Repossessions grew in 2006

More people had their homes repossessed as 2006 drew to a close, according to the latest statistics.

The Council of Mortgage Lenders (CML) has released its statistics for the year and they do not make good reading for people struggling to keep up with their mortgage repayments.

According to the CML, 8,860 homes were repossessed in the final six months of 2006, compared to 8,140 in the first six months. The reason for the rise is being put down to increased interest rates and the CML is expecting more repossessions in the coming years.

The organisation is predicting that things will continue to get worse for homeowners, with an expected 19,000 repossessions in 2007 and 20,000 in 2008.

Despite the apparently bleak figures, the CML points out that the 8,860 repossessions at the end of 2006 was fewer than had previously been predicted.

“The arrears picture at the moment is fairly complex,” commented Michael Coogan from the CML. “On the one hand, the wave of problems caused by previous interest rate rises has now worked through, so recently arrears levels have fallen.

“On the other hand, interest rates are rising again, and payment shock may be an issue for some this year as their existing fixed or discounted deals expire.”

Those considering taking out a mortgage are advised to borrow within their means and ensure that they have enough financial clout to deal with any large interest rate rises that may come up in the future.

Tags: repossessed, clout, Arrears, cml, latest statistics.the council, wave, are

Credit card market lacks competition

There is a lack of competition in the debit and credit card market, meaning consumers are getting a bad deal.

That is according to a new report published by the European Commission (EC) and it backs claims previously made by the British Retail Consortium (BRC).

For some time now, the BRC has been arguing that there is a lack of competition and that fees charged for transactions are an unjustifiable tax.

The BRC has revealed that the fees we pay are fuelling excess bank profits and figures from the EC report show that credit card issuers are making profits of 40 per cent.

Calls are now coming for the Office of Fair Trading to recognise the findings of the EC report in its current case against Mastercard and Visa’s fee arrangements.

“This report is a welcome indication that the commission agrees with us that banks are abusing their position,” said Kevin Hawkins from the BRC.

“The report sends a clear signal to member states, including the UK, that consumers and retailers have been bearing the costs of that abuse.

“We’ve long argued that high charges are an unjustifiable tax on consumers leading to excessive profits for the banks,” he added.

Customers looking to get a credit card should shop around and try to find the best deal to suit their personal needs.

Tags: Credit card, fee, kevin hawkins, credit, BRC, United Kingdom, MasterCard, tax

Idle homes making rich richer

A new breed of home-buyers is sweeping the nation, and particularly London, with the sole intention of making as much money as possible.

Super-rich investors are increasingly snapping up properties even though they have absolutely no intention of living in them. The idea is that they leave the house empty and wait for it to increase in value, before selling it on at a profit.

They have been labelled as buy-to-sitters and they tend to purchase homes at the high end of the market in order to see the biggest profits.

Lulu Egerton, from estate agents Lane Fox, says that many wealthy people see investing in property as something of a hobby.

“The super-rich acquire property in the same way as they buy fine art or fine wine – it almost turns into a kind of international collection,” Ms Egerton told the Evening Standard.

“It can happen over several years. Sometimes it’s no more than a whim, in other cases as families grow they move to a bigger property but the previous homes are neither sold nor let but held as assets.”

Becoming a buy-to-sitter is certainly a hobby which can only be indulged in by the very rich and is hardly helpful to first-time-buyers who are struggling to get a mortgage and buy a house.

“They have the right to hang on to what is undoubtedly a good investment but it does contribute to a real shortage of big houses at the very top of the market and does nothing to help London’s housing crisis,” said Richard Cotton from Cluttons estate agent.

For many Londoners the prospect of owning two homes is a distant dream, however a growing number of people find that they may be able to afford two properties if they leave the capital.

Tags: Idle homes, wine, end, sweeping the nation, money, nothing

Ex-smokers see financial benefit

For many people the New Year brought with it a resolution to give up smoking.

The health benefits of kicking the habit are well known and well publicised, but Sainsbury’s Bank says few people consider the financial advantages.

Aside from saving money by not buying cigarettes, ex-smokers could find that they save as much as 48 per cent when they take out a life insurance policy.

Sainsbury’s says that in order to benefit from the reduction when taking out a policy with the bank, a customer must have remained smoke-free for a minimum 12 months.

“If you gave up smoking last New Year and haven’t yet taken out life insurance, now is the time to shop around for a good deal on a policy. If you haven’t smoked for 12 months then you will qualify as a non-smoker,” said Claire Moyles, life insurance manager at Sainsbury’s Bank.

“Our research shows that when the ban on smoking in public places is introduced into England and Wales later this year, 1.44 million people plan to give up smoking.”

Sainsbury’s has calculated that around 740,000 Britons have managed to stick to their 2006 New Year’s resolution to quit smoking.

Tags: habit, Ethics, smokers, gave up, smoking, financial benefit, kicking

Casino to affect house prices

The news that Manchester has been chosen as the site for the UK’s first super-casino has led some industry experts to predict a rise in house prices in the city.

Nationwide Building Society described the award as a “vote of confidence” in Manchester and said the number of jobs created will affect house prices.

“This could be good news for house prices in Manchester,” said Fionnuala Earley from Nationwide.

“It will bring new jobs to the city and the decision clearly represents a vote of confidence in Manchester’s infrastructure and the city’s ability to support a new super-casino. New jobs will lead to an increased need for housing which will support local demand and house prices.”

The news is undoubtedly good for those who already own houses in Manchester as they will see the value of their property soar.

However, first-time buyers will struggle to purchase a property in the city as prices rise, while Ms Earley also says the casino may have a negative impact on the value of some homes.

“Depending on the location of the casino, there could still be some negative impact on local prices if factors, like noise, for example, become an issue,” she said.

House prices in Manchester have risen by three per cent in the last year and by 101 per cent in the last five years.

Tags: need, noise, building society, site, cent, year, Manchester, rise

GECB fined over PPI

GE Capital Bank (GECB) has been fined by the Financial Services Authority (FSA) for failing to have adequate systems and controls in place for selling insurance.

The bank was hit with a £610,000 fine following an investigation into payment protection insurance (PPI) by the FSA.

GECB works in providing credit finance through store cards, credit cards and sales finance. The firm has been found guilty of treating customers unfairly.

“Millions of people take out store cards every year,” said Margaret Cole, director of enforcement at the FSA.

“They need to know that PPI is almost always optional and should consider whether they need it before signing up.”

GECB has been punished for failing to provide adequate information to consumers regarding PPI and failing to retrain staff after it was highlighted that they were not complying with sales procedures.

The FSA has warned that GECB will not be the last firm to come under scrutiny regarding PPI.

“Our focus on Payment Protection Insurance will remain very high this year,” warned Ms Cole.

“We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly.”

GECB has committed to taking action to redress the highlighted issues, which resulted in the fine being reduced from £870,000.

Tags: Insurance, consumers regarding ppi, payment protection insurance, finance, fsa, sales procedures.the fsa, selling insurance, adequate information

Housing market may be cooling

There are very early signs that the UK housing market may be slowing down.

That is according to Nationwide Building Society, which says house price growth in January was the lowest it has been for eight months.

According to the firm, prices increased by just 0.3 per cent in January, a significant drop on the 1.2 per cent increase seen in December.

“House prices increased by just 0.3 per cent in January, the smallest monthly rise since May last year, which pulled the annual rate of house price growth back into single digits,” said Fionnuala Earley from Nationwide.

“Prices increased at an annual rate of 9.3 per cent in January, down from 10.5 per cent last month.”

The building society has also predicted that house prices will remain firm despite the recent rise in interest rates and the possibility of further rises in the year ahead.

“2007 started off with a bang as the Bank of England raised interest rates for the third time in six months. Only time will tell how much the surprise decision will affect sentiment in the housing market,” added Ms Earley.

The average price of a house in the UK currently stands at £173,225, down from the £173,746 price in December.

Tags: firm, price, significant drop, house, Fionnuala Earley, Nationwide Building Society, economics

Potential PPI refund

Consumers could save themselves large sums of money by seeking a better deal on their payment protection insurance (PPI) for a personal loan.

That is according to the Post Office, which says some borrowers may find that they could save thousands of pounds.

The firm points out that PPI that is sold alongside a loan is normally added to the total sum of the amount borrowed, meaning the consumer will pay interest on the insurance.

Customers are now being urged to challenge their lender and could find that they receive a refund for the interest charged.

“The refund could be substantial, so people shouldn’t miss out,” said Claire Oldstein, head of communications at the Post Office.

“Banks and loan providers are in an ideal position to sell insurance with their loans, but customers should challenge them to find out what the true cost of their payment protection is.

“By comparing this to standalone policies, customers can see for themselves that better value deals are available,” she added.

The Post Office has recently called for an open PPI market in response to an investigation by the Office of Fair Trading.

The organisation wants it to be mandatory that consumers are told by lenders that they can get better or cheaper policies by shopping around.

Tags: shopping, total sum, consumer, head, sum, payment, organisation

Bank charge row

The British Bankers’ Association (BBA) has hit out angrily in retaliation to a Which? magazine report that claimed banks are trying to trick their customers.

The publication looked into bank charges and found that many banks are employing “underhand methods” to prevent consumers challenging the charges.

According to the report, those who attempt to challenge the banks can be threatened with account closure and having their details passed onto debt collectors.

“In an attempt to avoid paying consumers what they are due, we have found banks employing increasingly underhand methods,” said Doug Taylor from Which?

“It is important that the exposure of these tricks does not put people off reclaiming their charges, though, as that would be playing into the banks’ hands.”

In response to the claims made by Which?, BBA has launched a scathing counter attack, labelling the report “sensationalist” and “personally insulting”.

BBA says that it is perfectly reasonable for a bank to close a customer’s account when it is clear that the relationship has broken down.

Additionally, the organisation points out that a bank is acting within its rights if it chooses to use a debt collector if it has chased an individual a number of times.

“Which? is clearly trying to exploit its position as a consumer body by sensationalising what could be a useful piece of research,” said Angela Knight from BBA.

“The way in which Which? has approached this is not only sensationalist, it’s also personally insulting to the front line bank staff who do an excellent job serving their customers.”

Another report into bank charges, carried out by the Office of Fair Trading, is due to be published soon.

Tags: office of fair trading, british, Bank charge, relationship, banks, bank

First-time buyers taking risks

First-time buyers are prepared to take bigger financial risks to get on the property ladder as house prices continue to rise.

As the third interest rate rise in five months looks set to have just a minor impact on the price of a house, Yorkshire Bank says many consumers feel forced into taking big chances with their future.

According to the bank, three out of five first-time buyers would consider taking out a home loan that was five times their income.

In addition, 80 per cent would also consider getting a mortgage which is paid back over more than 25 years in order to make the monthly payments more manageable.

“With the average house price nearing £200,000, this year may feel like the last chance saloon for first-time buyers already finding it hard to buy,” said Gary Lumby from the bank.

“Saddling themselves with such huge debts isn’t wise as they could still be paying off their mortgage well into their sixties or even seventies.

“They may also face breaking point should interest rates increase again. Unfortunately for some, they feel it is their only option,” he added.

Yorkshire Bank has also found that 28 per cent of first-time buyers are so keen to get onto the property ladder that they are willing to offer above the asking price straight away for a house which they want.

In response to the current housing climate, 15 per cent of parents have started a home fund to help their children buy a house when they are older.

Tags: chance, monthly payments, bank, yorkshire bank, council of mortgage lenders

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