Bank account options for consumers

Although the banking industry in the UK has taken quite a bit of flack over recent years the various High Street banks do offer plenty of choice when it comes to bank accounts to suit different needs. There are many different consumers with banking needs, and their different circumstances and statuses determine which bank account is going to be best suited to their needs.

One of the accounts that most High Street banks offer are basic bank accounts, and these are ideal for some people such as those on low incomes or with bad credit ratings who might otherwise struggle to get a current account. Whilst there are some restrictions with basic bank accounts, such as no debit cards or cheque books with many as well as no overdraft facility, they do offer the ability for accountholders to effectively manage and run their finances, pay bills, get money paid in, and other basic banking functions.

Standard current accounts are what most people have, and these are accounts that enable consumers to run their day to day finances. They are very similar to basic bank accounts in that you can set up standing orders and direct debits, transfer money, pay money in, make withdrawals, etc. However, many bank accounts also come with additional perks such as debit cards and overdraft facilities.

Another type of bank account that is available from many banks these days is the packaged bank account, and these accounts are fee charging accounts with fees that vary from one bank to another. The reason for the fee on these packages accounts is that they offer a package of benefits to the accountholder, which could save them money depending on how many of the services they use. Some of the benefits that come with the package include travel insurance, pet insurance, mobile phone cover, breakdown cover, and more. However, consumers should ensure that they are getting value for money and would not be better off paying for the benefits that they use on the open market rather than paying a fee for the account.

By choosing the right bank account and the right bank for your needs you can ensure that you can manage your finances more easily and conveniently, and with so many different banks and account to choose from it should be relatively easy to find one that is going to suit your needs and circumstances.

Villages being affected by bank closures

It has been reported recently that many villages in the UK are being affected by bank closures, with many bank branches having closed since the turn of the century. An investigation was carried out by the Campaign for Community Bank Services (CCBS), and this suggested that more than two thousand bank branches had closed since 2000, and this has left many people living in smaller villages stranded when it comes to conducting their banking.

For many of those living in rural areas and small villages there is a particular problem because lack of broadband facilities makes it difficult for them to benefit from other options such as online banking due to lack of internet access. With many bank branches in smaller villages now struggling to stay open, despite profits recently posted by banks, villagers may really struggle to access banking services properly.

A number of major banks are said to have shut hundreds of branches in some cases over the past decade, and Lloyds TSB said to have closed around five hundred branches. It is the branches in smaller areas and villages in particular that are suffering, and many officials are now concerned that vulnerable, elderly, and disabled people could experience real problems if they are unable to travel further afield to access banking services.

An official from Campaign for Community Bank Services, Derek French, said: ‘We are concerned that banks will continue to close quieter branches and concentrate on meeting sales targets in busier, more profitable High Street branches.’  

With banks having been hit hard financially over the past few years there are also concerns that many may focus of closing branches to save money rather than making cutbacks in other areas, which will further impact on the accessibility of services for many consumers.

Payday loans soar due to credit crunch

Payday loans have been at the centre of controversy for some time, and this is largely due to the high rate of interest charged by these lenders on an annual basis. However, some have argues that these lenders receive unnecessary bad press, because the interest charged is not that much providing the loan is paid back in time, and some officials argue that these loans can be very useful for those that desperately need short term financial help.

It has now been reported that the level of payday loans being taken out has soared partly as a result of the global credit crunch, which has left many people short of cash and in financial dire straits. In the space of four years the number of people taking out these payday loans is said to have quadrupled, as more and more people find themselves desperate for cash for a short term period.

The APRs that some of these payday lenders charge has caused a lot of concern over recent years, but for those that only borrow for a short period and repay the loan on time rather than rolling it over the cost of borrowing is not as bad as it sounds. Some charity officials have said that it is preferable for consumers to go to payday loan companies for short term loans to tide them over rather than unscrupulous loan sharks.

Whilst there have been calls for these loans to be banned officials from Consumer Focus said: ‘These products are controversial, but we don’t agree with calls for them to be banned. Outlawing payday loans could leave some borrowers vulnerable to illegal loan sharks. Instead we need sensible safeguards now to stop borrowers becoming dependent on this high cost credit and prevent even more stringent controls being needed in the future.’

Lenders cut fixed rate mortgage rates

According to industry reports a number of lenders have slashed the rates on their fixed rate mortgage offerings even though the Bank of England decided to keep the base interest rate on hold again this month at its record low of 0.5 percent. A number of building societies and banks have cut the rates on their fixed rate deals.

High Street banking giant HSBC recently launched its lowest ever five year fixed rate deal, and last week saw Coventry Building Society and Nationwide Building Society reduce their fixed rate deals. One industry expert said that the reason why lenders were slashing their fixed rates even though the base rate had remained static was because they wanted to try and entice people off going for low standard variable rates. With banks already struggling the situation is being made worse by people opting for low standard variable rates, and this has led the banks to start taking action.

She said that many people that had come off special fixed rate deals had then moved onto standard variable rates, and with the base rate being so low this had been their cheapest option. This has resulted in lenders struggling, and many are now working on the hope that by cutting their fixed rate deals they can tempt people into remortgaging and taking out a fixed rate deal rather than a standard variable rate one.

Financial expert Michelle Slade stated: ‘Millions of customers who have come off short-term fixed-rate and tracker deals in recent years have gone on to their lender’s standard variable rate as it has been cheaper than fixing again. For example, Nationwide’s base mortgage rate is just 2.5%.’ She added: ‘The new fixed rates are certainly mouth-watering and could be worth grabbing for some borrowers.’

Double dip recession could stem from house price falls

Officials from the Royal Institute of Chartered Surveyors have stated recently that concerns over a double dip recession have been sparked as a result of house price falls. Earlier in the week the majority of estate agents reported that house prices had fallen for the first time in a year.

According to RICS there has been a surge in the number of properties coming onto the market whilst at the same time the level of interest from would be buyers has fallen as a result of a number of factors. This has sparked a drop in property prices following a period where property prices were regaining strength, and with the economy in the UK still fragile following the recent recession many are now concerned that the nation could be heading back towards a double dip recession.

The figures show that compared to the combined total of estate agents that reports stable or increasing house prices 8 percent more reports falling prices, and this was the first time since July of last year that a majority of estate agents had reported a fall in property prices.

Officials have said that falling house prices tend to take their toll on consumer confidence levels, and with a fall in consumer confidence there could also be an increase in the chances of a double dip recession. Scotland and the South West are said to be enjoying some level of stability, but all other areas of Britain have apparently been hit.

RICS said: ‘This is a reflection of both the increase in supply following the scrapping of HIPs and the more cautious stance from buyers. Significantly, the forward looking price expectations numbers suggest that this softer trend will continue through the second half of the year. However, agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties.’

Nearly three million people could get PPI compensation

According to the UK’s financial regulator, the Financial Services Authority, nearly three million people could be in line for compensation over mis-sold PPI or Payment Protection Insurance. The regulator claims that 2.75 million people could be entitled to compensation totalling £2.7 billion.

Banks and financial institutions have been given until the beginning of December this year to bring in new rules with regards to dealing with complaints over PPI. The FSA has already said that over a five year period it had found a “wide and deep evidence of weaknesses in PPI sales”.

PPI is a type of insurance cover that is designed to cover repayments on loans and other forms of borrowing for a specified period of time in the event that the policyholder is unable to make repayments due to redundancy, sickness, or injury. However, investigations into the sale of this type of cover found that in many cases the insurance cover was being mis-sold.

One of the ways in which cover has been mis-sold is through selling to those that could not claim, such as the self employed. In other cases consumers were led to believe that they had to take out the cover to get the finance that they needed. In some instances consumers were not even aware that PPI, which is a costly form of cover, had been added to their finance agreement.

In a statement the FSA said: “Today is the culmination of months of hard work and now, with these measures, we look forward to consumers being treated fairly whether they are buying or complaining about PPI. Since we took over the regulation of PPI we’ve carried out 24 investigations and three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans, visited over 200 firms, and handed out some very significant fines.”

No move for base interest rate

The Bank of England has announced that the base interest rate in the UK is to be kept on hold once again, which means that this will be the eighteenth month in a row that the base rate will have been kept at the record low of just 0.5 percent. The announcement came after the August Monetary Policy Committee meeting.

The decision to keep the base rate at 0.5 percent, which is the lowest in the history of the Bank of England, has sparked speculation that the Monetary Policy Committee is not all that concerned about rising inflation, which at present is much higher than the government target of 2 percent but is expected to fall closer to its targets level over the course of the year.

The central bank also said that the quantitative easing programme was still on hold. The programme was started by the former Labour government, and so far £200 billion has been pumped into the economy through this scheme. The MPC has now said that whilst the scheme will be kept on hold for now there is still scope to use it again in the future should it be necessary.

In the meantime many industry groups have welcomed the decision for the bank base rate to be kept on hold, with officials stating that this could help to revive the economy. The British Chambers of Commerce said that the cuts that the coalition government had made to address the public deficit would impact on the economy, so keep the base rate on hold had been a necessity.

David Kern from the BCC said: “The MPC made the right decision. The tough deficit-reduction measures announced in the Budget, although necessary, will inevitably increase the threat of a UK economic setback. Given the precarious economic background, it is absolutely vital that the MPC maintains the current low level of interest rates until the second quarter of 2011 at the earliest.”

Lloyds Banking Group retains position in UK mortgage lending market

Figures that have recently been released have shown that banking giant Lloyds Banking Group has managed to retain its position in the UK market when it comes to mortgage lending levels. This comes despite the problems that the mortgage markets have experienced since the onset of the global financial crisis and the recession.

The figures show that Lloyds Banking Group managed to retain a 23 percent share of the gross mortgage market in the UK, despite the fact that the markets have remained subdued. The large market share of the mortgage market that has been taken by the group means that it remains as one of the leading mortgage lenders in the UK.

Lloyds Banking Group has also enjoyed success when it comes to profits, having announced profits of £1.6 billion for the first six months of this year. For the same period a year ago the bank reported losses of £4 billion, which means that the banking group’s fortunes have really turned around, as have those of a number of other banks in the UK. The money that Lloyds Banking Group has set aside to cover bad debt is also said to have fallen, and has gone from £13.4 billion to £6.5 billion.

Despite the profits that Lloyds and other banks have reported industry groups have expressed concern that mortgage lending is still restricted, as banks are still being cautious and many are still demanding high deposit from those looking to take out a mortgage.

Mortgage brokers have a more optimistic view, and many have predicted that they will be doing increased levels of business as the year goes on, as more and more mortgage products become available on the market.

What to look for with a personal loan

Whilst credit conditions have undoubtedly been strained over the past couple of years many believe that things are now easing up in the financial markets, and whilst lenders have not gone back to the days of easy credit the availability of loans and finance does appear to be easing up to some degree.

With this in mind many people may now start to think about taking out a personal loan for a variety of purchases, and with things easing up in the financial markets the choice of personal loans is greater than before, and there are some pretty good deals available for those that have a decent credit history and score.

There are many lenders that offer personal loans, and which cater for the needs of a wide range of people and needs. It is important for those that are looking for a personal loan to do some research and familiarise themselves with the different loans and deals available so that they can make a more informed choice when it comes to deciding which of these loans to opt for.

It is easiest to use the internet to browse and compare the different personal loans available, as this will allow you to quickly see which loans fit in with your needs and your budget without having to deal with any pushy sales people or feel embarrassed about going through your finances with someone on the phone or in person.

There are a number of key areas that you need to look at when browsing personal loans with a view to taking one of these loans out. The interest rate that you will be charged is a very important consideration, so this is something that you need to compare. However, do bear in mind that if a lender advertises a typical APR this does not mean that you will necessarily get that rate of interest but that most of the lenders customers get that rate.

The repayment periods on personal loans can vary from one provider and loan to another, so this is something else that you need to look at when you are deciding which loan you should go for. If you want to keep your repayments down then you need longer repayments periods, so make sure that you know what’s on offer.

Other things that you need to look at include the overall monthly repayments to ensure that you can afford the repayments, the eligibility requirements, the terms and conditions of the loan, and the borrowing limits, although this will vary based on your financial status.

Why first time buyers could benefit from shared ownership

Buying a property has become an almost impossible feat for many first time buyers in the UK these days, not least because getting a mortgage loan has become so difficult. Whilst property prices have fallen since their peak they are still very high in the UK, and with lenders demanding a large percentage of the property value by way of a deposit many first time buyers still find themselves priced out of the market.

In some cases lenders are demanding in excess of 15 percent of the property value by way of a deposit, and this is something that most first time buyers cannot manage, as they have no pervious property from which to take equity. As a result of this many first time buyers are having to move into rented accommodation, which makes it even more difficult to save a deposit to get themselves onto the property ladder.

However, there is another option that could prove ideal for many first time buyers in the UK and this is an option known as shared ownership. With a shared ownership property buyers only get a mortgage for a set percentage of the property value, and the they then pay rent on the remaining share to a housing association. Because they are only buying a share of the property initially they will need a lower mortgage and a lower deposit, but can still get themselves on the property ladder, albeit more gradually than in the traditional way.

The share of the property that first time buyers can get will vary based on the property and the housing association, and could be anything from between 25 percent and 75 percent. Often the houses that are sold as shared ownership are new build, which means that buyers can get their hands on a brand new property without having to find a huge mortgage and deposit upfront.

The great thing about shared ownership is that you will not have to rent the remaining share of the property forever, as you can ‘staircase’. This means that over time you can buy additional shares of the property as and when finances allow until eventually you own 100 percent of the home. Alternatively you may wish to continue on a shared ownership basis and then sell your share of the home to another person that wants shared ownership when you want to move on.

A number of housing associations deal with shared ownership properties, and there are both new build properties available as well as resales from those that want to sell their own shares in these properties. Whilst there may not be a huge difference in the amount that you pay out monthly with shared ownership compared to getting an outright mortgage (although it is generally cheaper) the key advantage is that you will not need a huge mortgage or deposit to start off with and can buy the remainder of the home as and when it is viable for you.

Cut back on your vehicle insurance costs

It was recently reported that the cost of car insurance in the UK has soared recently, with industry groups claiming that there has been a 14 percent rise in vehicle insurance related cost in the second quarter of this year. These increases are something that most drivers can ill afford, particularly considering the financial strains that most people are under due to the difficult financial climate, the after-effects of the recession, and the high price of essentials such as petrol and food.

Of course, having insurance cover in place is a legal requirement for drivers, and no driver should be on the road without having some form of cover in place. However, it is important to remember that there are different levels of insurance cover to choose from, and you may find that the vehicle that you have does not require the more comprehensive and costly cover.

If you have an older car that is not worth much in terms of monetary value there is little point opting for the fully comprehensive cover, as this will work out more expensive and you will get very little back for your car in the event that it is written off in an accident because of its low value. On the other hand if you have a newer, higher value vehicle it is best to opt for comprehensive cover as otherwise you would be shelling out a fortune in the event that you had an accident that was your fault.

It is also important to remember that the excess levels that you choose will affect the cost of your cover. This is the amount that you have to pay from your own pocket in the event of a claim, and insurance firms tend to offer a number of choices. If you go for the lower excess then you will not pay as much yourself in the event of a claim, but with the higher excess you can take a risk and cut the cost of the cover.

Comparing deals is vital in order to reduce the cost of your vehicle insurance, and this is something that can be quickly and easily done these days using the various comparison websites available online. You will be surprised at how much you can save simply by comparing deals. In some cases you can even reduce your insurance costs by phoning your insurance company and stating that you are considering going elsewhere. The competition amongst insurers is stiff, and many will negotiate a discount in order to keep your custom.

Many Welsh travellers fail to take out travel insurance

Research has recently been released by the Foreign Office, with the data suggesting that Welsh people are more likely to be hospitalised when they go abroad than others people in the UK. However, despite this many fail to take out travel insurance cover, potentially causing themselves a great deal of financial harm.

The figures showed that nearly one third of Welsh people had found themselves in some sort of trouble whilst abroad, and this included being arrested, being involved in road accidents, or ending up in hospital. However, around 16 percent of Welsh travellers do not take out any travel insurance cover when they head abroad.

With the summer holiday season just around the corner the Foreign Office is now appealing to consumers to use their common sense and arrange adequate travel insurance cover if they are heading abroad so that they are protected against mishaps such as those outlined above.

The research also found that Welsh travellers spent an average of nearly £12 on magazines, snacks, and drinks whilst at the airport, which is twice the cost of basic single trip travel insurance cover. Welsh travellers were also found to spend the least time arranging travel insurance cover, with the average time being spent doing this standing at twenty one minutes.

Jeremy Brown, the Foreign Office Minister, said: “This report shines a light on the number of Britons who get into difficulty abroad each year. The worrying fact is that so many of these situations are preventable. Helping out Britons in trouble abroad is part of our job, but we can’t get you out of jail or pay your hospital bills. A bit of preparation before you go, such as arranging travel insurance and checking our website, will ensure you get the most out of your trip without bad memories and big bills.”

Vehicle insurance related costs soar

It has been revealed in a recent report that costs relating to insuring cars and other vehicles have soared in the UK over recent months, resulting in many drivers who may already be struggling financially due to the cost of living and petrol prices finding it even more difficult to keep their vehicles on the road.

According to the report the costs associated with insuring a car or vehicle in the UK have increased by more than 14 percent in the second quarter of this year. The figures have come from the EMB Car Insurance Price Index and the online insurance comparison site Confused.

The rise in costs associated with insuring a car are much higher than the increases that were seen in the final quarter of last year and the first quarter of this year. In the last three months of 2009 costs relating to insuring a car increased by 4.3 percent, and in the first three months of this year the costs relating to insuring a car increased by 6.3 percent.

The massive increase in costs of over 14 percent seen in the second quarter of this year has resulted in around £74 being added to the average cost of car insurance for drivers. This reflects a total increase of 31 percent according to figures, and brings the average annual cost of car insurance to £599.

Some areas saw costs relating to car insurance rise more than others, and amongst those to be hardest hit were inner London and Manchester. Insurance officials have also said that this is not the end of the bad news for drivers, as many believe that the cost of vehicle insurance could continue to increase, which would mean even higher premiums for many cash strapped drivers.

Mortgage default levels falling

Over the past few years problems with finances, higher mortgage rates, and the global financial crisis has plunged many people into severe financial difficulties, and as a result of this many homeowners have been unable to keep on top of their mortgage repayments.

The high level of mortgage defaults over recent years has resulted in many people having their homes repossessed, which naturally caused a great deal of concern amongst consumers and officials. The recession also took its toll on the ability of homeowners to make repayments on their mortgages, with many people losing their jobs as a result of the recession.

However, with the recession now over and the financial markets easing up the level of mortgage repayment defaults has been falling recently. The Bank of England has issued figures showing the fall in the level of mortgage repayment defaults in the UK, which will come as good news for banks and industry groups.

The fall in mortgage defaults has been occurring for a while now, and industry experts have said that in the latter part of 2010 it will remain largely flat. Some have even predicted that in the short to medium term mortgage repayment defaults could actually start to increase again as a result in an economic slowdown caused by changes made in the recent emergency budget by the new Chancellor of the Exchequer, George Osborne.

Further job losses are also expected to occur as a result of the budget changes, and this could affect the ability of more people to make their mortgage repayments. Officials advise those that feel that they are in danger of falling behind with mortgage repayment to contact their lender or a debt advice group as early as possible so that the problem can be sorted out before banks have to resort to repossession action.

Problems with loan sharks being tackled by specialist team

A specialist team is dealing with problems relating to illegal loan sharks, with officials from the team expressing concerns about the number of people that are falling for illegal loan shark finance due to desperation in the current financial climate. One official from the illegal money lending unit covering North Staffordshire said more people were turning to these lenders as a result of the effects of the recession.

The global credit crisis has resulted in credit drying up for many people, making it difficult for them to get the finance that they need, and for many desperate times has led to desperate measures, forcing them to turn to less reputable lenders when it comes to borrowing money.

The problems relating to loan sharks are now being tackled by the Central England Trading Standards Illegal Money Lending Team, which was launched back in 2004. The team is funded by the government and is responsible for gathering evidence on loan sharks.  

As part of their investigation into the practices and activities of loan sharks the team has set up a twenty four hour hotline that allows consumers to ’shop a shark’ and give the team more ammunition when investigating these loan sharks.

As a result of the hotline the investigators recently managed to catch out one loan shark and get him sentenced. The team hopes to be able to catch out many other loan sharks through the hotline.

An official from Staffordshire County Council, where the sentenced loan shark was from, stated: “We hope this sends out a strong message to anyone thinking they can make money illegally. These people prey on vulnerable residents without any remorse which is thoroughly shameful.”

Lack of awareness about mortgage rates amongst UK consumers

It has been claimed in a recent report that there is a severe lack of awareness amongst UK consumers when it comes to their mortgage interest rates. The data comes from a study that was carried out for the Consumer Financial Education Body, and involved polling over two thousand consumers about their mortgage interest rates.

The results of the study indicated that a massive three quarters of mortgage holders in the UK had no idea how an interest rate rise of 1 percent would affect their mortgage repayments and their budgets. The poll also found that many mortgage holders did not know what type of mortgage they had, and many also had no idea when their mortgage would expire.

The survey looked into a number of different mortgage related issues. The base interest rate has been kept on hold at its lowest level on record for sixteen months now, standing at just 0.5 percent. However, the survey results showed that over 50 percent of consumers thought that in the next nine months the base interest rate would increase.

Around 15 percent of those polled did not know what sort of mortgage product they had, such as a fixed, tracker, discounted, or standard variable rate mortgage. Around 8.6 million people out of 14.6 million had mortgages that formed part of a time limited deal. However, 15 percent of these mortgage holders did not know when their deals came to an end.

One industry official said: “Interest rates have been at record lows for some while now. Although there is uncertainty about when this will change, it is clear from our research that many people with mortgages have not thought about what it would mean for their monthly payments, or where they would find the extra money in their household budget if their mortgage rate was to go up. Lack of time means many of us often put off reviewing our finances.”

Banks may offer more competitive deals than brokers

A recent report has shown that banks in the UK may be offering more competitive mortgage loan deals directly rather than through brokers, which means that consumers that go through a broker could find that they end up paying more than they would if they went directly through a lender in some cases.

Direct providers and banks are said to be offering highly competitive mortgage loan deals to try and stay a step ahead of rival providers, and this means that going through a broker could end up being more expensive. However, brokers have stated that if consumers choose to bypass them they could end up missing out on a range of specialist deals.

Some mortgage lenders such as the internet banking giant First Direct, which is part of the HSBC group, have decided to bypass brokers altogether for their deals. Officials from First Direct have said that there is no need for the company to go through brokers when they are able to offer such competitive deals direct to the consumer.

However, brokers claim that there are a number of reasons why consumers should go through a broker rather than direct to a bank, such as the diminishing number of people that now qualify for banks’ deals, and the fact that whilst a particular bank may be offering the best rate at one point this can quickly change.

One broker said: “First Direct and HSBC may have the best deals today but this can change and, besides, the number of applicants who will actually qualify for the banks’ criteria of three times income, a squeaky-clean credit record and large deposit, is fast diminishing. The reality is that most cases are not this easy and will require the expertise and contacts of a mortgage broker.”

Energy price increases described as depressing

Over recent years there has been a lot of controversy over the amount that customers have been charged for their energy usage in the UK, and whilst prices have gone up and down the UK’s major energy suppliers have been accused of being quick to increase prices when the cost of wholesale energy goes up but being very slow to apply changes when the costs go down.

One comparison site, confused.com, has recently stated that the price of energy usage looks as though it is set to increase again, and has described this as ‘depressing’. One official from the company said that the end of cheap energy rates was coming from some providers, and this would make for depressing news for households, many of which are already struggling with their finances.

Energy analyst, Lisa Greenfield, said that companies such as E.On and EDF Energy looked set to end cheap rate offers, and on top of this it looked as thought the cost of wholesale energy was set to increase again. This, she said, all pointed towards energy prices in the UK increasing, and would come as bad news for those that were already on the financial edge. The move could once again send many households into fuel poverty, where 10 percent of more of their household income goes on energy costs.

Greenfield did suggest that those looking to avoid having to pay more on their gas and electricity bills, at least for the foreseeable future, could go online and compare energy prices from a range of other suppliers. She said that it could be worth consumers trying to find a cheap, fixed deal with energy suppliers before the deals were withdrawn, as they could then lock in a lower price for a set period of time to save money on their monthly gas and electric bills.

Further increase expected with credit card interest rates

Over recent years there has been a lot of controversy with regards to the high rate of interest that is charged on many credit cards, with campaigners, consumers, and various other officials pointing out that the gap between the base interest rate – which is at its lowest level on record at just 0.5 percent – and the average credit card interest rate was getting wider and wider.

Whilst the base rate has been at its all time low for well over a year now credit card interest rates have continued to increase, leaving many credit card customers who are unable to settle their balances in full at the end of each month facing very high levels of interest on their debts. However, despite the controversy it appears that the problem could be set to get worse.

According to reports experts from the credit card industry are predicting that credit card companies are set to increase credit card interest rates even further, and this could further impact on the finances of many people that are already struggling to stay afloat. Experts believe that credit card providers will increase their rates in order to offset the risks that they are having to take.

Recent research showed that over five million consumers in the UK had admitted to using their credit cards on a regular basis to make bill payments and other essential payments, and this means that the higher interest rates could take their toll on many people.

A spokesperson from Moneyfacts.co.uk said: “Providers have been putting rates up and obviously there’s high unemployment and the risk of people defaulting and not repaying their debts is still quite high, so they’re very strict on who they give their cards to. The customers that pay off just the minimum every month are going to be the ones who are hit hardest. They’re going to add, maybe, hundreds of pounds extra on to their debt and take a lot longer to repay [it].”

Virgin Money makes changes to repayment system

Many Virgin Money credit card customers have been pleased to hear a recent announcement from the financial giant with regards to the repayment allocation on its credit cards. Virgin has announced that as of the start of September any repayments made on the Virgin credit cards will be allocated to the more expensive debt first, which could potentially save credit card holders a fair amount in interest.

Under the current repayment system, as is the case with many credit card providers, anyone that repays their debt gradually on the Virgin credit cards will see the repayment being out towards the cheapest debt first, which is often interest free debt. This means that more expensive debts that have high interest rates can be left to faster and continue accruing interest, which means that customers often end up paying out more.

The move to make credit card providers allocate customers’ repayments in this way has been pushed by regulators and financial authorities in the UK following similar moves that were taken in the United States. However, whilst lenders who offer credit cards will have to adopt these measures eventually many have surprised customers by bringing in the moves earlier than was necessary.

Virgin Money has become one of a number of credit card providers to bring in the changes to the allocation of repayments earlier than they needed to, and collectively customers could save a huge amount on interest as a result of these changes being made early.

One customer said: “I think its great that Virgin have decided to take this action early, because it will allow customers to save a fortune on the interest that they would otherwise have to pay.”

Energy firms probed over price differences

Two UK energy firms are being quizzed and investigated by regulators over differences in prices in different parts of the country, according to recent reports. Questions are being asked over why the energy providers are charging a particular price in one part of the country and a different price in another part of the country.

Amongst the discrepancies that appear to have been picked up is the fact that the price that the companies are charging in areas where they need to compete more is different to the price being charged in other areas. According to reports the two energy firms, which have not been named, are being asked ’serious questions’ by the UK’s energy regulator, Ofgem.

Ofgem has stated that if an official investigation is launched following the initial questioning then the two energy suppliers will be named. It was announced last year that energy firms could not apply price differences for no reason and that any difference in prices for energy usage had to reflect differences in cost to the actual supplier.

These changes, which were brought in last year by Ofgem, resulted in many energy customers seeing their bills falling, and in recent months the prices for those that were using a prepayment meter had dropped impressively from £111 to £69.

Whilst the questioning of the two energy firms continues industry experts have suggested that consumers who feel that they are being charged too much on their energy usage look into switching to a different provider. Many are surprised to find that when they do this they can get their energy far cheaper than with their current provider.

Christine McGourty, director of Energy UK, said: “Suppliers compete across all payment methods and tariffs, so it is important for customers to shop around to make sure they are on the best deal.”

Mortgage market could suffer over next quarter

Over the past couple of years things in the mortgage market have been tough, and availability of mortgages has become very restrained as a result of the global credit crisis and the recession. This has left many people unable to get their hands on a mortgage loan, and has had a serious impact on the property market.

The Bank of England has now issued a warning stating that there could be fresh restrictions in the mortgage market over the next few months, blaming the tightening of wholesale funding for the expected squeeze on mortgages. This will create additional difficulties for those that are looking to get a mortgage, and will reverse the recent trend of increased availability of mortgages.

The data comes from the Bank of England’s Credit Conditions Survey, and a number of economists have also agreed that the availability and affordability of mortgages could fall over the next few months as banks struggle with tightened wholesale funding.

Over the past quarter the availability of mortgages has actually increase after a couple of years of serious difficulties, but this is something that is set to go into reverse according to the Bank of England. Figures have also shown that over the past quarter demand for mortgages has fallen even though mortgage availability has been increasing.

Dougald Middleton, head of capital and debt advisory at Ernst and Young, said: “While the survey shows that costs of borrowing have eased over the last quarter, we think credit conditions have turned over the last three or four weeks.”

The good news from the Bank of England report was that the rate at which mortgage borrowers and businesses were defaulting on loan took an unexpected fall, which will come as good news for banks.

Downturn hits pensions savings

It has been suggested following recent research that the economic downturn and financial meltdown that has been seen over the past couple of years has had a serious negative impact on pensions savings amongst consumers in the UK. Many have found themselves struggling to make ends meet financially, and this means that they have had to make other financial sacrifices, which for some has meant their pensions provisions.

Scottish Widows, the pensions and life insurance provider, carried out the research and according to the results of the study there has been a fall of around 6 percent in pensions savings over the past year, with the total now falling to 48 percent. This is said to be the lowest it has been since 2006.

The study showed that 41 percent of people said that the reason that they had been saving less – or saving nothing in some cases – was due to the economic downturn. Women aged fifty and over were found to have been worst hit, and whilst 52 percent of women in this age group put enough money aside for retirement last year this feel to just 38 percent.

Officials from Scottish Widows said that the effects of the global financial crisis were only just starting to affect the pensions savings market even through the crisis began back in 2007. Many people were found to be failing to put any money aside at all for their retirement, including many of those that were nearing retirement age such as the over fifties age bracket.

An official from Scottish Widows said: “The whole nation is feeling worse off than a year ago and this is really starting to take its toll on pensions savings. While there are signs that the economy is recovering, the nation’s saving habits paint a very different story.”

Fall in lending to businesses seen in May

According to recent reports the level of lending to UK businesses fell in May, despite efforts from industry groups and the government to try and boost lending by banks to businesses. Whilst the level of mortgage lending in May improved compared to the previous month the level of business lending took another hit.

The figures have been released by the British Banker’s Association. The level of lending to private, non-financial companies is said to have plunged by £1.3 billion in the month of May, which was slightly higher than the fall seen in April but slightly lower than the average decline seen over the past six months.

These businesses are said to form the backbone of Britain’s economy, and many have highlighted the importance of enabling these businesses to borrow the money that they need. However, banks are still being very cautious when it comes to lending, as many are still reeling from the financial meltdown.

In addition to this the falling demand for finance from these businesses is also affecting lending levels, and many businesses are loathe to take out costly loans and finance in the current climate. With fewer businesses wanting to take the financial risk of borrowing more money demand levels have fallen and subsequently so have lending levels.

Officials have also said that there has been an increase in retail sales, with the higher property sales levels now impacting upon the retail sector. Household goods and furniture retailers were said to have seen improvement, as did grocery retailers who may have benefitted from people stocking up for the World Cup.  Electrical retailers also benefitted as a result of people buying new television sets in preparation for the World Cup.

Consumers can benefit from rewards based credit cards

One popular finance website has recently highlighted the benefits of rewards based credit cards, stating that many consumers could benefit from having these credit cards providing they use them properly. Officials from the site, Confused.com, said that in the current climate many people could benefit from effectively being able to get something for nothing.

With rewards based credit cards consumers are able to earn points, rewards, or cash back when they make purchases on the card, and there are various different rewards based credit cards to choose from offering a choice of different rewards. Some of the rewards available with these credit cards include air miles, points towards discounts, vouchers, and more, as well as cash back.

Those that use these credit cards need to ensure that they clear the balance in full each month otherwise the interest that they pay on their balance could by far outweigh the rewards that they earn for making purchases on the card. However, by repaying the balance in full each month no interest is charges and customers can effectively get something for nothing by earning their rewards.

The level of rewards offered on these cards can vary depending on the card and provider that you go through, and rewards can only be earned by making purchases on the card and not for cash transactions and withdrawals.

A Confused.com official said: “Using a reward based credit card can be a great way to earn incentives like cash back, flights and shopping vouchers.  Our findings show that it is still possible to get something for nothing and that savvy shoppers really can be rewarded for using a credit card, with incentives that all the family can benefit from.  Customers who are able to pay off their balance in full each month are likely to benefit the most from a reward card, otherwise the benefits could be outweighed by interest charges.  For customers who find it harder to do this, a zero percent purchase card may offer a more suitable and beneficial proposition.”

Is renting more viable than getting a mortgage?

 

Homeownership is a dream that many people hope to achieve, but over recent years many have experienced a range of hurdles when it comes to getting onto the property ladder. First time buyers in particular have experienced many difficulties from sky high property prices to lack of mortgage available, crippling deposit demands, and more.

 

One recent report has now questioned whether first time buyers are better off renting a property rather than trying to buy in the current climate. In the recent emergency budget it was announced that the new government was looking into scrapping the stamp duty holiday extension for first time buyers, creating further financial difficulties for those that were looking to buy.

 

In addition to this the new chancellor, George Osborne, announced that the Financial Services Authority would no longer exist in its current form and that the Bank of England would be given greater powers to regulate the banking sector, which could mean that a cap is placed on the amount that banks can lend, creating further difficulties for first time buyers.

 

Officials have said that this means first time buyers could face difficulties in finding an affordable property, getting an affordable mortgage, borrowing the amount that they need for the purchase, raising a deposit, and affording the repayments. If they rented, on the other hand, they would only have to pay a month’s rent and a deposit upfront and would not have to worry about repairs because this would be dealt with by the landlord.

An official from the National Landlord’s Association said: “At a time when government funding is strapped, it is private investment that will enable essential housing needs to be met. Rather than being seen as a last resort, private tenancies are becoming the choice of many people who need the freedom to choose homes where they need and for as long as they need.”

Cyclists should ensure their bikes

Most of us would never dream of driving or even owning a car without insurance cover due to the risk of accidents, damage, or theft. However, many people who have bicycles fail to get their bikes insured, and this can prove to be a problem in the event that the bike is stolen.

A survey was carried out recently by M& S Money, and according to the results over twenty five percent of cyclists have had at least one bike stolen in the past two years, reflecting the high risk of theft for cyclists. The figures show that over three quarters of adults in the UK have a bike in the home, whether it belongs to them personally or to a member of the family.

The research indicated that the average value of these bikes was around £240. According to officials this makes these bikes a prime target for thieves, and with more and more people getting health conscious and more aware of the environment the number of people that own and use bikes could increase steadily over time.

Officials are now urging consumers to ensure that their bikes are insured so that they do not suffer financially in the event that their bikes are stolen. In many cases this can be done under a home insurance policy, and some policies also cover bikes as standard as long as they are within a certain value.

However, cyclists also need to ensure that they have cover that protects them if their bike is damaged or stolen whilst outside the home, and whilst this may come at an additional cost it will be well worth it in the event that something does happen to the bike.

Andrew Ferguson from M&S said: ‘Cycling can certainly be a popular activity, particularly as the evenings are lighter and the weather is warmer. It is important that if people have a bicycle already, or are considering making a new purchase, they make sure it is covered adequately by their home insurance policy.’

Spring bounce continues for mortgage lending

Recently released figures have suggested that the spring bounce seen in mortgage lending has continued, with the increase in mortgage lending continuing in May. According to the figures mortgage lending for the month of May was at its highest level so far this year.

The figures have been released by the British Banker’s Association, with the data showing that 36,709 mortgage loans were approved by major banks during the month of May for those that were buying a property. However, despite this encouraging data HM Revenue and Customs has released figures showing that for the past three months the number of completed property sales has remained flat.

The number of sales for May came in at 73,000, and this equates to around 1000 more than the numbers seen in March and April. These figures are higher than those seen a year ago, but are still far lower than figures from 2006, 2007, and 2008.

With regards to the increase in mortgage approvals members of the BBA have said that this is the third month in a row that mortgage approvals have increased, indicating that the spring bounce in mortgage lending is set to continue.

The BBA also said that in the current climate, with the base rate still at its record low of just 0.5 percent, many people were still focussing on paying off their debts rather than trying to save money, as they were able to save more on borrowing interest than they were able to earn on savings interest, making this a more favourable option.

David Dooks, Director of Statistics at the BBA, said: “The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.”

New government may reverse stamp duty break for first time buyers

In the budget by the former Chancellor of the Exchequer, Alistair Darling, earlier this year it was announced that there was to be a stamp duty break for first time buyers in the UK, and that first time buyers would be able to buy a property up to the value of £250,000 without having to pay any stamp duty.

The former Labour government was hoping to help more first time buyers onto the property ladder and to revive the housing market through this move. The increased stamp duty exemption threshold was twice the standard levels, which is £125,000, and was made available for first time buyers only.

However, it has emerged that the new coalition government is considering scrapping the extension on stamp duty exemption, which means that first time buyers could have this important tax break pulled out from under them just months after it was originally introduced.

The extension on stamp duty exemption was set to last for two years until 2012, but as part a range of cutbacks the new coalition government could end up getting rid of the stamp duty break. The Conservative party had previously supported increasing the stamp duty exemption threshold for first time buyers, and the Labour party was said to have pinched the idea from the Tories.

In fact, many thought that the Conservative party would make the increased exemption permanent if elected, but instead the government is considering scrapping the tax break altogether in a bid to save more money to clear the public deficit.

The recent budget stated: ‘As announced in the Coalition Agreement, the Government will review the stamp duty land tax relief for first time buyers taking into account its impact on affordability and value for money.’

Exercise caution when looking for a non-traditional loan

These days many people are looking to get finance or credit of some sort, but because of the difficult financial climate and the increased caution being exercised by lenders many are finding it increasingly difficult to get the finance that they need.

As a result of this there are many borrowers that are turning to less traditional means of getting credit or raising finance, and whilst some of these options can prove useful and helpful for consumers industry officials have warned that caution should always be exercised to ensure that the deals that are available are fair and affordable.

There are a number of options available to those that need to get money but cannot afford to get credit from traditional lenders. However, before jumping in and taking up one of these options it is important for consumers to consider the cons as well as the pros, and to ensure that they are not getting ripped off as a result of the transaction.

One of the options that people might use when they are unable to get traditional finance is a payday loans company, which offer short term loans to tide borrowers over until payday. The APR charged on these loans can be very high. However, most will charge a fixed fee such as £10 per £100 borrowed and if you are only borrowing over a short period this may be an affordable option. Most do not carry out credit checks either, although proof of income must be provided. If you are considering a payday loan make sure that you check a few and compare the fees and charges so that you can get the best deal.

Another option that many people might look at is to get cash for gold, with a plethora of advertisements trying to tempt consumers to send in their gold jewellery in exchange for cash. However, many reports have claimed that the consumer often only gets a fraction of the value of the jewellery when doing this so you need to make sure that this is a viable option for you and don’t let yourself get ripped off over how much you are paid for your jewellery.

Finally, many people that cannot get mainstream finance may be tempted by doorstep lenders, and more worryingly loan sharks. You should bear in mind that with doorstep lenders you may be charged an extortionate rate of interest, which could be financially crippling. When it comes to loan sharks you should always avoid them and look at alternatives, as these are unregulated and often unscrupulous lenders, and you could end up in very hot water by borrowing through them.

Keeping insurance costs down

For most people having insurance cover in place is a way to provide a financial safeguard against a plethora of possibilities, from the chances of having a car accident to the chances of being burgled or falling ill. There are many different types of insurance policy available these days, with cover to protect against a wide range of events and possibilities, and having this cover in place can provide consumers with real peace of mind.

 The cost of cover can vary depending on a number of factors, such as the type of cover being taken out, the level of cover, and any past claims made, amongst other things. However, the insurance market has become incredibly competitive with a wide range of companies vying for the business of consumers, and this has resulted in some very competitive deals being made available for consumers.

 In this day and age, with many people still reeling from the recession and the global credit crisis, it is vital to try and keep costs down, and therefore it is important to ensure that you get the best deal on your insurance cover no matter what type of policy you are looking for. There are plenty of deals available these days offering all sorts of incentives from cut price protection to several months of free cover.

 Some people have decided to cut back by cancelling their insurance policies altogether, but this can work out to be very costly in the long run if something goes wrong. An alternative is to try and reduce the level of cover to one that you can comfortably afford, although you should make sure that you do not under-insure yourself otherwise you may still face financial difficulties if something goes wrong.

 Another important thing to consider is the importance of comparing policies from a wide range of providers, as there can be a big difference in price and you could find that you are paying far less with one company for the same level of cover than with another. There are various price comparison sites now available that will allow you to compare different insurance policies and companies with ease and speed, and you can really save time by using these. However, do bear in mind that not all insurance firms operate through these price comparison sites, so it may be worth checking on individual insurance firms’ sites to try and get the best deal.

Improvement in mortgage lending continues

For the past couple of years many people have found it increasingly difficult to get a mortgage loan, with many unable to get the finance that they need from the lenders in the UK, who have been exercising more caution when it comes to lending money.

However, over recent months the end of the recession has marked an easing in the financial markets, and lenders have become more relaxed about handing out finance to consumers. This could help people to obtain mortgage loans more easily, and could enable those struggling to get onto the property ladder to finally get the loan that will enable them to live their dream.

The Council of Mortgage Lenders has recently confirmed that mortgage lending levels have already increased, with the level of mortgage lending having increased by around 7 percent last month. However, the CML has said that whilst the level of mortgage lending has increased it is still far lower than the level of lending that was seen last year.

The CML has said that mortgage lending is still subdued in the UK, and despite the fact that the recession is over and financial markets are meant to have improved the market remains difficult and challenging. In fact, the CML believes that the total level of lending for this year could fall short of the forecast total of £150 billion.

The CML also said that a number of factors would affect the housing and mortgage markets such as consumer confidence levels in the mortgage and financial markets, and also household finances. Credit conditions are still said to be tight when it comes to getting a mortgage loan, and it is thought that many consumers, especially first time buyers, will continue to experience difficulties.

Lack of mortgages and increase in buy to let investors leads to increase in private renting

Over the past few years the mortgage lending market in the UK has become increasingly subdued, and whilst the recession may now be over and the economy on its way to recovery many people are still struggling to get a mortgage loan unless they have a very sizeable deposit to put down. At the same time the number of buy to let investors is said to have increased, which means that there is a rising number of buy to let properties on the market.

A combination of these factors is said to be affecting the number of people that are in private rented accommodation, and according to recent reports the number of people that are privately renting is set to rise, as more and more private investors come on to the market, making it increasingly easy for people to get a private rent accommodation compared to social housing, which involves going onto a waiting list or bidding on properties through council websites via the Choice Based Lettings system.

A study was recently carried out by the Building and Social Housing Foundation, and the results of the study indicated that one in five households could be living in private rented accommodation by the end of the decade. The foundation believes that there is going to be a boom in the number of people that are living in private rented accommodation, and this will make up one fifth of households by the end of the decade in ten years time.

One industry official said: “This research shows significant changes are taking place in the UK housing system. More and more of us are becoming private renters – 1m households since 2005 – some of them through choice, but many because they have no other option.”

Net lending to businesses falls further

Recently released figures have suggested that net bank lending to businesses in the UK continued to fall in the month of May despite the fact that the recession is now over and the economy is meant to be getting back on its feet. Since the onset of the global credit crisis there has been a lot of concern over lack of lending by banks to businesses in the UK, and this is something that many thought would result in the recession being more prolonged than it otherwise may have been.

The recent figures were released by the Bank of England, and showed that net bank lending in the month of May from banks to businesses had fallen. However, it was also noted that the rate at which banks were writing off bad loans had fallen. The central bank also noted that the demand for borrowing by smaller and medium sized businesses remained subdued, which may have contributed to the falling figures.

According to figures net bank lending to businesses has been falling on a month by month basis since December of 2008, although there was a slight respite in November of last year, when net lending by banks to businesses saw a modest increase. There are concerns over the amount that lenders are now having to pay to borrow themselves, and it is thought that these costs could end up being passed on to corporate customers.

The data came from the recent Trends in Lending report from the central banks, and report noted: “The intensification of market concerns over fiscal sustainability in a number of countries at the start of May resulted in heightened volatility and a reduction of liquidity in funding markets.”

Long term fixed rate mortgage option from Yorkshire Building Society

With the base interest rate in the UK still at its lowest level in the history of the Bank of England, at just 0.5 percent, many are now wondering when the base rate will start to increase again, and this is causing many people to wonder whether they should fix their rate over a period of time when taking out a mortgage.

There are different options available for those that want to fix their mortgages, and whilst the choice is not as great as it was prior to the financial crisis more and more lenders are becoming more lenient when it comes to offering a good choice of mortgages, although these are often to those that have a higher deposit level.

It has now been announced that the Yorkshire Building Society is offering a long terms fixed rate mortgage, with those considering buying a home or remortgaging now able to benefit from a ten year fixed rate mortgage. The deposit required on the mortgage is 25 percent, and borrowers will benefit from a rate of 4.99 percent.

The mortgage also has an arrangement fee that borrowers will have to pay, and this comes to £995. Whilst a ten year fix will provide many people with increased stability and peace of mind there are also some that may feel that this is too long a period to fix for.

An official from the building society said: “This product presents a fantastic opportunity for borrowers looking for long-term value, protection from future interest rate rises and piece of mind when it comes to their mortgage payments. Over the last ten years the average mortgage standard variable rate across the market has been 6.2%* so our new range of ten-year products offer great value.”

Norwich residents urged to ensure home insurance up to date

Residents in the Norwich area of the UK are being urged by officials to make sure that their home insurance is up to date and adequate. The warning comes after several break-ins in the area, which took place at the end of May and the beginning of June.

Whilst most people are well aware of the importance of having home insurance in place many forget to get their policies renewed or fail to ensure that the policy is amended to provide adequate coverage. This can cause big problems in the event of a break in, as the homeowner may find that he or she is unable to make a claim because of lack of coverage.

Residents in the area are being warned to check both their buildings and contents insurance to make sure that it is all up to date and provides adequate coverage. Officials are now stressing the importance of having home insurance policies in place for residents in Norwich, particularly given the spate of break ins that has been seen over recent weeks.

Police are still appealing for information with regards to the break ins, and in the meantime are warning residents in the area to be on their guard and do as much to protect themselves and their homes as they can.

Consumers that are looking for affordable home insurance coverage are able to choose from a range of options these days, and it is therefore possible to get a low cost policy that provides adequate protection. Police have confirmed that a number of high value gadgets and cash were taken in the recent break-ins, so consumers could save themselves a fortune in the cost of having to buy replacement simply by ensuring that they have insurance cover in place.

Using a financial advisor to get a mortgage

There is little doubt that getting a mortgage these days has become increasingly difficult, and with this in mind many people may end up making the wrong choice when it comes to determining which is the right mortgage product for them. First time buyers in particular could experience difficulties when it comes to getting a mortgage, and in many cases could really do with some professional and independent assistance from an expert in the field.

Most estate agents will have someone at the branch that can offer assistance with getting a mortgage, and this is something that many people looking for help with finding a mortgage opt for. However, it is important to remember that the selection of lenders that these advisors have on their books will be limited, which means that you could effectively miss out on a better offer.

There are also many independent financial advisors in operation that offer advice and assistance on finding mortgages without charging any upfront fee to the buyer, as these advisors get their payments from the mortgage lender that they refer the borrower to. However, whilst the choice of lenders that these independent financial advisors have is generally quite good there is always a danger that you could be hooked up with a mortgage based on the amount of commission that the lender is going to pay the advisor.

With advisors that are being paid by the lender rather than by the borrower it can be difficult to determine whether the advisor truly has the best interests of the borrower at heart. This is why more and more people that want help with getting a mortgage are opting for an independent financial advisor that they pay themselves rather than one that is paid by the lender.

The benefit to choosing a paid independent financial advisor is that this means that the advisor will truly have your best interests at heart, as he or she will not be working on the basis of how much any particular lender will pay them in commission. This gives buyers the peace of mind that they need, as they know that the advisor will be looking for the best deal possible for them having no financial reason to do anything other than this.

There are a number of different financial advisors available that offer assistance with mortgages and other financial products. It is a good idea to check on the fees charged by each of these advisors and also check on their experience and testimonials wherever possible.

Property prices increase again

According to data released by a High Street lender property prices have increased again in May, and the average property price is now closing in on the peak achieved in 2007 before the inset of the global credit crisis sent property prices tumbling. The data has been released by the Nationwide Building Society, which has reported a 0.5 percent increase in May, taking the average house price to £169,162.

Despite the increase in property prices the lender did warn that there was a shortage of properties on the market for sale, which meant a low level of property transactions that was affecting property prices. Since February of last year average house prices have increased by 12.2 percent according to the lender, and the average house price is now only 9.5 percent lower than the peak in 2007.

In terms of monthly increases the level of the increase seen in May was lower than those seen in March and April, with the May increase coming in at 0.5 percent compare to 1 percent in March and 1.1 percent in April. Officials have said that whilst the news of rising property prices will be welcomed by homeowners the lack of transactions in the housing market had remained relatively low since the end of last year.

One industry official said that stock shortages and low interest rates had been lifting house prices, but added that it was likely that more properties would come onto the market as a result of the government getting rid of Home Information Packs.

An economist from the Nationwide said: ‘Housing market conditions remain characterised by thin transaction volumes and a relative scarcity of properties for sale, despite a slow return of more sellers in recent months. The current supply-demand balance on the market is still consistent with relatively stable to modestly upward trending prices.’

Thousands get extension to complain about PPI

It has been reported that tens of thousands of consumers who may be looking to make a complaint about PPI, or Payment Protection Insurance, have been given an extension to the deadline to make their complaint by the UK’s financial regulator, the Financial Services Authority.

The normal deadline for PPI complaints in relation to being mis-sold the cover is six months. However, the FSA has extended the deadline for five months for those whose complaints were rejected by firms between November 28^th last year April 28^th this year. It is thought that around fifty five thousand people could benefit from the extension.

The additional five month period that has been granted by the FSA means that the tens of thousands of people whose complaints were turned down between November last year and April this year now have until towards the end of October this year to complain.

There was a delay in the FSA’s own plans whilst it decided how companies should be made to deal with PPI complaints. However, the regulator did not want consumers to suffer as a result of the delays, and this is why it has decided that it should extend the complaint deadline.

PPI has been at the centre of controversy for some time, and there have been investigations carried out showing that many people were mis-sold these policies, which were often sold to those that did not want them or were under the impression that they had to have the insurance cover in order to get the finance that they wanted.

One consumer said: “I’m glad that the FSA decided to extend the deadline, as otherwise I would have missed out on my chance to complain and possibly get a refund on cover that I believe to have been mis-sold to me.”

Energy firm breaches new rules

It has been revealed that an energy firm has recently been found guilty of breaching new regulations with regards to consumer complaints. According to a recent report EDF Energy failed to record customer complaints properly in line with regulations. The breach is said to have occurred between October 2008 and March of last year.

The report claims that the problem has now been rectified and the energy supplier has had to pay £200,000 to charities that help consumers. As a result of the payment that the energy supplier has made the UK’s energy regulator, Ofgem, has decided against imposing a separate fine against the energy firm.

The regulations that the company was found to have breached were introduced in 2008, and this is said to have been the first investigation since the rules were brought in. The energy firm is said to have taken immediate action to put the matter right. The rules had been brought it try and improve customer service levels from energy firms, which typically receive a huge number of complaints relating to customer service and billings.

The regulations aimed to ensure that consumer could contact the energy firm and have to explain the situation just once, and the complaint would be properly recorded so that the matter could be resolved or continue to be dealt with effectively. This also made it easier to monitor how long it took for the complaint to be resolved, helping to ensure that it was sorted out within the specified timescale.

EDF Energy said: “When Ofgem first identified in January 2009 that the number of complaints we had recorded was lower than expected, we immediately instigated a review and developed a robust action plan to resolve the matter. The actions we took led to an almost immediate and sustained improvement, such that our recorded complaints are now fully consistent with our expectations and with other suppliers.”       

Interest rates need to rise in the UK

It has been claimed by an organisation that the base interest rate in the UK needs to be increased in order to keep inflation under control, with the group claiming that it is necessary to increase the rate this year and increase it further over the course of next year.

The claim was made by the Organisation for Economic Co-operation and Development, which has stated that the base rate needs to be increased this year and by the end of next year needs to be at around 3.5 percent in order to keep a lid on inflation, which has already been soaring past the government target of 2 percent.

The base interest rate has been at its lowest level in the history of the Bank of England for well over a year now, standing at just 0.5 percent. However, inflation has been soaring and some officials now believe that in order to bring inflation down the base rate will need to be increased.

If the base rate does go up the cost of borrowing could also rise, which means that consumers may have to pay more interest on loans and mortgages. The OECD has said that whilst the government made the right move by reducing the base rate to this rock bottom level during the recession it was now time to consider increasing it.

A report from the OECD stated: ‘The gradual drift up of some measures of inflation expectations implies a need to increase interest rates earlier than previously thought and no later than the last quarter of 2010. The projected increase of core inflation to the Bank of England target warrants an increase of the policy rate to 3.5% by end-2011.’

OFT launches campaign to stop loan sharks

For a number of years loans sharks have been causing much concern for campaign groups, finance industry officials, regulators, and consumers, with many people falling victim to the unscrupulous practices of unregulated lenders running dodgy operations.

The UK watchdog, the Office of Fair Trading, is now said to have launched a new campaign to warn consumers over the dangers of taking finance from a loan shark. Over the past couple of years more people have been unable to get finance from traditional lenders, and some have been forced to go to loan sharks, leaving them to pay huge amounts of interest and deal with spiralling debt.

It is estimated that around 165,000 may be at the mercy of illegal money lenders in the UK, and many of these people are low income earners living in poor areas of the country according to the Office of Fair Trading. A campaign has already been run by the watchdog, and has saved many people from these illegal lenders and resulted in a number of jail sentences for the lenders themselves.

A new campaign has now been launched by the Office of Fair Trading along with Trading Standards, and it is hoped that this new campaign will help more people to realise the dangers of borrowing from loan sharks and put even more of these illegal lenders behind bars.

Posters, leaflets, and an online advert are amongst the things that form the new campaign against loan sharks, with advertisements targeting those living in low income parts of the country in particular.

The Office of Fair Trading said: “If you have borrowed money from a loan shark, you haven’t broken the law – they have. Loan sharks cause misery to thousands of families and should be stopped.”

Another drop in lending by banks to businesses

Recently released figures have shown that for the month of April the level of lending by UK banks to non financial businesses fell, with lending falling by £1.1 billion. The figures were released by the British Bankers’ Association, and officials said that whilst April marked another fall in business lending the level of the drop was smaller than those seen in the previous six months.

In the past six months the average decline seen over the period was £1.6 billion per months, so the April drop is significantly lower. Industry groups and government officials have been urging banks to lend more to businesses because of the importance to the economy, and the drop in lending seen in April has been put down to a number of factors.

The British Bankers’ Association has claimed that part of the reason that borrowing to businesses has fallen is because there is a lower demand for finance from UK businesses, as many are exercising caution when it comes to borrowing. The BBA said that figures from the Bank of England showed that corporate deposits had been rising sharply.

However, other industry official believe that it is not just lack of demand that is hindering lending from banks but also the fact that many businesses are struggling to get finance from banks even in cases where they need to borrow the money. On a separate note the level of net mortgage lending from banks also fell in April, dropping to £1.8 billion.

Economist, Ed Stansfield, stated: “April’s soft mortgage lending data add weight to the idea that last year’s upturn in approvals overstated the underlying health of the housing market. Moreover, since the looming fiscal austerity measures will keep a lid on mortgage demand while the uncertain funding outlook will limit the supply of mortgage credit, weak lending looks set to remain the norm for some time.”

England fans need to sort out travel cover

A huge number of lucky England football fans will be looking forward to jetting off to South Africa over the coming weeks to enjoy the excitement of the World Cup, which kicks off in June. Many will already have sorted out their hotels, travel money, flights, and even itineraries.

However, many excited England fans may have forgotten about one very important element of their travel arrangements in the form of their travel insurance cover. With the possibility of things going wrong even before the trip has started, as well as the risk of something happening whilst they are away, World Cup ticket holders are being advised to ensure that they get their travel insurance sorted out sooner rather than later.

High Street retail giant Marks & Spencer, which also deals with financial products including insurance, has said that travellers heading off to South Africa for the football should ensure that they prioritise on getting travel insurance cover if they do not have any in place already.

Officials from M&S said that some travellers may find that they have to make a claim on their cover before they have even travelled, and with people having paid out huge sums of money for their trip to see the football those that do not have cover in place could end up losing out big time.

One insurance industry official said: “People get really excited about trips like this, and they spend aged getting their flights and hotels sorted out. However, many overlook the fact that they need travel insurance cover or tend to leave it till the last minute, and this can cause a real problem if a claim has to be made prior to travel.”

Increase seen in debt consolidation loan enquiries

According to a recent report the number of enquiries relating to debt consolidation in the UK has been rising, as consumers struggle to cope with their debt and look for solutions to try and ease the financial strain. Over the last couple of years debt problems have become a major issue for many people, with the global financial crisis and the recession taking their toll.

There are a number of options that are available to those that have unmanageable levels of debt these days, and one of these is to consolidate their debts. A debt consolidation loan is designed to allow borrowers to wrap all of their different unsecured loans, credit cards, store cards, etc into one more convenient, lower interest loan.

By consolidating their debts borrowers can enjoy reducing the overall amount of interest that they pay, will only have to deal with one creditor and one repayment each month, and can greatly reduce the amount that they are paying out each month by taking out the consolidation loan over a longer period so that repayments are smaller.

The report claims that over the past couple of years many people have accrued high levels of debt through having to borrow money to manage their day to day costs and even through having to use their credit cards for essentials, bill payments, and in some cases mortgage repayments.

Many of the enquiries that are being received by lenders who offer consolidation loans are from homeowners who want to use some of the equity in their homes to borrow money and repay their smaller debts. Consumers that are looking to consolidate their debts are being advised to compare a range of loans from different lenders to boost their chances of getting the best deal.

Women fail to cover themselves for critical illness or death

For many people having critical illness insurance cover and life insurance cover is vital so that they can be certain that their loved ones are protected in the event that the worst should happen. Critical illness insurance and life cover provides peace of mind and stability for those that have the cover as well as for their loved ones, and there are many different policies available from a range of providers these days.

However, according to a recent report women in the UK do not seem to be as concerned about covering themselves with critical illness and life cover as they perhaps should be, and this has caused concern amongst some industry officials. A study that was recently carried out by leading life insurance firm Axa Life showed that many women in the UK had no life or critical illness cover in place.

According to the results of the study more than 30 percent of women did not think that they needed life insurance or critical illness cover. The figures showed that only one third of women actually had any life insurance cover in place, and when it came to critical illness cover only 20 percent of women had any cover in place.

Furthermore the results indicated that of those women that did take out life insurance cover and critical illness cover many were underinsuring themselves, which could prove to be problematic for them or their loved ones in the event of critical illness or death.

An official from Axa Life said that women had become more independent over recent years in many ways, including financially, and that they needed to be more aware of possible health problems and take steps to protect themselves financially against unexpected health problems that could seriously affect them and their families.

Boost your chances of getting a mortgage as a first time buyer

As many people are already aware getting a mortgage can be difficult for anyone these days, with the banks exercising extreme caution over who they lend to and putting a range of restrictions in place with regards to mortgage loans. However, one of the groups most likely to experience difficulties when it comes to mortgage loans is first time buyers.

There are many first time buyers that are desperate to get onto the property ladder, and have been for some time. However, for many years these potential buyers have faced difficulties when it comes to getting a property. Until the global credit crisis swept the nation first time buyers could get mortgages without even having to put down a deposit in most cases, but many could not afford the extortionate house prices that resulted from the many years of house price inflation.

Once the credit crunch hit property prices began to tumble, which is what many first time buyers may have been waiting for. However, at the same time as this the banks started to really rein in their lending, wiping out the 0 percent deposit that so many first time buyers had come to rely on and demanding huge sums up money upfront before even considering granting a mortgage loan. This has left first time buyers out in the cold once again, albeit for different reasons.

Whilst there is no doubt that first time buyers still face many challenges when it comes to getting a property there are some steps that they can take to try and improve the chances of getting onto the property ladder. One important thing to remember is that lenders are being very cautious over who they lend to, so it is advisable for first time buyers to be prepared and be aware of their credit rating. Before applying for a mortgage buyers are advised to order a copy of their credit report and check how good the rating is, as this will provide an idea of how likely it is that a mortgage will be granted.

Another think to consider is the level of deposit that the lender will want. Before wasting time looking at properties and applying for mortgages first time buyers should plan their budgets and spend time saving as much as possible, as the higher the deposit the more likely it is that an affordable mortgage will be granted by lenders.

Finally, more and more first time buyers are now turning to shared equity schemes, where they get a mortgage out to purchase a percentage of a property and rent the remainder from a housing association until they can also afford to buy the remaining share, which can be done in stages. This is a more effective and affordable way for first time buyers to get onto the property ladder these days, and it is possible to get a brand new house without having to take out a huge mortgage by using this option.

April sees drop in mortgage lending

The mortgage lending figures for April in the UK have suffered a fall according to recently released figures. The figures were released by the Council of Mortgage Lenders earlier this week, and showed that in April gross mortgage lending fell by 12 percent.

The figures from the Council of Mortgage Lenders showed that the level of mortgage lending for the month reached a value of £10.2 billion. This marks the lowest level of mortgage lending in the UK during April for ten years according to reports. The figure reflected a £1.4 billion drop compared to the previous month, with mortgage lending levels for the month of March coming in at £11.6 billion.

The level of mortgage lending this April was also down by 1 percent compared to April of last year, when the mortgage and property markets were still severely depressed. Officials from the Council of Mortgage Lenders said that there were expectations of a slight decline in mortgage lending for the month of April due to a number of factors, including when the Easter holiday fell this year.

However, despite the discouraging figures the Council of Mortgage Lenders has said that the mortgage market is still on target at present to reach its aim of lending £150 billion in mortgage loans over the course of the year.

Whilst the mortgage market has seen some level of recovery over recent months there are still a number of problems facing groups such as first time buyers. Many are still being expected to raise a fairly sizeable deposit by lenders, which is hampering their efforts to get onto the property ladder, and these demands are being made due to the financial difficulties that are still affecting some of the banks themselves as they try to recover from the financial crisis.

One billion pounds have been spent on HIPs

Earlier this week the new coalition government announced that it was abolishing Home Information Packs, or HIPs, other than keeping one element of the pack, which was the EPC or Energy Performance Certificate. The packs have caused huge controversy since they were brought in by Labour in 2007, with homeowners loathe to spend the hundreds of pounds required when trying to sell their homes.

According to recent reports homeowners in the UK have spent an astonishing £1 billion on these Home Information Packs since they were brought in, and many officials have branded this a complete waste of money adding that the HIPs were pretty pointless.

Estate agents across the nation have welcomed the new government’s decision to abolish these packs just a few days after coming into power. For estate agents the need for HIPs caused a number of problems, including a reduction in properties being sold because of the additional cost and also potential delays with property sales due to the need for the pack.

The report claims that around 2.7 million homeowners have been forced to pay for one of these packs in order to sell their homes, but that in the most part those buying the property didn’t even bother to look at the information in the packs. The new housing minister, Grant Schapps, said that he was keen to get on with ‘cutting away pointless red tape that is strangling the market’.

Eric Pickles, the Communities Secretary, said that the money that homeowners would save would come in useful for other things, stating: ‘Hips are history. I hope people can use the money they save to do something useful for themselves, like go to B&Q and buy some paint or some shelving or some white goods.’

Rise in bank card fraud recorded

Britain’s fraud prevention agency, Cifas, has reported an increase in card fraud in the first three months of this year, with many cardholders finding themselves at the receiving end of identity theft. The agency claimed that it recorded around 27,000 victims of this type of fraud during the first quarter of the year, reflecting an increase of 6000 or 23 percent.

There has also been a 45 percent increase in the number of cases where the fraud has been highlighted when it too late and the fraudsters have already got away with the cash. Fraudsters are said to be using a range of tools and methods of getting hold of details of customers, including social networking sites such as Facebook in cases where consumers are careless with their personal information.

Consumer campaign group Which? said that many people were increasing the risk of becoming victims of card fraud by writing down their PIN because they cannot remember it. Some people have even given their PIN to other people that they feel they can trust, but this can also increase the risk of falling victim to this type of fraud.

In a poll nearly 10 percent of people that admitted to writing down their PIN said that they had a copy of it written down at their workplace. The campaign group said that if cardholders were found to have been careless with their PIN or personal details then there was no guarantee that they would be reimbursed if they fell victim to card fraud.

An official from Which? said: ‘The results show that too many consumers are putting their finances in jeopardy by not taking simple precautions. Writing down your Pin is like leaving your door open when you leave the house.’

Lloyds cracks down on interest only mortgages

Over the years interest only mortgages have become popular amongst certain property purchasers, such as first time buyers that want to keep repayments down and those on lower incomes. With interest only mortgages the borrower repays only the interest on the loan over the specified term, which means that at the end of the term the actual loan itself still needs to be repaid.

The idea is that when these mortgages are taken out the borrower also sets up another investment so that over the years they can raise the money to pay the loan off in full at the end of the term. However, officials believe that many people that took these mortgages out had no plans in place to save for repayments of the loan at the end of the term, and many were simply relying on the value of their property increasing sufficiently to sort out the loan.

Lenders have become far more cautious about taking risks over the past couple of years, since the onset of the global credit crisis, and according to recent reports have now started to crack down on risky interest only mortgages. Many lenders have been reluctant to deal with interest only mortgages for some time, but more and more are now set to become wary of these deals according to reports.

One banking giant, Lloyds TSB, is said to have already started its crackdown on interest only mortgages, and has placed a cap on the amount that customers can borrow without repaying the capital. It is now thought that other lenders will quickly follow suit in terms of clamping down on these mortgages.

An official from Savills Private Finance commented on these interest only mortgages, stating: ‘Lenders see them as being extremely risky, and they would much prefer everybody to have a repayment deal. There will be fewer and fewer of them, and they could eventually disappear.’

Choose the right bank account for your needs

These days there are a number of bank account available for consumers to choose from based on their needs and circumstances, and it is important that you choose the right bank account so that you have the facilities and benefits that you need to deal with your day to day financial transactions.

Choosing the right bank account can make a big difference to how easily you manage your financial transactions, and most of the major banks these days offer three choices when it comes to bank accounts. This includes the basic bank account, current accounts, and packaged current accounts.

It is a good idea to look into the different features and benefits of these individual bank accounts so that you can better determine which of these is the right one for your needs, as this will help you to make a more informed decision.

The basic bank account is one that is designed for basic day to day financial management, and is somewhat limited compared to the standard current account in that it does not come with facilities such as a debit card or cheque book. These accounts allow you to set up direct debits and standing orders, and also come with a cash card so that you can take money out from a cash point. However, there is no overdraft facility with the basic bank account, and they are often made available to those on low incomes or credit history problems.

Current accounts offer slightly more than the basic bank account, and the additional features that may be available with these accounts include an overdraft facility (subject to status), a cheque book, and a debit card. These accounts, like the basic bank accounts, are ideal for having money paid in and out and for managing your day to day finances.

Over recent years more and more banks have been offering packaged bank accounts, and these are fee charging accounts with the monthly charge varying from one bank to another. The packaged back account allows you the same facilities and benefits as a current account. However, it also comes with a package of benefits, which often includes benefits such as travel insurance cover, preferential borrowing rates, car breakdown cover, discounts off various services and from a variety of retailers, mobile phone protection, etc. You should always check the benefits package to determine whether you will use the services and products offered, as otherwise it will not be worth you paying the monthly fee for the account.

Should Brits take out loans for weddings?

As most married couples will already know getting married can be an expensive affair if you want all the trimmings, and those that are looking to have the perfect wedding, entertain guests, provide food and entertainment, and round things off with a romantic honeymoon will know that the cost can run into thousands of pounds.

In the current financial climate it can be difficult for couples to save the kind of money that they need for a wedding within a reasonable space of time, particularly if they also want to put a deposit down on a property. It would therefore be natural to think that many couples look into taking out a loan for their special day.

Many couples do turn to personal or wedding loans in order to pay for the big day, and those that do are advised to look for the best rate of interest and the best deal possible, although some people may be put off from starting their married life in debt.

Whilst those getting married may consider a loan for their big day, recent research has shown that attendees are far less likely to take out a loan in order to pay for expenses at the weddings of their loved ones. In fact, Santander carried out research showing that only 1 percent of Brits would actually take out a personal loan to fund the cost of going to the wedding of a loved one.

Emma Roberts from Santander said: “It’s easy to overlook the cost involved in being a wedding guest but the outlay can be significant, both before and during the big day. The last thing people want to be thinking about when preparing for a loved one’s wedding is the expense involved but costs can quickly mount up.”

Overdraft interest charges hit highest level in ten years

Since the catastrophic global credit crisis swept across the UK, leaving the banking industry to face huge losses, the UK’s banks have been taking whatever steps necessary to try and recoup the massive losses, which were made worse by the recession, which left many borrowers unable to continue with repayments on loans, credit cards, and other forms of finance.

Reports have highlighted the various ways in which banks have been trying to claw back their financial losses and shore up their own finances, including reducing the interest paid on savings accounts to little or even nothing in some cases, and sneakily increasing the interest rates charged on loans and other forms of credit.

Another recent report claims that the interest rates being charged on current account overdrafts have now been hiked up to their highest level ten years, with the average rate of interest being charged on accounts that are in the red increasing to 14.22 percent.

The report states highlighted that this was twenty eight times higher than the base interest rate, which is at an all time low of just 0.5 percent, where it has been since March of last year. It also stated that the base interest rate was a massive 6 percent last time average overdraft interest rates exceeded 14 percent. Officials believe that this is yet another move by banks to try and make more money from customers and improve their own profits.

An official from the financial industry group Moneyfacts stated: “Despite eventually winning the OFT case banks made significant changes to the level of charges they will levy for unauthorised borrowing. As one revenue stream closed inevitably they have moved to find another. Banks are likely to be making more now from these increases than they ever were from penalty charges.”

PPI mis-selling results in compensation of millions for consumers

Consumers in the UK have won back millions of pounds from banks and insurance companies as a result of being mis-sold insurance or becoming victims of administrative errors. According to figures the total amount won back by consumers who were mis-sold insurance or experienced errors in the last six months of last year was £284 million.

The reports show that the majority of these cases related to consumers that had been sold payment protection insurance, also known as PPI. This was a type of insurance sold alongside credit such as loans and credit cards, but came under fire several years ago after investigations found that it was being widely mis-sold by many providers of financial products and services.

The Financial Services Authority, the UK’s financial regulator, made these figures public recently, and also revealed that banks had received over 1.1 million complaints relating to unauthorised overdraft charges. Banks are now dealing with a huge backlog of these complaints following the removal of a ban on addressing the complaints, which were frozen as the bank charge case went through the High Court and then the Supreme Court.

Banks and insurance firms were said to have received 2.7 million complaints between July and December of last year, which compared to 1.6 million in the six months previous. The figures also showed that of these 45 percent were upheld in favour of the consumer.

The Financial Services Authority has, in the meantime, said that it will be coming down hard on banks that are found to be failing to deal with customer complaints effectively, and has warned that there are some banks that are trying to force customers to buy financial products that they do not want or need to shore up their own finances.

Have things improved for first time buyers?

Over recent years things have gone from bad to worse for many non-homeowners that may have been hoping to get onto the property ladder. After years of soaring property prices many would be first time buyers will have been pleased to learn that prices starting plummeting following the onset of the global credit crunch in the latter part of 2007.

However, just as things looked as though they were on the up first time buyers were hit with a plethora of new problems, with the global financial meltdown resulting in severe restrictions on mortgages. This also led to banks increasing the level of deposit that they wanted from first time buyers, making it impossible for many people within this group to scrape together the minimum deposit that lenders were demanding to get an affordable mortgage.

The global credit crunch and he recession left many first time buyers hoping that their luck had changed and that things would ease off. For many this marked the chance of being able to get a property at last. However, this is not what has happened according to recent reports. Despite the recession being over and reports that banks were being more relaxed over lending first time buyers are still in for a bad time.

A number of reports have claimed that the banks are being increasingly cautious about mortgage lending and are still only offering their best deals to those that have a fairly sizeable deposit. This means that first time buyers need to be able to stump up a fair amount of cash towards a property if they want to get a mortgage that is affordable.

A number of things are thought to be affecting the decision of banks to continue their caution when it comes to mortgage lending. One has been the uncertainty over the running of the country resulting from the hung parliament following the general election recently. Whilst this is some way to being sorted, with leader of the Conservative party, David Cameron, now named as Prime Minister the country still finds itself in a situation that it has not seen for decades in the form of a coalition government formed with the Liberal Democrats.

Another of the factors thought to be affecting mortgage lending is continued uncertainty over jobs, with banks loathe to take the risk of lending in a climate where the risk of job losses is high.

Loan hikes have made millions for UK banks

According to a recent report banks in the UK have managed to make millions of pounds as a result of sneaky hikes on loans and other forms of borrowing. The claims have been made following an investigation by a finance group, which shows that since they started making huge losses during the credit crunch the banks have been merciless on their attack on consumers in order to try and shore up their own finances.

It is claimed that banks have been making up the losses on their books by slyly increasing the rates of interest charged on borrowing whilst at the same time reducing the rate of interest on savings accounts to the point where some savers are earning practically nothing on the money that they put into their savings.

Officials claim that banks are getting away with this because of the rock bottom base interest rate, which still stands at just 0.5 percent, which is the lowest it has ever been in the history of the Bank of England, and it has been at this level for well over a year now.

The low base interest rate has fooled many people into thinking that borrowing is cheap at the moment. However, what has in fact happened is that the gap between the base rate and the rates that lenders are charging has expanded resulting in what has been described as an eye watering margin. The fact that the base rate is so low, coupled with the fact that many of these banks have been bailed out by the taxpayer, appears to have provided no benefit to borrowers.

An official from the consumer campaign group Which? said: ‘We paid for the banks’ failures once when we bailed them out and now they are getting a double hit by taking more of our cash.’

Mortgage approvals still slow

According to figures mortgage approvals in the UK for the start of this year have been sluggish despite optimism over improvements in the market. The Bank of England released data showing that the level of mortgage approvals in March did increase slightly from the previous month rising from 46,882 to 48,901.

The figure for mortgage approvals in March was also said to be 17 percent higher than the figure in March of last year, so there have been some signs of improvement. However, the bigger picture indicates that mortgage approvals remain sluggish for the first part of the year.

Apart from 2009 the number of mortgage approvals for the first quarter of this year was at its lowest on record according to the figures. One economist said that the Bank of England figures showed that the mortgage market and housing sector were finding it difficult to gain momentum following the turbulence of the last couple of years.

He added that over the coming months property prices in the UK were likely to be erratic, and for the remainder of the year it was most likely that property prices would be flat. The Building Societies Association added that the mortgage market remained fragile and was likely to remain so in the short term.

The group said that some of the factors that could contribute to this fragility included the uncertainty over leadership of the country, jobs, interest rates, and inflation on property prices.

One financial expert concluded: “It is good news for borrows that lenders are slowly acclimatising to a new landscape of the mortgage market and continue to improve on the competitiveness of new mortgage deals. But lending figures show that there is only a slight improvement in the market; we still have a way to go before the market returns to any sort of normality.”

Consumers saving more and using credit cards less

Recent reports have shown that consumers are getting far savvier about their finances, with many now choosing to save money and shore up their finances rather than splashing the cash on large purchases or spending ruthlessly on their credit cards. This indicates that consumers have become more accustomed to the fact that they need to save money to help them through in the current climate and that they have to be more mindful about their spending.

Prior to the global credit crisis and the recession many of those that are now saving their money may not have thought twice about using the money to purchase big ticket items, splash out on luxuries, and spend on items that they didn’t really need. Likewise, many may not have given a second thought before going out armed with their credit card and treating themselves to pricey luxuries.

However, over the past couple of years many people have realised how important it is to have money put aside to help them through in the event of a financial emergency or if they lose their jobs. With this in mind more and more people are putting money aside and avoiding spending unnecessarily. According to reports a rising number of people are also trying to pay off their debt so that they can be more financially secure in the future.

A spokesperson from ING Direct, which released the report, said that many people were now trying to get over the debt that they accrued over the Christmas period and were focussing on saving or repaying their debt.

He said: “We are also seeing a trend, which is getting stronger and stronger, that people start saving before they make big purchases and use their credit cards less and less.”

Car insurance premiums experience unexpected fall

It has been reported by a motoring industry group that car insurance premiums have experienced an unexpected fall, although this is said to be a short term reduction, with prices expected to increase again. The data was released by the motoring group the AA, which claims that in the first three months of this year car insurance premiums fell by 3.2 percent.

The fall in car insurance premiums was said to be a very unexpected one, particularly given that over the course of last year car insurance prices increased by 18.7 percent in total, resulting in further financial misery for the many drivers who were already experiencing problems due to other motoring costs. The fall means that the average cost of full comprehensive insurance is now £968.

However, whilst the temporary respite may come as good news to driver, particularly given the soaring price of petrol and diesel at the pumps, the lower prices are not expected to last. The report claims that over the rest of this year drivers are set to be hit with rising insurance premiums once again, and this is likely to continue for the foreseeable future.

It is thought that insurance companies at the more expensive end of the market have been reining in their prices, and this is what has caused the temporary drop in premiums seen during the first quarter of this year. However, the rest of the year will see insurance premiums increase once again, causing more financial problems for motorists.

Those that feel that they are paying over the odds for their cover are advised to shop around and compare prices in order to get a better deal. It is also worth contacting the current insurance company as the firm may be prepared to do a better deal if they think that the customer is going to move elsewhere.

Energy firm switches customers to higher priced tariffs

German owned energy firm NPower has shifted tens of thousands of its customers onto higher priced tariffs in a bid to retaliate at the energy regulator Ofgem. The move comes after Ofgem said that companies must only offer deals to customers that reflect the actual cost of providing the power.

The requirement was made by the regulator in a bid to reduce the cost of energy for many customers. However, Npower has been described as acting ‘petulantly’ by stating that it works both ways and subsequently moving thousands of its customers onto deals that could see them paying up to 25 percent more for their energy.

The supplier, which has over six million customers, said that the changes that Ofgem has made to its licensing requirements has forced it to cancel the deals that have seen customers moved over to more costly tariffs. Whilst some of the customers that have been switched had come to the end of their special deals, others had taken deals that had no expiry date attached and have simply found themselves simply shunted onto poor value deals.

An official from a popular comparison site said that Npower had turned the tables on the regulator but offering its consumers poor deals as a result of the changes when the regulator had been aiming for consumers to get better results because of the changes that it has put into place.

He said: “This is a petulant move from Npower which demonstrates its disregard for customers who signed up to cheaper online tariffs. Ofgem’s guidelines were designed to encourage energy providers to offer all customers equally good deals, but Npower seems to have turned that on its head and decided to offer all customers equally bad ones.”

Getting a good deal on a personal loan

Over the past couple of years the availability of personal loans has become somewhat restricted, and the global financial crisis and recession have made it difficult for many people to get a good deal on personal finance. However, the market is now starting to ease, and this means that whilst personal loans are by no means being dished out like smarties, as they were in the days before the credit crisis, it is a little easier to come by a good deal on a personal loan than it may have been a year or so ago.

These days people use personal loans for all sorts of purposes, and if you get the right loan this can be a great way to fund a range of things that you may want. Whilst the use of personal loans for debt consolidation has fallen over recent years many people use these loans for things such as improving their homes, buying a new vehicle, paying for a wedding, or even funding a dream holiday.

Your ability to get a low cost personal loan will depend on a number of factors, including your credit history and rating. Those with good or excellent credit should be able to find a low rate personal loan without any problem, whilst those with a tarnished credit history may find it difficult to get a personal loan or may have to pay a higher rate of interest because of the increased risk they pose to the lender.

In order to get the best deal on a personal loan you need to make sure that you compare the deals on offer, as this will boost your chances of finding a loan that comes with affordable repayments. You can compare loans quickly and easily online, and using a comparison site could help to save you time as you can check out a range of personal loans and providers at a glance.

When you are comparing personal loans there are a number of things that you need to look at to check the suitability of the loans. You should check out the interest rate on the loans, as this will determine how much you repay on the loan. Also, compare the repayment periods available, as this will give you an idea of how much you need to repay each month. Always ready the terms and conditions of the loans to check on any penalties or extra charges.

Credit card fraud increases

The flexibility and ease that credit cards provide have made them hugely popular amongst consumers in the UK, and many people now have one or more credit cards, which they use for making purchases on the High Street, by phone, and online. However, whilst these cards do offer the ultimate in freedom and flexibility they can also pose a danger if users are not vigilant.

Credit card users are being warned that they need to be more vigilant when using their credit cards and with their credit card information. This is because figures have shown that the level of credit card fraud has increased, with 6.4 percent of plastic cardholder falling victim to fraud in the past twelve months compared to 4.7 percent in the previous year.

The figures were released as part of the British Crime Survey, and the rising level of card fraud has made many people concerned about falling victim to this type of activity. In a survey 53 percent of cardholders said that they were concerned about becoming a victim of plastic card fraud.

With fraudsters now using a range of sophisticated methods to conduct this type of criminal activity, cardholders are being urged to be extra vigilant when using their credit and debit cards. It is also advisable for cardholders to check their statements carefully and also check copies of their credit reports in order to look out or any suspicious transactions.

One credit card holder stated: “I used to do a lot of shopping online with my credit card, and I’ve never been a victim of fraud. However, these days I often think twice about shopping in this way because the level of card crime in the UK really worries me. I think it is vital that shoppers are really careful when they use their cards.”

Trends in Lending report claims house prices and mortgage lending will remain steady

The Bank of England has recently released its Trends in Lending report, which has shown that mortgage lending levels have remained steady over the first quarter of this year, and that whilst there may be a slight increase in mortgage lending over the course of the year lending levels will remain pretty steady overall.

The Bank of England report also indicated that property prices would remain flat over the course of this year, having increased slightly over recent months. Mortgage availability is expected to increase but only by a slight amount, and Loan to Value ratios are also expected to increase slightly over the course of this year.

Whilst the data from the report reflects improvement compared to last year, when the recession and the financial crisis were still taking their toll heavily on the property and mortgage markets, the climate is still expected to remain challenging for many people that are looking to get onto the property ladder or take out a mortgage for a new property.

Lenders are still likely to be looking for higher deposits, although there has been an increase in the number of lenders that are offering 10 percent deposit mortgages, which has provided some degree of relief for cash strapped first time buyers who have suffered hugely over the past couple of years since the onset of the global credit crisis.

One first time buyer said: “I hope to see the amount of deposit that lenders are looking for to come down over this year, although I’m not sure that it will. I would love to be able to get a mortgage and buy a property but until the deposit level comes down I’m stuck with renting, which is just money down the drain.”

Now may be the time for British Gas customers to make the switch

British Gas has recently announced that around half a million of its customers are set to receive higher bills as a result of a special scheme coming to an end. The customers are those that signed a deal in 2005 by taking up the Price Freeze 2010 plan, which effectively froze their payments for a five year period up until this year.

The customers that did take up the deal managed to avoid the price hikes that were seen in 2006 and 2008, and on average saved several hundred pounds a year compared to those that were not on the plan. However, the scheme is now coming to an end, and this could see the bills of these customers increase sharply.

British Gas is writing to some customers and putting them automatically on a new price freeze plan up until 2012, although the cost per unit on this plan will be higher than it was on the plans that were signed back in 2005. Those that do not want to automatically switch to the plan are being advised to contact British Gas to let the company know, and they will then be moved to the energy supplier’s standard tariff.

Form those that are not going to switch to another scheme with British Gas it may be worth looking at the charges of other suppliers in the area to see if they can get a better deal on the cost of their gas and electricity usage than they would be being moved to the standard tariff from British Gas.

Talking of the customers that fixed their prices in 2005 one industry official said: ‘Everything fell into place for these customers. They fixed at the right time, for the right price and for the right length of time.’

Water bills to soar over the next two decades

One of the UK’s biggest water suppliers, Severn Trent, has said that water bills are likely to soar over the next two decades. The water supplier predicts that over the next twenty years the cost of water bills will soar around 27 percent above inflation.

The supplier has put the increase down to rising operating costs and EU regulations, both of which it claims will cost the industry billions of pounds. The water industry was privatised in 1989, and since that time has made huge profits from increasing bills. However, despite the price increases water companies are said to have failed to carry out repairs and offered a poor level of customer service.

Severn Trent said that rules that have now been brought in by regulators will results in billions of pounds having to be spent over the coming years, and these operating costs are going to prove hard to handle by the water suppliers. The company said that the rising costs that would be incurred by the water industry would have to be passed on to customers, who would see their water bills rocket as a result.

An official from Severn Trent stated: ‘It is not clear such a continued high level of investment is sustainable in terms of whether it can be financed, whether customers are willing to pay for it and the detrimental impact on carbon emissions.’

The water regulator Ofwat has also ordered water suppliers to place a cap on bills over the next five year, with Severn Trent being told to cut its bills by 4 percent, which will also hit the supplier hard. The rising cost of borrowing, which is a problem for all businesses, is also going to play a part in the higher costs that customers will face.

Students in line for loan rate shock

It has been claimed that many students that are studying at university in the UK could be set to face a loan rate shock, with interest rates on student loans set to increase as a result of the rise in inflation levels. Students already face a tough time when it comes to being able to afford everything they need whilst studying at university, but if interest rates do increase the situation could get even worse for many of those studying in the UK.

This week it was reported that the level of inflation had increased to 3.4 percent, which is 1.4 percent higher than the government’s target of 2 percent. The increase in inflation was said to have been driven by price increases on things such as petrol, food, and energy compared to last year when prices on these products and services were falling.

The interest rates on student loans are increased by the Student Loans Company each September based on the level of RPI inflation seen in March of that same year. According to reports around three million students as well as graduates could see their rate of interest increase when September comes around. The rate of interest that students are paying on loans can vary based on when the loan was taken out.

In addition to facing increased interest rates on loans students are also up in arms about the lack of clarity over student funding and university fees from the three main political parties in the run up to the general election. Student unions have accused parties of failing to provide clarity over these issues and hiding behind a review that was carried out last year in order to avoid having to go into too much detail about their policies with regards to this matter.

First time buyers fail to budget effectively

A recent report has indicated that many first time buyers fail to budget properly before they make the move into their new home, and often receive a shock when they realise that they outgoings are going to be far higher than they initially anticipated.

Many first time buyers are budgeting for things such as deposits, mortgage repayments, and shopping, but are failing to get prices for essentials such as utilities, insurance cover, and the like. In addition, many fail to account for costs such as petrol and general spending money when they are working out affordability, and this can come as a shock when they actually move in to the property and start paying out.

Buyers that are moving into a property for the first time and are therefore unaccustomed to the services they will need and the cost of these services are advised to seek advice prior to accepting any mortgage offer, otherwise they could find themselves in a property with a mortgage but may not be able to afford to live there.

Common things such as monthly or weekly shopping, home insurance cover, television licence, utilities, broadband or Internet costs, mobile phone usage costs, and general day to day spending money are amongst the things that many first time buyers fail to budget for when working out whether they can actually afford to buy and live in their own property.

One first time buyer who purchased a property last year said that it was a shock over the first month or so as she realised how many things she hadn’t budgeted for before moving in.

She said: “I’ve had to change my lifestyle completely because of the amount that I am actually paying out compared to the amount I had budgeted for. I wish I’d spent more time working out my budget rather than rushing to buy a property.”

Inaccurate bills common amongst energy suppliers

Many households are used to getting bills that are inaccurate for one reason or another, and these bills can come from a variety of sources and companies. This can be very frustrating for the bill payer, as it can mean that it takes longer to sort out their budget, which is something that most people want to get done as quickly as possible in the current financial climate.

It has been revealed that some companies are worse than others when it comes to sending out bills that are no accurate, and the group of companies that have emerged as being the worst for this type of activity is energy suppliers, according to a recent report.

Research was carried out by uswitch.com and indicated that consumers found energy suppliers to be the worst when it came to sending out inaccurate bills. Moreover, this is the fourth year in a row that energy suppliers have been voted worst in this survey, showing that much improvement is still needed when it comes to billing.

The data showed that in the last two years around 30 percent of households had received incorrect bills from their energy suppliers for their gas and electricity usage. Data also showed that of 17 percent of these households had been incorrectly billed by their energy supplier more than once.

Whilst some of the inaccuracies on the bills were sorted out within a week or two, the average time taken to resolve the problem was just over two months. This has led to a greater number of consumers providing their own readings o energy suppliers.

Uswitch stated: ‘Clearly there’s a long way to go before the energy industry lays the ghost of bad billing to rest, but there is some hope here. The fact that more households are providing suppliers with meter readings will play no small part in improving the accuracy of our energy bills.’

Holidaymakers slate insurance firms over volcanic disruption

Thousands of UK holidaymakers and business travellers have had their plans disrupted following the volcanic ash cloud that has swept across from Iceland, affecting both the UK and neighbouring European destinations. For the first time British air space was effectively closed down due to the risk of damage to plane engines.

However, this left many people stranded in airports and unable to travel, and for many a major concern was being able to get their money back. Whilst airlines have been offering refunds to those that cannot travel because of the natural disaster, there is no compensation available for those that booked DIY holidays in terms of accommodation costs and car hire.

DIY holidaymakers could now end up getting a very raw deal, as although they will get their flight money back they could stand to lose a fortune in accommodation and car hire costs, as well as other related costs such as any excursions that they may have pre-booked.

Many are now turning on their insurance firms, accusing them of hiding behind the defence that the volcano eruption was an ‘act of God’ in order to avoid having to pay compensation to those that have been unable to travel. It is thought that personal losses from the disaster could amount to £20 million, and this is something that insurers will naturally want to avoid paying if they can.

One holidaymaker who was stranded at the airport because of the volcanic disruption said that her insurance company had already said that they would not be paying for her financial losses.

The customer said: ‘We rang our insurance company and they said it was an “act of God”, so they won’t cover us – we’re stuffed.’

Be savvy when you shop online

These days a rising number of people are doing their shopping online, with many different people purchasing their groceries and household goods via the Internet. With so many shoppers trying to cope with various other commitments such as work and family getting the time to go to the supermarket and queue up can be very difficult. However, the Internet has given busy people an opportunity to get their shopping from the comfort of their own homes with the touch of a button and get it all conveniently delivered to the door.

There are a number of benefits available for those that do their grocery shop online. The first is that they can do their shop at any time of the day or night without even having to leave their home, providing total convenience. The second is that they can get their groceries delivered conveniently to the door at a time to suit. Finally, there is plenty of choice available online, so shoppers can quickly find what they want without having to wander around the supermarket scouring the shelves.

There are also some other very important benefit to doing grocery shopping online, and one of the most important is that potentially shoppers could make a fairly sizeable saving compared to going to the supermarket to make their purchases. There are a number of ways in which consumers may be able to save money when shopping online.

Firstly, those that shop online are less likely to be without a list or be shopping on an empty stomach, and both of these things can increase the likelihood of impulse shopping, which can really add to the final bill. Another thing to bear in mind is that there are often special offers for online customers, which can be taken advantage off to boost savings even further.

Whilst there is generally a delivery charge to have your shopping brought to the doorstep the time of day that delivery is arranged for can affect the price. Shoppers should therefore aim for off peak hours if possible so that the delivery charge is lower.

Finally, shoppers can use sites such as mysupermarket.com where it is possible to do your shopping online and then see which of the major supermarkets offers you the shop for the least amount of money, which means even greater savings for the shopper. The site also allows shoppers to switch branded items to cheaper one with the click of a button, making this a fast and easy way to make savings.

Households struggling with winter fuel bills

According to recent reports there are now many households that are struggling with winter fuel bills as a result of very cold weather coupled with lack of price cuts from energy suppliers. The high energy bills that some households are having to try and cope with will add further strain to the already difficult financial situations of many people.

The average amount that households are expected to pay for the fuel that they used over the winter period is £532.70, and this takes it above the previous record of £475, reflecting an increase of over £50. Many have been keeping the heating on for longer during the cold weather and this has driven up the cost of their energy bills.

Whilst the spring is officially here and summer is only around the corner there are still warnings of cold weather being released, and this means that consumers are likely to continue using their heating at a time of year when they might usually have stopped using it. Many are also putting the temperature up when using their heating, which can also make a big difference on bills.

The figures relating to winder fuel bills were put together by Energyhelpline.com, which has accused the government of failing to stand up for consumers. Whilst wholesale prices on energy have fallen dramatically by around 60 percent there are concerns that household energy usage costs have only dropped by around 15 percent coming nowhere near reflecting the saving that the energy firms are making.

Officials are also concerned that some people may be receiving inaccurate bills and paying more than they need to because they do not take the time to check the bills. Consumers are also being advised to try and switch providers to get a better deal.

Energyhelpline.com stated: ‘In a privatised energy market, there is little governments can do and they need to be honest and tell people that the only way to reduce their bills is by taking personal responsibility to find the best deals.’ 

Cards set to replace cash transactions

According to recent reports less than half of all transactions will be made by cash in five years’ time. A report from the UK Payments Council has suggested that at the moment 80 percent of cash transactions were low value transactions that were for less than £10. The Payments Council said that cash was taking over as the main method of payment for transactions, whereas cash and cheque use had fallen into decline.

In years gone by those making purchases used cash and cheques to make payments, with only a small percentage having access to or wishing to use plastic cards. However, over the past decade this has changed, with a rising number of people having access to plastic cards and many preferring the convenience and ease of paying by card.

In addition to this the use of cheques has really declined over recent years, and many retailers have stopped accepting cheque payments altogether. In fact, the banking industry has confirmed that it is planning to phase out cheques altogether over the next eight years, but this is something that is being opposed by many pensioners who have become accustomed to using cheques.

Based on trends over the past few years the UK payments Council developed a report with predictions relating to how consumers will be spending in the future. The report predicts that by 2018 only one in every fifty workers will be paid in cash, whereas in 1999 this figure stood at one in eight.

An official from the Payments Council said: “Although cash will not disappear in our lifetime, the continuing payments revolution will make it an ever smaller part of our spending. The noughties have been the decade of the debit card. Especially since chip and pin, which has speeded up transactions, it has become socially acceptable to buy small items by card now too, for example in a sandwich shop or a pub.”

Tesco wants 10 percent share of financial market

It has been reported that the supermarket giant Tesco is looking to take a 10 percent share of the financial market as it continues its launch into retail banking. Over the years Tesco, like a number of other leading supermarkets, has broken into a range of different fields, and retail banking is something that Tesco has been looking into breaking into for some time.

In 2008 Tesco revealed its plans to break into retail banking, and this decision was welcomed by many given the problems that had arisen with traditional High Street banking giants. Last year saw the supermarket rebrand its Tesco Personal Finance brand to Tesco Bank in preparation for the move.

Already Tesco is now enjoying a reputation as the UK’s largest supermarket bank, and has around six million customers using a range of around twenty eight financial products ranging from loans and credit cards to insurance services. The supermarket wants to extend these services and build upon a customer base in current accounts, mortgages, and other financial products.

If Tesco does manage to reach its goal of taking a 10 percent share of the financial market it will be on level pegging with Abbey, which was recently renamed Santander after being taken over by the Spanish banking giant.

Officials have said that the fact that Tesco is a household name puts it in an excellent position to enter into the banking sector, as consumer confidence in its services may already be high. The move for a greater number of entrants into the banking sector is also something that is being encouraged by the government.

Many people have lost confidence in the traditional banking system over the past couple of years, and this could spell good news for new entrants to the market such as Tesco.

NPower named as Britain’s worst utility company

The German owned energy firm NPower has recently been named as the worst utility company in Britain, topping the tables as Britain’s worst supplier after the consumer campaign group Which? carried out a poll that involved surveying eight thousand respondents.

Owned by the German company RWE, Npower has around 6.5 million customers in the UK, but the majority of them are not happy customers according to the results of the Which? survey. Only 27 percent of customers with NPower said that they were satisfied with the service, leaving the vast majority of customers unhappy with the service.

Whilst Npower rated the worst in any Which? survey on history, the report also showed that the customer service levels amongst the big six energy suppliers was all inadequate. British Gas received a customer service satisfaction level of just 37 percent, and Eon received a slightly higher 39 percent. Scottish Power received 40 percent and Scottish & Southern Energy achieved a more respectable 50 percent satisfaction level.

Officials from Which? said that the results for all energy providers was poor and reflected a poor level of customers service, adding that customers should be happy with the service that they are receiving rather than just satisfied. He said that the results reflected the poor state of Britain when it came to the commitment of energy firms.

He stated: ‘Our latest survey adds to the dismal picture of Britain’s utilities in 2010.’

However, an Npower spokesman said that the company was committed to its customers and aimed to provide a service that would keep them happy.

He said: ‘Our aim is to see our customers happy, not just satisfied – and we’ve been working really hard to make customer service the focus of our company.’

House price increase seen in March

Figures released by the High Street lender, Nationwide, have indicated that there was an increase on property prices for the month of March, with property prices increasing by more than £3000 according to the figures. Officials from Nationwide have added, however, that the annual rate of inflation on house prices is set to slow down from its current 9 percent.

In the month of February average property prices fell by 0.8 percent according to Nationwide, but in the month of March property values bounded back with an increase of 0.7 percent. In price terms this reflected an actual rise of 2 percent before any seasonal adjustments were taken into account.

The decrease in property prices that was seen in February resulted from a slowdown in demand and a drop in the number of mortgage approvals. This was partly attributed to the end of the stamp duty holiday, which had caused more people to push through property sales at the end of last year and caused an unusually profound dip at the start of this year.

Nationwide has stated that the average property price in the UK is now £164,519, and compared to February of 2009 this was £16,733 higher. However, quarterly house price inflation has fallen from 3.8 percent seen in September to 1.6 percent in March.

An economist from Nationwide stated: ‘The last two months are consistent with a relatively flat profile for house prices, and in line with the recent drops seen in buyer enquiries and house sales. Preliminary figures show that the number of loans taken out for house purchases failed to recover from January’s large dip, suggesting that weakness in house sales at the start of the year may have been due to more than just the snowy weather.’

Fuel prices hit a record high

Things have been looking increasingly dismal for drivers over recent months when it comes to petrol prices, and for many the rising cost of petrol has caused real financial problems, making it difficult for some motorists to actually afford to run their cars. However, things have now got even worse as a result of prices at the pumps reaching record highs of £1.20.

In July 2008 the soaring cost of oil saw petrol prices reach new highs at the pumps, but the latest prices have now surpassed those seen in 2008. The prices reached their record high just days after the first of three one penny price hikes was added as part of the fuel duty hike, with the other increases due to come in October and January of next year.

Whilst the Chancellor of the Exchequer, Alistair Darling, was hoping that staggering the three pence fuel duty hike would help drivers by avoiding a sudden sharp increase in already high petrol prices drivers have still been hit with the highest prices on record, and things could get worse before they get better due to the rising cost of oil and the weak pound.

Officials from the motoring group the AA said that it was difficult to predict where things would go, as it could depend on a number of factors including how the pound reacted to the general election, which is due in May, and the impact of any tax changes that followed on from the election.

Another industry official stated: “The things that have really put the cost of petrol up more recently has been the fact that our currency has been weaker against the dollar, and that’s actually had a bigger impact than the duty itself. In 2000, the fuel tax was 73.5%. And now, it’s running at about 60%. So tax on fuel, as a percentage, is actually lower at the moment.”

Demand for cheque alternative from pensioner group

It was announced last year that the banking industry is looking to do away with the cheque, which has been a method of payment for millions of older people for many years before debit and credit cards came along. Many pensioners and older people still rely on cheques to make payments for various services and purchases, and the announcement that the cheque was to be phased out caused concern that many of these people would be left without a viable alternative.

The banking industry has said that it is planning to phase out cheques by around 2018, but many officials have said that this could impact on pensioners negatively, causing them stress and difficulties. A pensioner group is now calling for an effective and suitable paper alternative to cheques to be offered so that those that cannot use the Internet to make payments will still have a viable choice.

The group that is lobbying for the paper alternative to the cheque is the National Pensioners Convention, and its protest to find an alternative comes shortly after the BCC revealed that more than 75 percent of pensioners were against cheques being phased out. The NPC is now calling for a guaranteed paper alternative to be offered to older people in place of cheques.

An official from the NAC said: “If cheques are taken away from older people it will create an enormous stressful situation for them, because their bills are paid on time, with a cheque, in an envelope and put in the post. We have told the authorities that what is going to be required is a paper trail to replace the cheques.”

A spokesperson for the Wandsworth Older Peoples Forum added: “A lot of people who are housebound use cheques daily, and a lot of people who have no computer and therefore can’t get onto the internet or do internet banking would be lost without it.”

OFT tackles irresponsible lending

Over the course of the decade leading up to the global financial crisis there was a period of easy credit in the UK, and lenders were throwing cash at people and businesses hand over fist in a bid to get their custom. Even those with damaged credit usually had no problem getting a loan or mortgage during this time. However, when the credit crunch swept the nation things came to a head, and over the coming months the banking industry was brought to its knees bringing with it the worst financial crisis in recent history.

Whilst things have improved and the financial sector is slowly getting back on its feet the days of easy credit are definitely gone, and lenders are being far more stringent about who they lend to. One of the main causes attributed to the financial crisis was irresponsible lending from banks and financial institutions, which had been eager to lend money to people without even running checks on whether they could afford to repay it in many cases.

Of course, the financial crisis is something that the UK does not want to see repeated, and with this in mind banks are now being discouraged from falling back into their old ways of lending to anyone. The Office of Fair Trading has recently produced guidance for banks, a requirement of which is aimed at ending the days of irresponsible lending.

The OFT has told the banking industry that it must not mislead consumers when it comes to providing finance, and that stringent checks must be carried out before any finance is agreed to ensure that the consumer is in a financial position to afford the credit being taken out. The OFT sad that is fully expected the industry to comply with this.

An official from the trade association, the Finance and Leasing Association, said that the new regulation would help to protect consumers, ensure that people did not get stuck with debt that they could not afford to take on, and would help to weed out unscrupulous lenders.

The new regulation has also been welcomed by the Citizen’s Advice Bureau, which tackles many cases relating to debt that consumers cannot afford to repay.

An official from the charity said: “Irresponsible lending plays a significant part in many of the debt problems we see in Citizens Advice Bureaux. The focus on getting firms’ practices and procedures right is a big step towards ensuring consumers are treated fairly and not encouraged into taking out unaffordable and unsustainable credit that lands them deep in debt.”