Banks try to recover by making customers pay

It has been suggested that many banks and building societies in the UK are trying to rebuild their financial portfolios and profits by making customers pay, according to a recent report. Read more

Tags: cost of borrowing, margin, level, banks, percent, fixed rate, change, borrowing

Watchdog to probe sale and rent back

The UK’s watchdog, the Office of Fair Trading, recently announced that it would be launching an investigation into sale and rent back scheme, which have been gaining popularity over recent months due to the rising levels of people facing repossession due to high mortgage arrears. Whilst the sale and rent back industry has claimed that this is an ideal solution for many struggling homeowners, many campaigners have expressed concern over how fairly sale and rent back customers are treated. Read more

Tags: sale and rent back, office, bank, office of fair trading, Subprime mortgage crisis, change, home insurance, public improved protection

No change to mortgage crisis

There has been no change to the mortgage crisis in the UK despite government intervention, according to the Council of Mortgage Lenders. Officials from the CML have said that the problems in the mortgage industry are still ongoing, and the squeeze on credit and mortgages continues even though the government has pumped billions of pounds into the money market and has launched a £50 billion mortgage rescue plan that allows lenders to swap their mortgage assets for government bonds, which is aimed at restoring confidence amongst lenders and increasing liquidity in the mortgage sector. Read more

Tags: bank insurance, mortgage lending, change, squeeze, credit, special liquidity scheme

Greater equality for gay people over insurance

There has been a change in attitude when it comes to insuring homosexual people.

Chris Morgan, managing director of Compass Independent Financial Advisors, said that there has been a shift in the last five years.

In the past, he said, it would have been difficult to have assured a £200,000 sum for an “openly gay” customer, whereas now as much £1 million life assurance can be given.

However, he added: “There are other issues you have to consider in finance for example specialised advice for people with HIV and that’s around mortgages particularly because they can’t get life assurance.”

According to the ABI, in October 2005, a Statement of Best Practice was put in place by the insurance industry regarding HIV and insurance that affects the way some types of gay men are insured.

It states that ‘the gay question’ on life insurance forms, income protection and critical illness cover applications that many homosexuals consider unfair. The ABI have put an end to this and “other intrusive personal questions”.

Tags: example, change, illness cover applications, homosexual people.Chris, way, Best Practice

Customers advised to check on dormant bank accounts

Customers can easily lose track of their bank accounts just by being “a little bit disorganised”, a financial expert said today.

The comments, from money education charity Credit Action, came after Halifax announced that it would be attempting to re-unite customers with money that they held in inactive, or ‘dormant’ bank accounts.

A bank account is automatically classified as “dormant” if it remains unused over a 15-year period.

Deputy director at Credit Action Chris Tapp said that dormants accounts were generally created “when there’s a change of circumstance: if somebody moves home, particularly if they move abroad. In the confusion of those changing circumstances, people just forget – it’s almost as simple as that.”

He also suggested that the fact that “banking has become so much more complicated”, with many holding multiple accounts, as a reason behind the dormancies.

The Unclaimed Assets Register, maintained by creditors Experian, tracks dormant bank accounts, estimating that a total of £15.3 billion is held in them.

A Treasury Select Committee also recommended this week that money sitting in such accounts should be reinvested in good causes.

Tags: GBP, confusion, committee, financial expert, today, week

Consumers should keep an eye on their savings rate

Consumers are being urged to keep an eye on their savings rate following the latest interest rate rise by the Bank of England.

Banks and building societies are often notoriously slow at applying any interest rate rises to savings account, yet are quick to apply them on borrowing, which means that they make maximum profits from any interest rate rises. The Bank of England has raised interest rates four times in the last nine months, taking them from 4.5% last August to 5.5% earlier this week. However, although borrowers quickly see repayments on variable rate loans and mortgages going up, savers do not benefit from the same speedy action.

In some cases, according to industry experts, banks and building societies simply leave the interest rate on savings unaltered, and most consumers fail to notice or concern themselves about this, leaving the banks to rake in million in additional profit.

Experts are urging consumers to keep on eye on their interest rates on savings every time the Bank of England imposes another interest rate rise, and to make sure that they either see the rate reflected on their savings account or consider switching accounts to one that does offer a competitive rate of interest.

Many of those with savings account may have to wait until June to see any rise in interest rates on their savings, and even this small delay could rake in huge profits for banks and building societies.

Kevin Mountford, head of savings and current accounts at moneysupermarket.com stated: ‘It takes providers an average of 20 days to pass on an interest rate rise. With each half per cent rise bringing in £12m per day in interest it’s easy to see why providers delay. If the reason for the average 20-day delay is operational then banks and building societies should backdate the rise.’

Tom Smith
21st May 2007

Tags: accounts, compare, moneysupermarket, competitive, interest, rise, change, rate, switch

Buy-to-let market set for growth

More and more people are choosing not to get a mortgage and are instead renting property.

According to Alliance & Leicester, the buy-to-let market is growing rapidly and the firm expects that it will have ballooned by 40 per cent within ten years.

The company has released its Changing UK Household Market report in which it states how the market will grow and what will be the factors affecting it.

Three main drivers for the market were identified, the first of which is a rise in the renting market, with more students and single people looking for places to live.

A change in attitude among the younger generations was also named as a key factor, with it now being more socially acceptable not to own a home.

Finally, Alliance & Leicester said that larger numbers of people are now using rented property to ensure they have flexibility.

“Demand for rented property has been growing steadily in recent years and returns on buy-to-let have increased,” said Stephen Leonard, director of mortgages at the firm.

“This growth is expected to continue – as the number of renters rises further and buy-to-let becomes even more attractive to both existing and potential landlords.”

Tags: market, change, home, flexibility, uk, landlords, Stephen Leonard

Car insurance premiums soar

Car insurance premiums have reached their highest ever level, according to new research.

The AA British Insurance Premium Index found that in the last quarter of 2006 the average premium rocketed by 4.35 per cent.

That took the average cost of car insurance to a massive £806, breaking all previous records since the index began in 1994.

Drivers buying third party, fire and theft (TPFT) cover saw their premiums rise by a smaller amount, but they are still paying the most for their insurance.

According to the index, the average TPFT premium is £999.45. This is largely because a typical TPFT buyer is young, meaning higher premiums and little no-claims bonus.

“Young drivers account for a quarter of all road fatalities and are five times more likely to have an accident than a driver aged 35-plus,” said Kevin Sinclair, managing director of AA Insurance.

“Premiums reflect this shocking record while many insurers will no longer cover young drivers.”

The Index also looked at home insurance premiums and found little change. However, some analysts believe that with an increasing number of freak weather incidents in the UK, we could soon see premiums rising.

“The recent north London tornado is an example and meteorologists are predicting more of the same,” commented Mr Sinclair.

“Insurers are taking note but it will take several such events to have a significant upward influence on premiums. However, I do believe that this year will start to see an upward trend.”

Tags: road fatalities, record, upward influence, upward trend, change