More compensation payouts to be issued by Halifax

High Street banking giant, Halifax, has recently admitted that it may have to pay out more compensation to customers over a mix up with its mortgage rates. Earlier this year the lender identified around 600,000 customers who may be eligible for compensation over confusion about mortgage rates, about half of whom ended up receiving compensation payouts. The lender has now stated that there could be another 250,000 people who may be eligible with around half of them expected to actually receive compensation.

The compensation that the lender pays out could be up to £4500 per person based on a mortgage of £150,000 where the borrower has been affected for three years. The payouts will equate to either 1 percent of the mortgage interest for each year that the borrower has been affected or will be a fixed compensation payout. With tens of thousands of borrowers potentially set to receive compensation, Halifax could have another huge bill on its hands.

The confusion has arisen over Halifax increased the cap on its standard variable rate mortgages from 2 percent above the Bank of England base rate to 3 percent above. The UK’s financial regulator, the Financial Services Authority, expressed concern that wording on documentation may have led borrowers to believe that they would receive advance warning of any such changes. Halifax subsequently came to an agreement with the FSA over paying compensation to customers who were affected.

A Halifax official said: “In February 2011, we agreed a voluntary agreement with the FSA in relation to a customer contact and goodwill payment programme with specific Halifax mortgage customers. We have subsequently identified a further group of customers that are eligible for inclusion within the programme. We are now in the process of writing to these borrowers explaining what this means for them.”

Tags: standard variable rate, goodwill, Halifax mortgage customers, customers, tens of thousands

No change in UK interest rates

Following the August Monetary Policy Committee Meeting the Bank of England has announced that the base interest rate is once again to remain on hold at its lowest level in the history of the Bank of England. The base rate has been at its all time low of just 0.5 percent for well over two years now, which has provided relief for many homeowners and borrowers who have seen their monthly repayments plummet.

Economists have now predicted that the base rate will remain at this record low for the remainder of this year, with some even going as far as to say that it could remain at 0.5 percent next year as well. In a poll that included 32 economists the majority believed that it would be next year before the base rate was increased and a handful said that it could be 2013 before rates increased.

The news that the base rate is to remain on hold comes as no surprise to most industry experts, as the MPC is reacting to the fragile economy by keeping the base rate low. There will be many people that welcome the decision to keep rates low, such as those with mortgages on variable rates. However, there are also some groups that want to see rates increased in order to try and bring inflation levels down.

One group said that rather than increasing the base rate the MPC could look at further increasing the quantitative easing scheme, as this would increase the amount of money available to companies.

David Kern, chief economist at the British Chambers of Commerce, said: “Every effort must be made to sustain the recovery. If the economy weakens further, the MPC should not hesitate to increase the QE programme.”

Tags: history, scheme, rates, inflation, interest, chief economist

Mortgage holders breathe a sigh of relief over base rate

Many mortgage holders around Britain will be breathing a sigh of relief this week after the Bank of England announced that it was keeping the base interest rate on hold at just 0.5 percent. This is the 22^nd month that the base rate has been at this record low, leaving the base rate at the lowest level that it has been in the three century history of the Bank of England.

The Monetary Policy Committee has been under increased pressure from various industry groups because of the soaring rate of inflation, which has rocketed to way above the 2 percent target set by the government. However, the committee has also taken into account the continued fragility of the economy, and has therefore decided to keep the base rate at the level it has been at for nearly two years.

There were no further plans for Quantitative Easing announced following the February meeting, which also came as no surprise to most industry officials. It is not yet known how the decision amongst MPC members was split. However, in the January meeting there were two members that voted for a rate increase and one that wanted to see the QE scheme extended.

A spokesperson for the manufacturing group EEF said: “The MPC is right to hold off on rate rises for now as an increase will do little to alter the path of inflation in the short term, which is being driven higher by commodity prices and tax. The contraction across the economy in the final months of 2010 may well have been a blip, but as the bigger risk now appears to be growth, the MPC should continue to hold steady until the picture becomes clearer and the economy is firmly back on an upward track.”

Tags: century history, blip, short term, bigger risk, bank of england, Quantitative, Many mortgage holders

More people rush to fix their mortgages

It has been announced that a rising number of homeowners are rushing to fix their mortgage rates amidst fears that the base interest rate could shoot up over the course of this year. With inflation having rocketed to nearly double the target set by the government there are concerns that the base rate will have to be increased in order to bring inflation down to a more acceptable level.

With the speculation and rumours over when the base rate will increase many homeowners with variable rate mortgages are now getting concerned, and are flocking to try and get their mortgage rates fixed. As a result of this surge in demand many lenders have been pulling their cheapest deals and replacing them with more expensive ones.

There are concerns that inflation is set to soar even higher, and the shocking increase in the cost of living has sparked panic amongst homeowners who are now worried that interest rate increases are set to send repayments rocketing. Some economists expect inflation to rise to a staggering 5 percent within a matter of months, which would force the Bank of England and the Monetary Policy Committee to start increased interest rates. This would then impact on repayments on mortgages, and could tip many homeowners over the financial edge.

One mortgage broker said: ‘People will rush to fix because they’ve probably been worrying about interest rates for a while. It is inevitable that more people will fix because rates are expected to start rising.’

Around two thirds of homeowners currently have variable rate mortgages. However, a fixed rate mortgage offers the security of static repayments for the period of the fixed term, which will remain the same even if interest rates increase.

Tags: while, economists, rate, term, interest rate, rate increases, bank of england, base interest rate

Record low base rate remains static

For the past eighteen months the base interest rate in the UK has stood at a record low of 0.5 percent, which is the lowest it has ever been in the history of the Bank of England, which spans over three hundred years. It has now been announced that the base rate will remain at this record low for a nineteenth month, with a decision to keep the base rate at 0.5 percent being made after the October Monetary Policy Committee.

Although one member of the MPC has been calling for the base rate to be increased for the past four months according to the meeting minutes the fragility of the economy has been taken into consideration, hence the decision to keep the base rate at 0.5 percent. Andrew Sentance, the MPC member that wanted to increase rates, said that this was necessary in order to keep a lid on inflation.

For homeowners that are on variable rate mortgages the decision to keep the base rate static will come as good news, as it will help them to avoid costly repayment increases, which many may struggle to keep up with in the current financial climate.

The Bank of England said that it is vital to stimulate the economy by encouraging spending, and this is why the interest rate needs to be kept low. The central bank said that this had to be a priority over inflation, which is currently 1.1 percent over the 2 percent target set by the government.

The Bank of England also said that it would not be extending the quantitative easing scheme, which has already seen £200 billion ploughed into the economy.

One economist said: ‘So far the effects of QE in stimulating the wider economy have not been impressive. The bank sector remains weak and unable to increase lending to companies. There are dangers that further QE could lead to major new problems rather than leading to economic recovery.’

Tags: interest rates, interest, bank of england, Monetary policy, monetary

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.”

Tags: Central bank, interest rate, Monetary policy, bank base rate, bank of england

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.

Tags: availability, bank of england, mortgage, demand, market, finance

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.”

Tags: finance, month, bank of england, slight improvement, new landscape, mortgage, societies, Banking

Credit card borrowing increased in December

Figures that have been released recently have shown that for the month of December the level of credit card borrowing increased, leading to an increase in overall consumer borrowing. Read more

Tags: consumer debt, Credit card, sector, Value added tax, bank of england, end, consumer spending, small increase

No movement in Bank of England base rate

It has been announced by the Bank of England that the base rate is to remain at its record low level of 0.5 percent once again, making this the eleventh month in a row where the base rate will have been at its lowest level in the history of the Bank of England. The decision comes just over a week after it was announced that the UK had finally joined other major economies by coming out of recession. Read more

Tags: recessions, inflation, bank of england, interest rate, economics, bank of england base rate, base rate

Businesses and consumers still wary about economy

A recent report has suggested that business and consumers across the UK are still wary about the outlook for the economy, despite assurance that the economy is heading towards some degree of recovery. Although various industry groups and government officials have tried to make the economic outlook appear to be somewhat brighter than many people see it, to many consumers and businesses the fragility of the economy means that any recovery could quickly be overturned. Read more

Tags: BDO, consumer confidence, Consumer behaviour, bank of england, Confederation of British Industry

Consumers want to see more ten pound notes in circulation

The Bank of England is being urged to ensure that more ten pound notes are put into circulation after a flood of complaints from shoppers in the UK. Business leaders have told the Bank of England that consumers are getting annoyed at having to carry around larger notes such as twenty pounds notes in their wallets and purses because of the lack of ten pounds notes that are available. Read more

Tags: 10 notes, 20 notes, notes in circulation, bank of england, twenty pond notes, ten pound notes

Warning over further job losses from Bank of England

The Bank of England has warned that the UK could be in line for another wave of job losses as a result of productivity falling faster than wages. The central bank claims that this could result in further job losses in the New Year, which would come as a huge blow given the many jobs that have already been lost during the recession. Read more

Tags: unemployment, number, huge blow, bank of england, job losses, central bank claims, Confederation of British Industry, Labour

What the economists think of the Quantitive Easing programme

The quantitative easing scheme is something that the government has been relying on to help pull the UK out of recession over the course of this year, but although the scheme has been extended on a number of occasions there are mixed reactions from industry officials with regards to just how well – if at all – this programme is working in terms of improvement to the economy. Read more

Tags: bank of england, Fiscal policy, policy, number, bias, statement, Quantitive Easing, stimulus effort

Blanchflower attacks King over recession

A former member of the powerful Monetary Policy Committee has recently launched a verbal attack on the governor of the Bank of England, Mervyn King, according to a recent report. Read more

Tags: david blanchflower, mrvyn king, bank of england, recession, mpc

Interest rates on hold again

Earlier this month saw the September Monetary Policy Committee meeting took place, and following the monthly meting the Bank of England has announced that the UK base interest rate is to be kept on hold for yet another month, staying at its all time low level of just 0.5 percent. Read more

Tags: hike, monetary, bank of england, mortgage rates, easing, quantitative easing, place, interest rates

Economy benefits from an additional cash injection

The economy is to benefit from an additional £50 billion, which is to be ploughed into the economy through the government’s quantitative easing programme. Read more

Tags: better surveys, bank of england, recession, surprise, money, injection, output, uk economy

Banks still turning down thousands of mortgage applications

It has been revealed that whilst many reports have claimed that restrictions on mortgage and general lending have started to ease off recently banks are still turning down thousands of mortgage applications every month, further hindering the recovery of the housing market. Read more

Tags: mortgage applications, reasons why, Mortgages, Real estate economics, month, bank of england, Labour

Banking crisis easing according to central bank

It has been reported that the Bank of England in the UK has claimed that the crisis that has hit the banking industry has started to ease off, although it does not deny that the system remains highly vulnerable and could be easily hit by disruption again. Read more

Tags: figure, banking crisis, credit crunch, finance, bank of england, vast improvement, paul tucker, Central bank

What is the Next Step for Borrowers and Savers?

With the recession in full swing in the UK and predictions of worse conditions to come, both borrowers and savers are wondering what they should so in the future. Small returns on investments are making it extremely difficult for savers to earn the money they were counting on for future needs, such as retirement. Read more

Tags: save money, bank of england, base rate, mortgage rates, interest rates, borrow money

Tougher Regulation For Banks – More Protection For Consumers

“We need a change of culture in the banks and their boardrooms, with pay practices that are focused on long-term stability, and not on short-term profit.”

These were the words of Alistair Darling today when he outlined his White paper on banking. The proposed measures are aimed at preventing a repeat of the banking crisis which led Britain into its worst ever post-war recession. Read more

Tags: Alistair Darling, bank regulation, banks, bank of england, consumer protection

Economic growth will be slow according to CBI

According to the Confederation of British Industry the growth of the UK economy still has a long way to go, and progress is likely to be slow. The comments from the CBI came amidst a variety of other industry reports that showed encouraging figures with regards to output and growth over April and May, and showed a rise in consumer confidence, as well as increased interest in the housing market from first time buyers. Read more

Tags: industry, cbi officials, economic growth. growth, credit crunch, first time buyers, bank of england, May, job losses

No change in base rate for third month

For the past couple of months the base interest rate in the UK has been kept at its record low of 0.5 percent, and following this month’s Monetary Policy Committee meeting the Bank of England has announced that the rate will remain on hold for a third month. Read more

Tags: interest rates, record low, October, level, bank of england

Lack of confidence in banks spells success for building societies

Recently released figures have shown that whilst consumers have been losing confidence in banks, and banks have been losing customers hand over fist, the UK’s building societies have emerged as winners in the current financial climate. Read more

Tags: building society, whilst, bank of england, bank confidence, official, influx, outflow

Interest rate could rise again quickly

The chief economist at the Bank of England has warned that whilst the base interest rate in the UK has plummeted to its lowest level in history over recent months, following a series of six interest rate cuts in as many months, there is a good chance that it could rocket back up again in the future if policymakers decide that the rate needs to go up in order to keep inflation in check. Read more

Tags: Mortgages, access, bank of england, Index, Central bank, order, lending, interest rates

Interest rates remain on hold after May meeting

After the May Monetary Policy Committee meeting the Bank of England announced that the base interest rate was to be kept on hold at its all time low of 0.5 percent. Read more

Tags: interest rate, base rate, Economic policy, Central bank, interest rates, money

Negative equity could hit many more

As a result of the house price crash that has seen a large percentage wiped off the value of UK properties over the past eighteen months it has been estimated that around one million homeowners have already been plunged into negative equity, which is where they owe more on their property than the actual value of the home. Read more

Tags: fall, property market, bank of england, households, situation, Mortgages, negative equity, house value

The pros and cons of the base rate cuts

Between 2006 and early 2007 many people were horrified as a result of the base interest rate increases which saw the base rate rise from 4.5 percent to 5.75 percent. Borrowers and homeowners found that their financial commitments went up considerably, although the rate increases came as far better news for other groups such as savers, who hoped to get better returns on their money as a result of the rate increases. Read more

Tags: savings, bank of england, Mortgages, Loans, interest rates, base rate

Banks decides to look at quantitative easing to assist economy

Over the past six months the nation has seen the UK’s base interest rate drop dramatically from 5 percent in October of last year to just 0.5 percent by March of this year. This came after a series of six interest rate cuts from the Bank of England in as many months, taking the base rate to its lowest level in the three hundred and fifteen year history of the Bank of England. Read more

Tags: series, bank of england, industry, access, level, Central bank, interest rates, Mortgages

First time buyers still having to put up with renting

For many years many non-homeowners that simply couldn’t afford to buy a home due to ten years of rocketing property values have been waiting in the wings for property prices to start coming down again, over in the latter part of 2007 many were delighted to find that this was indeed happening at last. Read more

Tags: large number, year, Mortgages, first time buyers, bank of england, housing market

Interest rate cuts could mean free banking comes to an end

A recent report has suggested that the fact that the base interest rate in the UK is now at a record low, and could even fall further, means that the nation could see free banking services come to an end. Read more

Tags: bank of england, interest rates, free banking, building societies association, savings accounts

UK base interest rate falls to a new low

The base interest rate in the UK has fallen to a new low following the Monetary Policy Committee meeting in March. Following the meeting it was announced that the base interest rate was being cut once again, which was the sixth month in a row. Read more

Tags: widespread glee, bank of england, March, building societies association, glee, Student Loans Company, UK base

Homebuyers being shut out by many lenders

A large number of homebuyers are having the door shut in their faces by lenders, according to a recent report. In the current financial climate an increasing number of lenders are becoming more and more stringent about who they will lend to, and as a result of this many homebuyers have been left out in the cold because they are not able to get the finance that they need to purchase a property. Read more

Tags: property, standard deposit, order, bank of england, bank

Woolwich launched cheapest mortgage since first loan

According to recent reports the Woolwich recently launched its cheapest mortgage deal since its first loan, which was made around one hundred and sixty years ago. Read more

Tags: bank of england, woolwich, mortgage, confidence, cheap mortgages, fixed rate mortgage, low interest rates, first time buyers

The day Britain nearly went bust

For most of us Friday 10th October 2008 was just like any other day, and we all went about our business as usual, with no idea that government officials were working frantically behind the scenes to try and save the nation from a disaster. However, it has now been revealed that on that same date the nation was on the brink of financial collapse. Read more

Tags: britain bust, recent report, Financial crises, financial collapse, Baron Myners, stock market, credit crunch

Savings rates continue to tumble

The base interest cuts that have been applied by the Bank of England over the past few months have been welcomed by many borrowers and industries, and for many homeowners and borrowers the base rate cuts have left them with far more money in their pocket each month as a result in a drop in repayments. Read more

Tags: savings rates, Mortgage loan, account, ISA, building society, action, industry, bank of england

Officials encourage mortgage overpayments

A number of industry officials have recently highlighted the benefits of overpaying on a mortgage, stating that borrowers could benefit hugely by taking advantage of the lower interest rates and making higher than necessary repayments on their mortgages. Read more

Tags: base, england, fortune, interest rates, interest, industry, bank of england, industry officials

Increased popularity for cheaper fixed rate mortgages

Recently released figures have suggested that new lower fixed rate mortgages may be gaining popularity again, with borrowers keen to take up lower rate deals yet enjoy stable repayments for a fixed period of time to help them to budget more easily in the current difficult financial climate. Read more

Tags: fixed rate mortgages, rate deals, deal, bank of england, council of mortgage lenders, finance

Interest rate cuts do not impress all

Following the most recent Monetary Policy Committee meeting earlier this month the Bank of England announced that it was cutting the base interest rate for the fifth time in a row, taking it to a new historic low of just 1 percent, which is the lowest in the history of the Bank of England. Read more

Tags: low level, funding, consumer, lows, bank of england, interest rate cuts, desired effect, monthly repayments

More needs to be done to aid the financial sector

According to recent reports city analysts have said that despite the various measures and the billions of pounds that the government has invested in trying to assist the struggling financial sector in the UK the steps being taken do not go far enough and more needs to be done to aid the struggling sector. Read more

Tags: uk, bank of england, bank rescue, toxic assets, establishment, financial sector, resolution, job

Rate cuts may not prove of benefit to many homeowners

With the aggressive rate cuts that have been applied to the base interest rate by the Bank of England over recent months homeowners on variable rate interest deals should in theory be delighted. Since last November the base interest rate has plummeted by nearly two thirds, plunging from 5.75 percent to just 2 percent. It now stands at its lowest levels in nearly six decades, and many think that it will fall further over the next couple of months. Read more

Tags: variable rate, Floating interest rate, home insurance, Mortgages, bank of england, base rate cut, homeowners, future rates cuts

Will the rock bottom base rate help homeowners?

Over the past few months the Bank of England has been taking radical action with regards to the base interest rate. With the economy really suffering and heading for recession, and with consumer confidence at really low levels, the central bank was forced to do something to try and ease the difficulties that both consumers and businesses in the UK were facing. To the relief of many industry groups and consumers the Bank of England has taken unprecedented action recently to try and ease the situation, but this does not guarantee that consumers will actually be any better off. Read more

Tags: Mortgages, base rate, interest rate, rapid decline, committee, Macroeconomics

Bank rate cut by a further 1 percent

The Bank of England has cut the base interest rate buy a further 1 percent in the third rate cut in as many months. The rate cut took place following the December Monetary Policy Committee Meeting, where it was decided by committee members that a further cut in interest rates was necessary in order to try and boost the flagging economy through increasing consumer spending. Read more

Tags: base rate, confidence, interest rates, committee, bank of england, right, Mortgages, Monetary Policy Committee

High street to suffer as consumers try and save money

Although Christmas is just around the corner many High Street retailers are not getting too excited about the flurry of activity and more importantly the huge profits that will come rolling in, namely because this is something that is unlikely to happen this year. After a particularly gruelling year in terms of finances, with soaring living costs, rocketing bills, and sky high borrowing costs to deal with, many consumers are desperate to try and put some money aside, and to do this many will have to cut back on the cost of Christmas, and reduce the amount of money that they spend on presents, food, going out, clothes, and entertainment. Read more

Tags: name, Christmas spending, Electronic commerce, food, year, bank of england, run

Discounts hit the High Streets in a bid to increase spending

Officials have said that consumers in the UK can look forward to a season of huge discounts as Christmas approaches, with many High Street retailers slashing the cost of goods by huge amounts in a bid to increase spending levels and try and boost profits. This comes at a time when many consumers are having to tighten their belts when it comes to spending, even through the Christmas period, in order to escape overstretching themselves financially. Read more

Tags: order, Christmas spending, discounts, High Street retailers, bargain basement

Base rate may have been in line for bigger cut

The minutes of the latest Monetary Policy Committee meeting have suggested that the latest base rate cut of 1.5 percent could actually have been even bigger, as there was room for the MPC and the Bank of England to consider a rate cut of more than 2 percent based on inflation projections. The Bank of England announced earlier this month that the base rate was being cut by a massive 1.5 percent, which was the biggest cut since 1981 and took the base rate down to just 3 percent. Read more

Tags: bank of america, bank of england, base rates, point, Inflation report, MPC members

Drop in interest rates causes surprise for consumers

Struggling homeowners trying to cope with high mortgage repayments welcomed a surprise earlier this month after the Bank of England slashed the base rate by 1.5% just a month after applying a surprise 0.5% cut a day ahead of the scheduled Monetary Policy Committee meeting. The slash in interest rates has now taken the base rate down to just 3%. Just a year ago the base rate stood at 5.75%, so it is now nearly half of what it was a year ago. Read more

Tags: Business Finance, policy, order, bank of england, CBI, borrowers

Interest rates kept on hold for another month

Following the Monetary Policy Committee meeting that was held last week the Bank of England has announced that the base rate is to be kept on hold at 5% for yet another month. This signifies the fifth month in a row where the base rate has remained unchanged, as the central bank and members of the powerful MPC struggle to deal with both soaring inflation levels and a slowing economy.
Read more

Tags: england, committee meeting, bank of england, economics, interest rates, struggle, row, committee

BCC states that interest rate must be cut

After several months where the interest rate has been left on hold at 5% by the Monetary Policy Committee and the Bank of England, the British Chambers of Commerce is now calling for action, stating that the base rate has to be cut in order to ensure that the economy does not grind to a halt. The government is facing tough decisions when it comes to the base rate, as the nation is going through a period of stagflation, where the economy has slowed down and stagnated and the level of inflation is soaring way out of control. Read more

Tags: base, interest rates, bank of england, consumer spending, chelsea building society, interest rate

Still no major risk of recession

A recent report from the Ernst and Young ITEM club claims that despite the various factors affecting the economy and the financial climate in the UK, the risk of a recession occurring is still pretty low. The economy has suffered a slow down over recent months, and this is expected to continue over the course of this year. However, it is unlikely to end in recession according to the data on the report. Read more

Tags: major risk, england, risk, interest rate, cheap no-questions-asked credit

Banks raking in millions through sneaky overdraft tactics

According to a recent report banks in the UK have been raking in a fortune recently by sneakily increasing the interest rates on agreed overdrafts on customers’ bank accounts. Banks have lost millions of pounds over the past couple of years due to overdraft charge claims, and it is thought that this move is designed to try and claw back some of revenue that has been lost through reimbursing these charges to customers. Read more

Tags: demand, ripped off, suit customers, bank of england, Treasury spokesman, matter, Non-sufficient funds

Split decision on rates at last MPC meeting

According to the recently released minutes from the last Monetary Policy Committee meeting held in early August there was a split vote with regards to interest rate movement. However, despite this many officials now believe that the minutes indicate that the MPC and the Bank of England are now prepared to look at cutting rates again despite soaring inflation levels that are set to get worse. This is because of the gloomy forecasts that have been made with regards to the UK’s economy. Read more

Tags: rate, mpc, bias, interest rates, year, remainder, Monetary Policy Committee, bank of england

Was the Bank of England right to keep interest rates on hold?

Following the five interest rate rises that took place between August 2006 and July 2007 the whole country seemed to breathe a sigh if relief when in December of last year the base rate was cut for the first time in two years. Another base rate cut quickly followed in February, and a further one in April. By this time many analysts and economists were wildly enthusing over how quickly and by how much interest rate were likely to come down, with some predicting that rates would fall to below 4% by the end of the year. Read more

Tags: interest rates, British Chambers of Commerce, bank of england, CBI, British Retail Consortium

Impact on Northern Rock could have been softened

In a recent report the chairman of the Financial Services Authority, Callum McCarthy, has stated that the impact on stricken lender Northern Rock could have been softened had consumers been made more aware of the savings guarantee that was in place from the government. Mr McCarthy stated that many consumers had not been aware of the savings guarantee that was in place, and had they been more aware of this it could have made a big difference to the level of trouble that Northern Rock found itself in. Read more

Tags: bank of england, flock, nose, fsa, government

2007 ended with lower lending levels from banks

A recent report has shown that there was a significantly lower level of lending to households from banks in the UK during the fourth quarter of last year. The information was released by the Bank of England, and officials from the Bank of England have put the drop in lending levels down to a number of different factors. The data came from the Bank of England’s Quarterly Credit Conditions Survey result. Read more

Tags: interest, interest rtae, bank of england, lenders rejecting applications, higher inter-bank charges, end, global slowdown, summer

Central bank governor and deputy governor did not agree on interest rates

Following the recent Monetary Policy Committee meeting earlier this month the Bank of England announced that it would be keeping interest rates on hold at 5.25%, stating that the risk of rising inflation had to be considered in addition to the slowing economy. Interest rates have already fallen twice since December, and industry experts predict that they will fall at least one more time before summer and then again in the latter half of the year.

According to the minutes from the March Monetary Policy Committee meeting there was a 2-7 split over whether interest rates should be cut in March, with the Deputy Governor of the Bank of England, Sir John Geive, agreeing with MPC member David Blanchflower that rates should be cut by a further 0.25%, which would have taken the base rate from 5.25% to 5%. However, the other seven members of the committee, including the Governor of the Bank of England, Mervyn King, wanted interest rates to be kept on hold.

The Bank of England has not taken the stance of the US Federal Reserve, which has been slashing its interest rates lately in order to try and keep recession at bay. Over the past six months the US Federal Reserve has cut the interest rates by a massive 3%, taking them from 5.25% to 2.25%. However, following the majority vote the Bank of England decided to keep rates at 5.25%. Analysts and economists are now speculating over whether there will be a further base rate cut following April’s Monetary Policy Committee meeting, although many think that the next base rate cut may come in May.

Recent Additions:

• Mortgage lender offering some impressive rates on savings
• Bank savings interest rates start to come down
• Pay and bills could further affect consumer finances
• Increasing number of first time buyers look to brokers for assistance
• Gazundering becoming more commonplace

Tags: bank of england, Business Finance, recent additions, Deputy Governor, Central bank governor

Bank savings interest rates start to come down

The interest rates being offered to savers with some banks have already started to fall following the recent base rate cut from the Bank of England. Following the latest Monetary Policy Committee meeting early in December the Bank of England announced that interest rates would be falling by 0.25% taking the rate from 5.75% to 5.5%. This followed a series of five interest rate rises between August 2006 and July 2007, after which there were several months where the interest rate remained unchanged at 5.75%. Read more

Tags: saving account, certain level, interest rtae, lloyds tsb, base

We won’t have cheap credit for ‘a number of years to come’

According to a financial analyst, Brits will not be seeing the days of cheap credit “for a number of years to come”.

Darren Cook, a spokesperson for Moneyfacts.co.uk, said that some experts have predicted the Bank of England base rate will increase another three times before the end of the year.

“These uncertainties, paired with the house price adjustments and many households finding themselves in negative equity, [means] lenders are prudently hedging themselves on pricing due to fears of a massive increase in the probability of default,” Mr Cook commented.

In related news, Experian recently advised consumers looking to secure a loan to check their credit report first.

By doing so, consumer education manager at the organisation James Jones said that consumers give themselves a better chance of their loan application being accepted as they can make sure that the information on their report is correct before it is checked by a lender.

Tags: James Jones, loan, England base rate, Brits, personal finance, Darren Cook, bank of england

Interest rates ‘may drop to 4% in 2009′

Although recent predictions suggested that the Bank of England interest rate would remain unchanged, an expert has said that it could drop to four per cent in 2009.

Howard Archer, chief European and UK economist for Global Insight, said that the Bank of England will almost certainly keep interest rates at five per cent this Thursday.

Mr Archer predicted that rates are unlikely to drop before August at the earliest, however he also said that they may drop next year.

“We still believe that interest rates could eventually fall as low as four per cent in 2009, but it will be a gradual process,” he commented.

However, he also said: “The bank will want clear evidence that wage moderation is continuing and that reduced demand is undermining companies’ pricing power.”

In related news, net credit card lending rose by £100 million in April, although this was still below the increase in March, according to the bank.

Tags: credit, Credit card, March, bank of england, gradual process, Global Insight, Pricing, credit card lending

Mortgage finance working group launched to advise government

A group of industry experts has been established to provide advice to the government on how to improve the function of mortgage finance markets.

The group has been formed in response to the complex issues raised about the functioning of the mortgage-backed securities markets due to the ongoing crisis affecting global financial markets.

Its first job will be to assess the current state of the mortgage finance market.

Led by former HBOS chief executive Sir James Crosby, the working group will draw on the experience of lenders, investors the Treasury, the Bank of England and the Financial Services Authority.

Chancellor Alistair Darling said that the group’s “work will be an important contribution to stabilising the cost and supply of UK mortgages”.

Earlier this week, the news editor of moneywise.co.uk said that although there is still demand for new mortgages at the moment, it is difficult to tell whether it will last.

Rebecca Atkinson said that First Direct’s decision to stop selling mortgages to new customers shows that mortgage lenders are suffering from liquidity problems and also trying to attract good-quality borrowers rather than a high quantity of customers.

Tags: First Direct decision, mortgage, bank of england, good-quality borrowers, government, job, liquidity

Building societies still lending despite the credit crunch

Building societies are still in a good position to offer funds for mortgages despite some announcing they were restricting lending, one financial expert has claimed.

According to the Building Societies Association (BSA), action taken last week by certain building societies was not an indication that these providers were struggling in the wake of the credit crunch.

With certain larger lenders withdrawing from the marketplace, many smaller firms were inundated with applicants which required a re-adjustment of service levels to ensure customers were still dealt with, said the firm.

Neil Johnson, PR and policy manager for the BSA, said: “Building societies are largely funded by retail deposits rather than wholesale markets. So the problems in the wholesale markets haven’t affected them in the same way that they’ve affected banks.”

Earlier this month, the BBC reported that five building societies – the Bath, the Earl Shilton, the Newbury, Melton Mowbray and the Tipton & Coseley – had restricted or halted new mortgage lending due to an influx of new customers.

Tags: societies, good position, bank of england, Financial services, Social economy, month, business, economics

Consumers ‘confused’ by Isas

Over 40 per cent of consumers do not know what the current limit is on their Isa according to research from financial experts.

Findings from the Alliance & Leicester also revealed that almost 80 per cent of do not know what the maximum limit is for equity Isas.

Ewan Edwards, head of savings at Alliance & Leicester, said that the study shows that, with the new rules surrounding Isas arriving in April, many consumers are still confused by the current regulations in place.

“We feel that more could be done to communicate the basic principles and benefits of Isas, so that everyone is clear about how they work and how to get the most out of them,” he added.

The “structure must be more straightforward” if they are to appeal more to the man on the street, he concluded.

According to Moneyfacts.co.uk, changes to Isas from April 6th involve increasing the the annual contribution to £7,200 while the maximum cash element is also set to increase from £3,000 to £3,600.

Tags: bank of england, leicester, ISA, equity, maximum limit, ISAs

Mortgage lending ‘drops to lowest levels for 2 years’

Mortgage lending dropped to its lowest level for over two years last month, according to figures from the Council of Mortgage Lenders (CML).

The statistics show a 25 per cent drop on gross mortgage lending compared with November and 21 per cent fall from the same figure recorded for the month last year.

Gross lending only reached £22.5 billion, the lowest amount since May 2005 and down from the £29.9 billion recorded in November.

Simon Rubinsohn, senior economist at the Royal Institution of Chartered Surveyors, said: “2007 may have been a banner year for the mortgage market as the CML data suggests, but the most timely indicators point to a sharp slowdown in demand for property-related loans.”

However, despite the effects of the credit crunch gross mortgage lending during 2007 reached an estimated £362 billion, an increase of five per cent from the £345 billion in 2006.

Meanwhile, mortgage lenders are putting increasing pressure on the Bank of England to help them raise funds to provide potential homeowners with loans reports the Financial Times.

Tags: mortgage market, bank of england, gross mortgage lending, demand, crunch, Council, data

Households to be worse off in 2008

Households will be financially worse off in 2008, according to Ernst & Young ITEM Club’s latest forecast for the UK economy.

The research, using the Treasury’s own economic model, describes public finances as a “mess” and anticipates the situation to get worse with slower growth and slower tax revenues predicted.

Speaking to the Independent, Peter Spencer, chief economic adviser to the ITEM Club, said: “Now that the economy is slowing sharply, the public finances will deteriorate equally rapidly.”

He added: “We have revised our forecast of this year’s current deficit up to £14 billion, compared with the Treasury’s pre-Budget report forecast of £8 billion.”

Experts have predicted that the Bank of England will cut interest rates at least three times to 4.75 per cent, or to a figure even lower, from the current 5.5 per cent over the course of the year or by 2009 if the economy continues to slow.

Meanwhile, research from property expert Right move shows that house prices are rising at their slowest rate for two years.

Tags: rate, Economic, bank of england, United Kingdom, Business Finance, budget report, year

Rate falls ‘will not affect mortgage market’

Any drops in the interest rate over the coming year will have little affect on the mortgage market, an industry expert has said.

According to Firstrung, following the credit squeeze this year the market is “completely detached” from the Bank of England base rate, with the average rate at two per cent higher than that of the base rate.

Paul Holmes, chief executive of the mortgage brokers, commented: “We always used to look at Bank of England decisions to see what our mortgage rate was going to do.

“But all of a sudden the dislocation, the gap, is huge between what the lenders do and what the Bank of England does.”

He added that in excess of 40 per cent of mortgage products have been “stripped” from the market, although there is no shortage of products.

Furthermore, he said, there is a need for a “contraction and consolidation” of the market, rather than increased product innovation.

Tags: England base rate, base, bank of england, mortgage, base rate.paul holmes, lenders, year, average rate

Young people attracted by saving

Young people are now twice as likely to open a savings account as they were just six months ago.

A new survey from Birmingham Midshires found that one in seven (14 per cent) 18 to 24-year-olds had opened a savings account in the last three months, compared to just one in fourteen at the time of its last study, six months ago.

More and more young people are seeing the benefits of saving, with interest rates high and banks and other savings providers competing fiercely to give the best deals.

Jason Robinson, director of savings operations at Birmingham Midshires said: “With 2007 widely accepted as the year of the saver, the savings market is not only appealing more to new markets – the younger generation – but we are also noting an increase in movement with more savers, particularly older savers – switching accounts to get a better deal. The trend is certainly moving away from inertia as people vote with their feet.”

The study found that more people, particularly over-55s, are willing to move their savings around to get a better deal.

However, other research out this week claimed that large numbers of savers are unaware of just how much interest they are actually earning.

Research from Sainsbury’s Bank found that around £112 billion nationwide is being held in account where the savers just do not know what rate they are on.

Tags: inertia, savings operations, Birmingham Midshires, bank of england, six months, best deals, Youth, deal

Mortgage and housing fundamentals ‘broadly positive’

With such variety in predictions about which direction the markets will take, IMLA have said that there is a “broadly positive” outlook for house prices and the mortgage market.

It explains that this trend is unclear due to the disparity between demand for houses and the supply available, as well as the “inadequate” amount of new builds happening over the past years.

Executive director of IMLA, Peter Williams, commented: “Without doubt, there are some clouds on the near horizon but IMLA’s view is that, if the market correction gathers pace in the way some pundits suggest, then we should expect firm action by the Bank of England to support the financial markets, provide liquidity and, if necessary, cut rates to protect confidence and help the markets recover over the medium term.”

He added that, inflation in house prices varies from place to place across the country, saying that, realistically, it will only be those who have bought a property at the market peak who will be effected by the market slowdown.

Tags: cut rates, property, amount, market peak, pundits, market

BoE reports increased lending to individuals

The Bank of England (BoE) has reported a rise in lending in its Lending to Individuals figures for September this year.

It showed the increase in total net spending to be higher than August by £11.2 billion (0.8 per cent).

Within this figure, net lending secured on dwellings was up by £9.8 billion, up from an £8.5 billion increase in August

The number of remortgaging loans approved in September was up from August at 101,000, with loans for other purposes also on the rise at 67,000

Meanwhile the annualised growth rate increased by 0.1 per cent, despite the twelve-month growth rate seeing no changes, staying at ten per cent.

In related news, the mortgage market has taken a severe blow from recent credit squeeze, with lending at a seven-year low this month, falling 27 per cent last month from September’s figure for 2006.

Experts suggest that this could mark an eventual end to the housing boom and lead to a cool-down in the market and an easing off of house prices.

Tags: Individuals figures, blow, bank of england, News, Subprime crisis background information, mortgage

‘Danger thresholds’ show borrowers most at risk

An industry expert has highlighted the fact that many people falling outside “defined thresholds” could be adversely affected by credit crunch.

Fool.co.uk urges mortgage borrowers to recognise the risks they could face from the wider impact of global credit problems by taking guidance from the Bank of England’s Financial Stability report.

It states that those with repayments of over 55 per cent of their total household income are most at risk, standing outside the defined thresholds.

David Kuo, head of personal finance at Fool.co.uk, advised: “Consumers should draw up a Statement of Affairs immediately to get a useful snapshot of their finances. The snapshot will tell, at a glance, whether you fall into one of the ‘at risk’ categories.

“Failing to draw up a Statement of Affairs in the current difficult financial climate is tantamount to driving a car without shock absorbers.”

The Financial Stability report speaks of a “tightening” in the money markets, pointing to the need for more focus on liquidity management and better stress testing among other things.

Tags: report, testing, bank of england, fact, Head of Personal Finance, The, loan

Sharp decline in first-time buyers

Britain has seen a steep decrease in the number of people investing in property for the first time.

The number of first-time buyers has gone down by 20 per cent since March this year, according to research by YouGov.

Partly blamed on mounting house prices and inflated interest rates, the reduction is also put down to a swelling of the buy-to-let market and a decrease in the properties available for purchase.

Head of mortgages at moneysupermarket.com, Louise Cuming, commented: “The past month has been fraught with uncertainty and lenders have begun acting independently of the Bank of England in terms of rate pricing.

“It’s not surprising some potential first-time buyers are getting cold feet and steering clear of home ownership.”

She added that figures from the Council of Mortgage Lenders shows the proportion of first-time buyers to have dipped six per cent against total borrowing in the first six months of this year compared to the same time-frame last year.

The website reported that a total of 56 per cent of homeowners have a fixed-rate mortgage whereas over a quarter choose to go for a fixed-rate of just three or five years.

Tags: Moneysupermarket.com, bank of england, steep decrease, Owner-occupier, time.The number, first time buyers, fixed rate mortgage, cent

Fool.co.uk: House price standstill could ‘imprison’ first-time buyers

Many first-time buyers may fail to sell their home at a price high enough to cover their mortgages if house prices begin to fall.

Fool.co.uk states that people who have recently bought homes on 100 per cent mortgages could suffer from the evening out of house prices and that they have cause to be “concerned”.

Although 100 per cent mortgages are not a significant part of the market, the Council of Mortgage Lenders estimates that they are taken out by one in every 20 first-time buyers.

The website warned that these homeowners would suffer from even a small downturn in prices, leading them into negative equity.

However, David Kuo, head of finances at Fool.co.uk, advised: “They can tip the scale in their favour by ensuring that they choose repayment mortgages rather than the cheaper interest-only options. They should also overpay their mortgage as often as they can afford.”

Mr Kuo added that doing this would help them to chip away at their debt and give them more equity in their homes allowing them an improved choice of mortgage provider.

In the UK, house prices have seen a slowdown in recent weeks with borrowing costs still high and the Bank of England’s decision to hold interest rates at 5.75 per cent meaning the pressure on people repaying mortgages remains high

Tags: chip, borrowing, negative equity, market, David Kuo, bank of england

Further controversy over banks’ failure to apply interest rate rise to savers

Once again many banks in the UK are coming under fire as a result of leaving savers hanging on to find out if and how they will benefit from the latest interest rate rise, which was applied four weeks ago by the Bank of England. Read more

Tags: interest rates, savings, banks, interest, Loans, bank of england

Lenders increase mortgage rates

Halifax has said that global turmoil in credit markets was to blame for the rise in rates of 20 of its tracker mortgages.

More specifically, the bank explained that there had been a sharp increase in short-term interest rates that banks pay when they lend to each other.

Such mortgages are often financed by banks borrowing money on the international markets yet because of the sub-prime fears in the US availability of lending has slowed dramatically.

Halifax’s announcement of its decision came in the wake of news that Northern Rock had ceased offering sub-prime products, which it had done in partnership with US investment bank Lehman Brothers.

Abbey has also increased the tracked margin above the Bank of England’s base rate for its tracker products.

Halifax’s Paul Fincham, said: “Pricing has changed in the markets. Also we have seen other lenders move so we needed to adjust our rates.”

Ray Boulger, spokesperson for the broker John Charcol, said: “It means that the effect is now being felt by borrowers across the board.”

Tags: global turmoil, john charcol, england, northern rock, partnership, bank of england, rise, lehman brothers

Market volatility increases attractiveness of buy-to-let

The recent fluctuations in the UK stock markets have caused a lot of financial concerns among investors.

Originally caused by the meltdown of the US sub-prime mortgage sector, the current turbulence in credit markets might lead some to look elsewhere to grow their assets.

Mortgage Trust commented today that some landlords are finding safer bets in the buy-to-let market.

According to their research, 32 per cent of new landlords have cited control over their investment was a major factor behind their decision to enter the market.

This represents a four per cent rise over the same question asked by the company in January.

Managing director at Mortgage Trust John Heron commented: “When investing in stocks and shares, your only option if you don’t like the way an investment in a fund or company is performing, is to sell.

“With buy-to-let, landlords are in the driving seat. As financial markets become increasingly volatile, this level of control will become more attractive to investors.”

Mr Heron also claimed that the spiralling base rate of interest – which the Bank of England has raised five times in the last year – had also led investors to become “increasingly risk averse”.

Tags: way, Trust, director, buy-to-let, bank of england, stocks and shares, United Kingdom, fund

Barclays share prices fall

Rumours surrounding emergency loans allegedly taken out by Barclays Bank from the Bank of England have resulted in the bank’s shares taking a tumble. The UK banking giant recently saw its shares fall to their lowest level in two and a half years. In August rumours began when the bank is said to have taken two emergency overnight loans from the Bank of England. The bank has defended its actions, stating that the loans were due to technical difficulties, but with the crisis that hit Northern Rock still fresh in the minds of many it was inevitable that Barclay’s actions would eventually affect its share prices. Read more

Tags: United Kingdom, loan, finance, point, head of global retail and commercial banking, recent additions, bank of england

BCC warns Bank of England against rate rise

The British Chambers of Commerce (BCC) has claimed that “economic damage” will be done in the UK if interest rates go up again.

The Bank of England’s monetary policy committee (MPC) will meet later this week to decide whether to put rates up or not.

According to the BCC’s chief economic adviser David Kern, the MPC should wait for previous rate rises to avert potential damage – and there have been five in the past twelve months – to take full effect before putting another increase on: “There are already signs that the housing market may have started to soften”, he said.

Mr Kern’s position is backed up by the latest monthly house price figures from mortgage lenders Nationwide, which show a seasonally adjusted gain in inflation of just 0.1 per cent for July, dragging down the overall inflation rate for 2007 to 9.9 per cent, well down on previous double digit showings.

A Reuters poll has also previously shown a comfortable majority of city analysts agreeing that rates are scheduled to go up to six per cent by the end of the year.

Tags: majority, bank of england, signs, digit, inflation rate, interest, price, uk

Savings gulf opens up in UK

New research from Alliance & Leicester, released today, shows that Britons hold six times more in savings and investments than they do in debt.

Property was totted up as being worth £4.3 trillion, savings at £820 billion, with other assets including pensions totalling £1.8 trillion. Total borrowings came to £1.3 trillion.

This impressive ratio – gleaned from figures from the Bank of England, the Council of Mortgage Lenders and the government by the pollster YouGov – hides a financial gulf splitting the populace.

While richer households enjoy the property boom and the strong economy, lower income households are saving less as belts are tightened.

Evidence for this is found in savings figures: while the national average comes to £31,300, almost one third of households have no savings at all – pointing to a big split between the “haves” and the “have nots”.

Alliance and Leicester pointed out a general decrease in savings, with the bank’s head of savings and investments Ewan Edwards pointing out that on average just 2.1 per cent of disposable income is currently saved by Britons, when the figure averages out at 6 per cent over the last decade.

“Britons are increasingly losing the savings habit”, he concluded.

Tags: splitting, council of mortgage lenders, britons, bank of england, split, income

Increasing numbers of players in small business loans market

Increasing numbers of lenders are getting involved in the increasingly competitive small business loans market, leaving consumers apparently spoilt for choice.

Lloyds TSB said today, however, that customers must be sure that they will be able to pay back money lent, and to have a thorough risk assessment before going ahead with the loan.

Senior manager of lending at the bank, Stuart Wilson, also said that the current climate – with the Bank of England raising interest rates last week – meant that people looking for loans should take extra care, and that those having difficulty with meeting their repayments should seek out their lender for advice.

Referring to small businesses, he added: “In terms of availability I think there are more and more players in the market who would cater for all types of lending options. So I don’t think there’s necessarily customers who are not able to start up because of a lack of funding, it’s just looking around the marketplace and seeing who is looking to lend to them.”

Increasing competition in the market has led lenders to advertise more and more attractive introductory offers to induce new startups to take out a loan with them. NatWest is launching a new small business bank account this month where all bank charges are free for the first two years.

Tags: tsb, bank of england, Commercial mortgage, lack, small businesses, current climate, lloyds, month

Overdraft interest rates go up

Recent reports have indicated that some banks and lenders have raised their overdraft interest rates by huge amounts over the past year, by far exceeding the interest rate rises that have been imposed by the Bank of England in terms of the base rate. Read more

Tags: overdraft, Banking, banks, bank of england, interest rates

Interest rates frozen

The Bank of England has decided to freeze interest rates at 5.5 per cent.

The monetary policy committee (MPC) made the decision following a quarter point rise in May and after four rate rises since August 2006.

Industry figures had widely predicted the move as it was thought that the MPC would want to wait and see what effect the last rise had.

Despite the decision being good news for those with loans, mortgages and credit cards, borrowers are being warned that further rate rises are likely in the near future.

“The majority of economists are calling for a rise in July but if we need another increase it would be more logical for the MPC to wait until the next quarterly inflation report in August before making that decision,” said Ray Boulger from mortgage advisor John Charcol.

“With the total previous rise of one per cent looking like it is doing the trick, I believe the MPC will want more time to see if this is indeed the case.”

This sentiment has been supported by a number of figures, with research firm Global Insight also predicting another rate rise in August.

“We believe that the MPC is likely to act by August at the latest to try to stamp out the significant upside risks to longer-term price stability,” said Howard Archer from the firm.

Tags: case, longer-term price stability, bank of england, interest, report, rate

Another interest rate rise

Interest rates are the highest they have been since April 2001 after the bank of England announced yet another rise.

The 0.25 per cent increase is the fourth rise since last August and is bad news for borrowers up and down the country.

Many experts had been predicting the Monetary Policy Committee’s (MPC’s) decision and some had even forecast a bigger increase of 0.5 per cent.

The rate rise was brought in to keep inflation in check and recent figures show that inflation is currently at record levels.

People with a mortgage, credit card or loan will be disappointed with the decision and will need to keep an eye on their finances to ensure that they can keep up repayments.

Someone with an £80,000 mortgage can expect to see their monthly payments increase by around £12, while those with a £200,000 mortgage will see payments rise by £30.

Experts are also warning that this is unlikely to be the last interest rate rise, with economists predicting more to come in the months ahead.

Tags: business, bigger increase, mortgage, rate rise, Credit card, bank of england, loan, Financial services

Homeowners anxiously await MPC’s decision

The Bank of England’s monetary policy committee (MPC) is to announce on Thursday whether it will raise, lower or maintain the base rate of interest.

While most analysts have predicted that the interest rate will have to rise another quarter point before this summer, analysts are in disagreement about whether or not April will see a rate rise to 5.5 per cent.

Stephen Smith, director of housing at Legal & General, said: “Borrowers will be waiting to see if they are going to be in the red or the black in the base rate roulette next week.

“Rates are still at a relatively low level compared to 70s and 80s and many people would struggle with today’s debts at yesterday’s prices. Whilst the boom and bust has flattened out since the turn of the Millennium, borrowers are still facing a probable hike in rates in the near future.”

Mr Smith warned that June and August were likely to hit those with mortgages hardest, since they were the most likely months for a base rate rise. He compared them to Park Lane and Mayfair on a Monopoly board as “you just want to get through them without having to pay out more money!”

The Council of Mortgage Lenders predicted that recent interest rate rises would start to have an affect on the value of homes and that while prices would still go up by seven per cent, this would be a marked deceleration compared to previous years.

Fionnuala Earley, Nationwide’s chief economist, also predicted that a rate rise would not curb the rising level of value in the property market, adding: “The UK housing market will remain fairly firm in the short term, partly because of the momentum built up in the market that will take a few months to work through, but also because of supply constraints.”

If an interest rate rise does occur on Thursday, homeowners with a £100,000 mortgage would find themselves £15 worse off per month.

Tags: bank of england, point, rise, base rate rise, Nationwide's chief economist, quarter point, level, Fionnuala Earley

Interest rates remain 5.25%

The Bank of England has decided to hold interest rates at 5.25 per cent.

It is good news for those with a mortgage, loan or credit card and will be welcomed by the majority of borrowers.

Many experts had been predicting a continued rise in base rates in the coming months, following a steep increase from 4.5 per cent to 5.25 per cent in five months.

However, a number of factors, namely falls in the stock market, commodity prices and a fall in inflation, have reduced the chances of an imminent rise.

The Bank of England’s Monetary Policy Committee (MPC) changes the base rate to keep inflation as close as possible to the government’s two per cent target.

Recent months have seen inflation running well ahead of this, sparking the quick succession of base rate increases.

Last month the MPC was split in its decision to hold rates and economists are predicting that March’s decision will also be a split one.

That does not bode well for the future, although two MPC members have come out indicated that they are strongly against any future rises.

Tags: bank, future, Monetary Policy Committee, interest rates, cent, finance, succession, bank of england

Mortgages rise above base rate

The Co-operative Bank, Alliance & Leicester and RBS Natwest high street banks have all increased their mortgages rates by more than the 0.25 per cent rise in the base rate introduced by the Bank of England in January.

While the Co-operative standard variable rate (SVR) has risen by 0.35 per cent, reaching 7.24 per cent, Alliance & Leicester raised its SVR by 0.3 per cent to hit 7.39 per cent and RBS Natwest added 0.3 per cent, taking its SVR to 7.44 per cent.

SVR is the standard rate a customer’s mortgage reverts to after the time-limit on a fixed-term mortgage deal such as a tracker expires.

Mortgage SVR rates rose by an average of 0.51 per cent over 2006, Moneyfacts.co.uk recently revealed – and adjustments to SVRs following interest rate hikes can accelerate their growth.

Over the last six months, when the Bank of England has raised the base rate three times, 13 mortgage lenders, including the Bank of Scotland, Britannia and the Co-operative Bank, have put up their SVR by more than the 0.75 per cent total increase in the base rate, Savills Private Finance has shown.

Tags: mortgages rates, interest rate hikes, mortgage lenders, Mortgage loan, bank of scotland, bank of england, cent total increase, svr

Property shortage fuels price rises

A new report says that house prices are rising due to a lack of property for sale on the market.

The Rightmove Price Index has found that prices in Britain have risen from an average of £221,751 in December, to £222,859 in January.

That means annual house price inflation is up to 13.5 per cent and the rise is being put down to a lack of housing.

The index says that housing stock is 18 per cent lower than it was at the same time last year, with Rightmove citing this as a major factor in the price rises.

“Where there are shortages of property, prices will keep increasing and properties will keep selling, in spite of the latest interest rate rise,” said Miles Shipside, Rightmove commercial director.

“The reason house prices are defying the gravity of a six-year high in interest rates is because the number of new households is growing by 50,000 a year, more than the supply of new build.”

The Bank of England has recently raised interest rates in a bid to bring the housing market under control, but Mr Shipside pointed out that this may be a risky strategy.

“Slowing property prices by raising interest rates several times in quick succession is not only incredibly painful for existing and potential homeowners’ mortgage payments, it’s a high-risk strategy for the economy given the possibility of rates going too high,” he said.

Rightmove has revealed that it expects to see property prices rise by six per cent this year.

Tags: mortgage payments, major factor, Rightmove, bank of england, Business Finance, property prices, housing.The index

Average house price £100k+

House prices have continued to grow, with new research showing that every county in the UK has an average house price above £100,000.

The data, collated by Halifax, signals the first time ever that this has been the case and demonstrates a massive growth in average prices.

In 2001 there were 63 out of 101 counties with an average price below £100,000. In addition, only Surrey had an average price of £200,000 back then.

The latest survey shows that 19 counties had an average house price of at least £200,000.

Scotland and Wales saw the biggest growth in house prices, with the top ten fastest growing counties being in these regions.

“Wales, Scotland and, to a lesser extent, Northern Ireland, have dominated the UK county league table for house price growth over the past five years,” said Martin Ellis, chief economist at Halifax.

“Southern England, by contrast, has lagged behind. Much of the out performance by these parts of the UK has been part of a catch-up process with the greater availability of more affordable property stimulating demand and therefore allowing prices to rise more quickly.”

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No Evidence That Interest Only Mortgages Are Taken Out Under Pressure

Amidst concerns that many people may be taking out interest only mortgages rather than capital and interest mortgages simply because of the rising cost of house buying and the problems with affordability, a recent report has been published and has indicated that this is not actually the case, and it is not pressures relating to the affordability of housing in the UK that is resulting in some borrowers opting for the interest only mortgage.
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