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This week’s roundup includes news that UK lenders are cutting back on offering unsecured loans, suggestions that stamp duty could be changed for energy efficient homes, a rise in rent for private tenants and inflation continuing to put pressure on low and middle-income families.

UK lenders ‘cutting back on unsecured loans’

UK banks and building societies have told the Bank of England they expect to tighten up on non-mortgage lending to households in the next three months. Obeying instructions from the Bank to rein in what could become a “household debt boom”, lenders suggested they would make it harder for borrowers to get new credit cards or consumer loans.

In the Bank’s survey, lenders also said the availability of unsecured credit to households had fallen during the third quarter of the year, while they also expected unsecured lending to fall again in the fourth quarter.

In the July-September period, banks and building societies reported the biggest cut in the availability of unsecured loans since the third quarter of 2009, as the proportion of unsecured credit applications being approved dropped considerably.

The findings follow concerns that many households are at risk of overstretching themselves, amid speculation over a potential rise in interest rates from their current record low of 0.25%.

Stamp duty ‘may be changed for energy efficient homes’

Stamp duty on residential properties in England could be changed in a bid to encourage people to make their homes more energy efficient. Energy Minister Claire Perry said homeowners would face “carrots and sticks” to push them to make savings on their heating bills and carbon emissions.

Speaking to Radio 4’s Today programme, Ms Perry said she was “interested” in the idea of lowering stamp duty on properties that have been made energy efficient. She added: “It's more likely that a home where insulation has been put in would attract a higher value, because the running cost of that home over the lifetime of ownership would be lower.”

The application of stamp duty is devolved around the UK, so the move would only apply to energy efficient homes in England.

Ms Perry’s proposals are to form part of the government’s Clean Growth Plan, which will be published on 19th October, to set out how it aims to reduce carbon emissions across the whole country.

As part of the Climate Change Act, the government needs to cut CO2 emissions by 57% from levels seen in 1990 by 2050.

Low-income tenants ‘facing soaring rents’

Low-income tenants now spend an average of 28% of their wages on rent, rising from 21% in the mid-1990s. This is according to new research from the Institute for Fiscal Studies (IFS), which revealed tenants have been hit by substantial cuts to housing benefit, amid fears government support is expected to fall further.

Since the mid-1990s, the proportion of people renting homes privately has increased from 8% to 19%, while average rental prices have gone up by 33% during the same period of time.

The IFS said changes to housing benefit policy had cut entitlements for two-thirds of low-income renters, and one-sixth of low-income renters in social housing. Future reforms were predicted to increase the number of tenants facing a shortfall between the amount of housing benefit they received and the rent they had to pay.

Agnes Norris Keiller, a Research Economist at IFS and author of the report, said: “Wider problems in the housing market are pushing up housing costs and increasing the size of the rented sector.”

Inflation ‘to cause £300 benefit squeeze’

Benefit freezes combined with the predicted oncoming rise in inflation could mean some low-income households are £300 worse off next year. According to think tank The Resolution Foundation, loss of income due to benefit freezes could be as much as £225 for a single parent in work.

Urging the government to “ease the squeeze” on benefit households, the think tank’s predictions come amid predictions the Consumer Price Index will stand at 2.9%. September inflation data is normally used to adjust benefits and tax thresholds the following April.

The Resolution Foundation’s research indicated that Chancellor Philip Hammond’s benefit freeze, which will begin its third out of four years in 2018, will impact the lives of working families the most.

Torsten Bell, Director of the Resolution Foundation, said Mr Hammond should use the upcoming Budget to “ease the squeeze on low and middle income families, not make it worse”.

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