More than a fifth of over 55s have a personal loan

Often, personal loans are associated with younger people in their twenties or thirties who may be borrowing the money to buy a new car, pay for their wedding or splash out on a luxury holiday. However, it seems that even older people are lumbered with personal loan debt these days with a recent study showing that more than one fifth of consumers aged fifty five and over were paying off a personal loan.

Whilst in years gone by people reaching their late fifties and sixties enjoyed the luxury of knowing that by the time they reached this age they had paid off their debts and often their mortgage as well, leaving them financially free to enjoy life during their retirement years with no financial burden to hold them down. However, these days things are quite different for many people in their fifties and sixties many of whom still have debts such as personal loans and mortgage debt.

Research was recently carried out by the insurance giant Aviva, which showed that more than one fifth of people aged fifty five and older have a personal loan. In total 21 percent of people over this age had a personal loan. The research was carried out as part of the Aviva Real Retirement Report and involved polling more than ten thousand people aged over fifty five.

An official from Aviva said: “The over-55s have seen their finances deteriorate over the last quarter as people struggle to keep up with the rising cost of living on a relatively fixed income. Taking out a private pension, building up a respectable savings pot and paying down debt are all simple steps that people can take to ensure they don’t face these problems in retirement.”

Tags: study, total 21 percent, over, building, retirement, aviva, polling, late fifties

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.’

Tags: Nationwide Building Society, property, Business and Economy, building, finance, prices, low interest rates, global credit

Nationwide pleased about BIS decision

The credit card industry in the UK has been at the centre of a major crackdown recently, with government officials and regulators looking at ways to make things fairer for the consumer when it comes to credit card repayments. Recent proposals from the government were put forward to the Department for Business Innovation and Skills, and amongst the various suggestions that were put forward was an important issue relating to the allocation of repayments. Read more

Tags: Business Innovation, credit card debt, nationwide, credit card repayments, various suggestions, order, BIS

Homeowners could be paying over £100 extra a year on mortgage

According to a recent report the average homeowner in the UK could end up paying over £100 a year extra on their mortgage as a result of the bailout of failed Icelandic banks and the Bradford & Bingley. One finance expert said that the bailout had resulted in homeowners being charged around an extra £108 a year because of home loan rates being pushed up as a result of the bailout. These figures come from John Goodfellow, who is the chairman of the Building Societies’ Association. Read more

Tags: homeowners, Financial Services Compensation Scheme, building, Mortgages, uk

‘Fixed-rates offer peace of mind’

The Newcastle Building Society has said that savers looking for “peace of mind” when they open a savings account should opt for fixed-rates, as they can be sure of the returns on these types of products.

Steve Urwin, senior marketing executive at the building society, said accounts with building societies not only give savers good returns on their money, they also act as a “safe” because they have additional protection.

Mr Urwin commented: “Savings are protected by the investor protection scheme, in addition to housing their money in a trusted institution.”

The number of people opening accounts with building societies reached record levels last September, according to reports.

It was also found that savings accounts and cash Isas were the most popular products, with the demand for Isas up by almost a fifth.

Mr Urwin said that people should take advantage of Isas because most other types of savings are subject to tax.

Tags: Banking, Marketing, building, Business Finance, investor protection, Financial services, money, society

Alliance & Leicester launches new bond

Alliance & Leicester International has announced the launch of a new one-year fixed-rate bond, which the firm claims will meet the needs of its customers. Read more

Tags: savings bond, escalator, amount, best rate, building

Boost in saving predicted for 2008

The number of consumers saving money is expected to grow during the course of 2008 “in terms of the proportion of the money in society”, claims one financial expert.

Halifax said that the slow down in the economy is likely to make consumers feel they need to deposit their money into their savings accounts in a bid to save.

Jason Clarke, spokesperson for Halifax, said: “When the economy is growing, people are confident.”

“When things begin to slow down, people think ‘now I need my rainy day money’ – it’s almost the reverse of what it should be. It’s down to [the] human psyche,” he added.

Halifax also advised those consumers looking for a savings account to research their options before committing to a deal.

According to the Buildings Society Association, building societies attracted a record £16.1 billion of savings inflows in 2007, which is almost double the inflow of 2006.

Meanwhile, in December 2007, HBOS forecasted that savings in Individual Savings Accounts (Isas) would rise by £30 billion to £240 billion in 2008.

Tags: record, financial expert, hbos, confident.""When things, building, psyche, ISAs, individual savings accounts

Home insurance should cover new installations

Homeowners could benefit from increasing home insurance cover to cater for the increased value of their homes following renovations advised an industry body.

The British Insurance Brokers’ Association (BIBA) said that the reassessment of the contents value and building cover is dependent on what work has been done and its size.

Steve Foulsham, technical services officer for BIBA, said: “If it’s an expensive, state of the art new kitchen worth £10,000, then you may wish to increase your sum insured to cater for that.”

He added that BIBA gets many queries from members of the public asking for clarification on what falls within home and contents insurance.

The “general feeling” among insurers is that once a renovation has been fixed down, it becomes part of the building, Mr Foulsham concluded.

According to the British Retail Consortium, citing figures from Datamonitor, in 2008 the UK DIY and hardware market is estimated to be worth £16.1 billion.

This is an increase of 17.7 per cent since 2003.

Tags: economics, public asking, part, cover, body, sum, industry, building

Consumers unsure of rate change impact

The majority of Brits are unclear on the value of a one per cent mortgage rate difference, it has emerged.

Research by Nationwide Building Society has found that 75 per cent of people in the UK do not know how much real difference this would make to their mortgage, which could be up to £4,000 on a five year fixed rate mortgage deal.

Meanwhile, when told to compare two five year mortgage deals to compare, the largest proportion of respondents (28 per cent) said there would be a difference of £500 to £2,000 between a £120,000 mortgage with interest of 5.6 per cent and one with interest of 6.6 per cent.

In fact the difference would be £4,000, which was correctly identified by just 23 per cent of respondents.

“People’s lives are busier than ever in the run up to the festive season and, as a result, they may be less inclined to shop around for the best deal. The temptation may be to take a slightly higher rate as an easier, less hassle option,” said Matthew Carter, divisional director for mortgages at Nationwide Building Society.

Tags: Real estate, mortgage rate, run, research, divisional director for mortgages

Building societies ‘offer best value’

Building societies are offering a better standard of service in most areas than banks, according to new research.

As well as providing higher service standards, the study also claims that building societies’ mortgages and savings, on average, represent better value than those offered by banks.

The research has been carried out independently for the Building Societies Association (BSA), a trade body which represents all of the UK’s 59 building societies.

Speaking at the Association’s annual lunch last Thursday, BSA chairman Iain Cornish said: “Building society savers and borrowers are significantly more satisfied with the services which they receive from building societies, than are customers of banks.

“The whole building society model is more transparent, simpler, more prudent and more trusted and we simply do not have the same motivation as banks to take massive risk positions in pursuit of profits for shareholders.”

Pointing to two recent reports published by a price comparison site, Mr Cornish claimed that building societies offered 70 per cent of the UK’s best value mortgages and 70 per cent of the best-paying savings products in the last 18 months.

Mr Cornish is also chief executive of the Yorkshire Building Society.

Tags: new research, Trustee Savings Bank, Mr Cornish, societies, standard, Iain Cornish, Yorkshire Building Society, building

Yorkshire Building Society opens 133rd branch

The Yorkshire Building Society is planning to increase its High Street presence by 10% over the next three years, and has recently made progress towards this goal by opening its 133rd branch in Chester.

The branch was opened amidst celebrations, with everything from champagne and white roses to town criers. Customers have already flocked to the branch to open accounts, and in light of the record number of deposits made in building societies across the UK over recent weeks officials have high hopes for the success of this newest branch.

A spokesman from the Yorkshire Building Society stated: ‘As a society, we have never veered from our main objective: to raise funds from the public via savings products that we can then lend on to those who want to buy their own homes. ‘The best way to raise those funds is through a healthy branch network. The public like this setup and I see no reason to change it. It’s not sexy, but in light of recent events at Northern Rock, it has huge customer appeal.’

The crisis with Northern Rock led to building societies enjoying huge rises in deposit levels over a matter of weeks, with worries savers taking their money out of Northern Rock and depositing it elsewhere. According to figures from the Building Societies Association there was a rise of nearly £1 billion in the number of savings deposits made in building societies following the Northern Rock crisis.

One of the customers that turned up for the opening of the new branch stated: ‘I find building societies more approachable and friendly than banks. ‘Although Chester is well banked and has its fair share of building society branches, it’s good to see Yorkshire offering more choice.’

Tom Smith
11th November 2007

Tags: expand, chester, savings, bank, society, open, building, yorkshire

Banks must keep customer more informed states BBA

The British Banker’s Association has recently stated that UK banks need to do more to keep their customers informed on all levels when it comes to the services and product that they offer, as well as when it comes to any changes.

A senior official from the British Bankers’ Association stated that banks need to buck up their ideas in terms of keeping customers informed. This comes at a time when reports indicate that consumer confidence in the banking and financial sectors has plummeted.

 According to the Chief Executive of the British Bankers’ Association, Angela Knight, banks in the UK need to keep their customers far more informed in terms of banking issues. Ms Knight stated that the increasing complexity of the banking industry as a whole meant that banks needed to be far more informative with their customers. She said that banks needed to be more open and informative in terms of their procedures, and that better explanations and increased security was required from banks.

Although one recent report is said to have shown that many consumers are satisfied with their bank, another study has shown that the confidence of consumers in banks and building societies, as well as other areas of the finance sector, has taken a real hit as the result of chaos and turmoil in the money markets and the recent problems seen at Northern Rock, where many savers were in fear of losing their money resulting in the mass withdrawal of over £2 billion.

Another issue that has affected consumer confidence and satisfaction when it comes to banks is the recent controversy over bank charges, which is due to come to a head early next year when the Office of Fair Trading takes the banks to court in a test case to determine what can be construed as a fair fee.

Tom Smith
4th November 2007

Tags: building, Banking, money, funds, bank, consumers, societies, information, deposits

Consumer confidence in banking falls

According to a recent survey the levels of consumer confidence in banking have fallen recently, and experts state that much of this reduction in confidence has been fuelled by the recent turmoil and chaos faced by Northern Rock.

The survey was carried out by Teamspirit, and showed that levels of confidence in banking and the finance industry as a whole have taken a real knock over recent weeks, affecting many sectors of the finance and banking industry.

Almost 2500 people were polled as part of the survey, and the results showed that only 46% of consumers now had trust in high street banks. A slightly higher number of consumers expressed confidence in building societies, with 48% stating that they trusted building societies. Online banking also took a hit, with just 25% of consumers stating that they trusted inline banking – experts state that this could be partly due to severe problems that Northern Rock customers experienced over the past couple of weeks.

One official that was involved in the survey stated that the whole Northern Rock situation had resulted in a damaging effect in terms of consumer confidence in finance and financial institutions.

She said: “The Northern Rock situation has contributed to the low levels of trust that the British public has in companies that look after their money.”

Another factor that has also affected levels of consumer confidence according to many experts is the turmoil that has hit the financial markets over the past month, which was sparked by the credit crunch in the United States. This has had global repercussions, affecting many areas of the financial sector in the UK as well as in other countries.

Tom Smith
25th October 2007

Tags: building, Banking, accounts, bank, society, finance

ISA reforms to allow customers to “mix and match”

Proposed government reforms to ISAs will encourage more people to save, financial experts said today.

A director at Tax Incentivised Savings Association (TISA), a trade association representing the financial services industry, added that customers would now be able to “mix and match” their ISAs, under the reforms announced last month.

The government will set new limits for cash ISAs at £3,600 and stocks and shares ISAs at £7,200, effective from next April.

Peter Shipp, technical director of TISA, said: “If [customers] have a cash ISA with the bank or building society and they have a stocks and shares ISA with another firm, they can mix and match as long as they don’t go over £7,200 overall.”

He recommended that savers take out ISAs, as they “encourage…people to save” and that people “will get their interest without a deduction of tax” by using them, unlike ordinary savings accounts which deduct the basic rate.

Stocks and shares ISAs were also a good way of avoiding capital gains tax if shares go up, he added.

Around 18 million Britons currently hold ISAs, with Mr Shipp confirming that latest statistics showed uptake levels at their “highest ever”.

Tags: ISAs, director, ISA, building, government, avoiding capital gains

Government wants longer term fixed rate mortgages to be available

The government, under new prime minister Gordon Brown, has announced that it wants more longer term fixed rate mortgages to be made available in light of the five recent interest rate hikes that have left homeowners struggling to keep up with rising repayments and have made the prospect of purchasing a home even more difficult for first time buyers on a limited budget.

Alistair Darling, the new Chancellor of the Exchequer, has stated that longer term fixed rate mortgages are more important than ever in light of the current state of the economy, as these will enable property purchasers and homeowners to benefit from stable repayments that will make financial management easier and reduced the risk of crippling repayments stemming from further interest rate rises.

Earlier in the week Alistair Darling stated: ‘When you look around the rest of Europe, it is more common to have longer-term fixed rates. We need to look at that. We need to reduce the volatility.’ He also spoke of the profits that some brokers and lenders are making by offering shorter time fixed rates that have to be renewed every few years, netting them thousands of pounds in profit: ‘Brokers want you to come back every two years, rather than every ten or 20. The Financial Services Authority has identified this as a problem.’

In light of the announcement made by government officials the Nationwide Building Society has just announced the launch of a 25 year fixed rate mortgage. However, there are concerns over how many people will want to take on a fixed rate over such a long period in case interest rates start to fall.

Tom Smith
31st July 2007

Tags: buyers, time, interest, rises, fixed, young, rate, first, Mortgages, nationwide

Woman furious over overdraft fees

A twenty year old university student recently expressed her anger over her building society’s failure to contact her about a tiny overdraft balance that went on to accrue months of expensive fees.

The woman stated that her account with the Nationwide Building Society was just 95p overdrawn after she wrote a cheque. However, whilst she was away studying at university the building society added charges to the overdraft on a monthly basis. When she arrived back from university some months later, the customer stated that she discovered that £250 in fees had been added to her student account.

According to the customer the Nationwide had been adding £20 each month to the account because of the outstanding 95 pence, but had made no attempt to contact her to let her know the situation.

She stated: ‘I had no idea the account, which I had not used in ages, was overdrawn. I was away at university for long periods of time.’

She added:  ‘When I returned I found a massive pile of letters from the Nationwide waiting for me and an overall overdraft of almost £250. I was pretty angry with them because they had not tried to contact me by phone and it was quite obvious the account was not being used. They said my credit rating could have been affected which would have been bad so I decided to do something about it.’

The customer stated that she contacted Nationwide regarding the fees, but the building society said it was only prepared to waive fifty percent of the fees that had been charged. The customer then went to her local MP about the situation, and as a result of this the total fee was finally waived but the building society also closed her account.

Tom Smith
4th July 2007

Tags: charge, bank, tiny, overdrawn, nationwide, accrue, months, 95p, society

Savers could benefit from another interest rate rise

Over the past year the UK has seen interest rates rise three times, shooting up from 4.5% in August last year to 5.25% by January of this year.

And with experts predicting that another rise of at least 0.25% will be enforced in May, and possible a further rise in the summer, borrowers on variable interest rates are dreading dealing with their finances, as this means that repayments will go up yet again. However, for some savers the story is quite different.

According to information from Moneyfacts interest rates on fixed rate savings accounts have been climbing, and another interest rate rise could spell good news for savers. According to one expert from Moneyfacts a number of banks and building societies have been raising fixed rate interest rates by up to 0.55%. This has created stiff competition between those offering these savings accounts, and at present the Nottingham Building Society offers the highest rate at 6.2%.

According to Moneyfacts’ Rachel Thrussell: “While rates in excess of six percent are currently very competitive, instant access rates are not far short of this mark, making the reward for tying up your money relatively low. So while these rates will offer a great return and piece of mind, perhaps the market has not yet reached its peak and better rates may still be yet to come.”

In a related report from Sainsbury’s Bank, some experts were concerned that savers were being short-changed in terms on interest on their savings, with many account failing to keep up with inflation and interest rate rises. Consumers that are saving in a low interest account are urged to shop around and look for an account that offers a higher rate of interest, as this could really bump up the amount if interest earned each year.

Tom Smith
28th May 2007

More Information:

• Savings Accounts – Are They Worth It?
• Internet Bank Accounts – The Benefits and Drawbacks

Tags: building, fixed, earn, increase, accounts, amount, tax, interest

Mortgage shock on horizon for many

Borrowers with a fixed-rate mortgage managed to avoid the recent interest rate rises but some are set to see their payments increase.

The reason, says mortgage broker London and Country (L&C), is that those who took out a mortgage two or three years ago may be about to see their fixed-rate deals come to an end.

L&C points out that the best two-year fixed-rate mortgage available in May 2005 was available from Newcastle Building Society, with a rate of 4.49 per cent and a fee of £420.

On a £150,000 interest-only loan, a borrower would have been making monthly payments of £561.25 per month. However, once the fixed-rate deal ends, borrowers will be paying 7.34 per cent interest, taking monthly payments up to £917.50.

“The payment shock for many borrowers will be substantial when their deals to come an end and it’s important that they do all they can to minimise it,” said James Cotton, mortgage specialist at L&C.

“The advice is simple: see what new deal your lender is willing to offer and shop around elsewhere.

“Most importantly, plan ahead and don’t leave it until you’re already paying Standard Variable Rate,” he added.

Borrowers are advised to try to get the best deal when taking out a mortgage for the first time but must be prepared to pay higher rates of interest once the deal comes to an end.

Tags: broker, May, Mortgage broker, interest, GBP, payment, Mortgage shock, building

Detached property mortgages most popular

Detached properties remained the most popular among home buyers throughout 2006, according to new research.

Figures released by Norwich and Peterborough Building Society show that more people took out mortgages on detached homes than any other type of property.

The East Anglia-based firm recorded an increase in figures for 2006 compared to 2005, with a one per cent increase in the number of people buying a detached property.

In contrast, the number of buyers who applied for a mortgage on a semi-detached home fell by two per cent, meaning semi-detached mortgages accounted for 30.41 per cent of total loans (5.22 per cent less than detached).

“Customers do look on their home as ‘their castle’ and prefer the greater privacy that a detached property offers, along with the benefits of perhaps a bigger garden and fewer problems with noisy neighbours,” commented Martin Bell, head of residential lending at Norwich and Peterborough.

Terraced houses once again fared the worst in the figures, with only 25.52 per cent of mortgages taken out to buy one, signalling a fall of 0.51 per cent compared to 2005.

Tags: bigger garden, business, building, bell head, fewer problems, finance, privacy, semi-detached home