our point of view this looks like good news if the trial proves successful.  Because hopefully, it won't just mean help in a crisis – but will lead to better planning, budgeting and investing for millions of normal people.

However, it won't extend to particular product advice.  For example: government-sponsored advice won't go as far as recommending you a particular mortgage, for example, or giving you a rundown of the market leading credit cards.  That's something you'd still need to use a professional adviser for.

• Get unbiased, FSA-qualified advice choosing a mortgage
• Get debt advice
• Get a Credit Card health check

But with money worries overtaking a lot of people right now, the new service is clearly aimed at helping people avoid financial hot water in the future, through better planning (and knowing where to turn if in doubt).  What do you think?

In our email newsletter last Friday, we published a money-saving suggestion involving calling the Tesco Clubcard helpline for money-off vouchers.

Sorry to miss out some vital details in the instructions!  We should have been much more specific...

Here is how you take up the offer:

• Vouchers are sent out to you when you register for one of Tesco's Affinity Clubs—e.g. Food Club.  There is also a Baby & Toddler club, Healthy Living, and Wine Club.
• First, you need to have a Clubcard—if you don't already, it takes just minutes to pick one up in store.  Then when you call the Clubcard helpline number, press "2" to register with the affinity club of your choice.
• They then send out to you an introduction in the post with money off vouchers—for food, or for whichever other category you chose.

Hope that helps, and sorry for any phone calls that ended in confusion.  We're trying to save you money, not drive you crazy :).  Thanks to Emily who wrote in to point it out.

It seems like the summer is officially over, given how the weather has performed recently.

Unsurprisingly, when the rain comes down, so does the volume of retail sales.

These have dropped almost across the board last month due to the bad weather and our low consumer confidence, while the property market remains in the doldrums

The British Retail Consortium (BRC) reported that sales fell 1% last month compared with August last year on a like-for-like basis. They said this was due to low confidence and increasing demands on on our household budgets (see food prices picture below).

This meant that we looked for value and planned our spending carefully to take advantage of the widespread promotions and discounts.

Stephen Robertson, the BRC's director general said:

"Miserable weather washed out hopes of a summer boost for retailers. Annual like-for-like sales fell in five of the last six months, the first time this has happened since 2005. Even food sales growth slowed. Footwear was the only other sector where sales rose, boosted by children's shoe sales."

Food and drink was the only sector to show significant sales growth, despite the chilly weather hitting salad and barbecue products. Food retailers reported higher sales of cheaper meat products such as mince and stewing meats.

In a bid to attract consumers who have been tightening belts in the face of rising inflation there was heavy discounting across both clothing and footwear stores over the month.

Howard Archer, economist at Global Insight, was not surprised by the figures saying:

"Consumers are being hit by a myriad of factors, notably muted disposable income growth, a serious squeeze on purchasing power coming from sharply rising utility bills and elevated food prices, tight credit conditions, higher mortgage repayments, sharply falling house prices, higher debt levels and rising unemployment."

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Are you struggling with debt? You should also speak free of charge to a debt adviser who can provide you with advice and solutions to help you resolve your debt and credit problems.

In addition there is more gloomy news from the latest Royal Institution of Chartered Surveyors' (RICS) monthly report on the housing market. (download pdf)

It shows the number of transactions has hit its lowest level since the survey began in 1978. Mortgage approvals are down more than 70% in the past year.

RICs spokesman, Jeremy Leaf said:

"A lack of mortgage liquidity is the key issue. The government's stamp duty policy will not be enough to kickstart transactions and is more likely to assist buy-to-let investors. More needs to be done to reinvigorate a market whose confidence has taken a severe knock."

So, are you still buying food and shoes like you used to or are you cutting back on even these?

Why not let us know in the comments below?