Third consecutive drop in asking prices

It has been revealed that asking prices for properties have fallen for the third month in a row, raising further concerns that the UK economy and the property market may be heading towards a double dip. The data comes from a report released by the specialist property website Right Move.

During the five weeks leading up to September 11^th the average asking price on a home put up for sale in England and Wales fell by 1.1 percent, taking the average asking price to £229,767. During the past three months sellers have dropped their average asking prices by 3.4 percent in total, equating to £8000 in terms of value.

The drop in asking prices over the past three month has wiped out half of the gains that have been made during the first part of this year. This gloomy data relating to property prices adds to a number of reports that have painted a bleak picture for the immediate future of the property market in parts of the UK.

Estate agents are currently reporting record numbers of properties on their books that remain unsold, as more people rush to sell their homes at the same time as a greater number of potential buyers decide to hold off committing to a mortgage or are unable to get finance to buy a property.

Officials from Right Move have said that there was a fall in the number of properties that came onto the market over the course of the month, with just over 26,000 properties a week going up for sale each week during the month, reflecting an 11 percent fall compared to August and resulting in the lowest levels seen since April of this year. However, the record number of unsold properties per estate agent stood at seventy nine.

Tags: england, property, Estate agent, Wales, Right Move

Net lending to businesses falls further

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

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

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

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

Tags: finance, Business_Finance, Central bank, corporate customers, england, bank, Banking Services, year

Mortgage defaults are yet to peak

A recent report has suggested that whilst many people may already have fallen behind with their mortgage repayments the level of mortgage defaults in the UK has not yet peaked, and that it could be some time before the level of defaults hits its worst. Read more

Tags: United States, england, crunch, recent report, Mortgages, mortgage arrears, government

Consumers withdrawing billions due to poor returns on savings

A recently released report has claimed that consumers in the UK have been withdrawing billions of pounds worth of savings over the first couple of months of this year, and this is because of the paltry rates of interest now being paid on many instant access and notice accounts following the dramatic cut in interest rates over the past six months. It has been revealed that in many cases savers are receiving barely above zero in terms of interest on these accounts. Read more

Tags: savings rates, england, notice, angry consumers, pensions

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

October sees further house price falls

Recently released figures from the Halifax have shown that house prices have fallen again in October, this time by 2.2 percent. This follows a smaller drop in September, and according to Halifax figures has resulted in the annual house price falling to 13.7 percent, although according to Nationwide the annual drop is larger at 14.7 percent. Halifax officials have said that the average house price is now around £30,000 lower than a year ago, coming in at £168,176. Read more

Tags: england, term interest, likelihood, housing market, stabilise, rate, halifax, royal

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: bank of england, england, committee, struggle, economics

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: cheap no-questions-asked credit, major risk, Ernst & Young, england, bank of england, risk, economy, interest rate

Link between base rate and mortgage rates “severed”

An expert has suggested that mortgage rates are no longer influenced by the Bank of England’s base rate of interest.

Melanie Bien, director of Savills Private Finance, said that despite the Bank’s monetary policy committee choosing to maintain the base rate at 5.25 per cent, Abbey has announced its mortgage rates will be rising from next week.

“It proves that the connection between base rate and mortgage rates has been all but severed as lenders look to improve margins rather than market share,” she claimed.

Consequently, even if the base rate comes down further this year, this may not feed through to mortgage products, the expert suggested.

In order to make the most of the best deals currently available, need to “act quickly” before lenders remove them from the market.

Paul Holmes, chief executive officer of Firstrung, said that people are unlikely to be able to take out 100 per cent-plus mortgages any more.

However, despite some people criticising such products, Mr Holmes said that they were “very good” in some circumstances.

Tags: Link, week, order, england, Firstrung, Savills, abbey, market

Slowing of consumer spending is “worrying”

Despite the economy growing by 0.6 per cent in the last quarter of 2007, consumer spending slowed dramatically, according to new figures.

Findings from the Office for National Statistics (ONS) showed that increases in household expenditure fell to 0.2 per cent, a drop from the 0.9 per cent previously seen in the last quarter and the weakest growth since 2006.

Speaking to theherald.co.uk, Howard Archer, chief UK economist at consultancy Global Insight, said that the breakdown of the ONS’ data was worrying.

“The faltering in consumer spending, business investment and exports in the fourth quarter increases concerns that UK growth will slow markedly in 2008 and increases pressure on the Bank of England to cut interest rates again sooner rather than later,” he said.

According to the figures, business investment and exports also faltered at the end of last year, declining by 0.5 per cent and 1.2 per cent respectively.

Meanwhile, Tim Besley, member of the Bank of England’s Monetary Policy Committee, told the Daily Mail that a reduction in the rate of consumer spending was worrying.

Tags: Global Insight, chief UK economist, drop, Daily Mail, england, Office for National Statistics

Rate cut could ‘ease financial pressure’

The cut in interest rates by the Bank of England (BoE) will help “ease financial pressure”, claims one financial expert.

According to the Fair Investment Company, the rate cut of 0.25 percentage points to 5.25 per cent by the Monetary Policy Committee (MPC) should help homeowners with mortgages of over £150,000 receive as much as £40 per month back.

James Caldwell, director of the company, said: “The MPC’s decision will come as a relief to many. A lot of people are facing higher living costs and business expenses, so the rate cut is an important step towards easing financial strain.”

However he added that home owners will only benefit if mortgage rates are cut in line with the BoE’s decision.

Mr Caldwell also said that savers will be worse off as a result of yesterday’s decision.

Those savers who hoped the base rate would remain the same for another month “will be disappointed”, he concluded.

However, according to the Newcastle Building Society, despite the effects of the interest rate cut, savers could benefit from the current climate of competition between banks and building societies to offer the best deal.

Tags: england, business, pressure, Mortgages, Newcastle Building Society, best deal, Business Finance, interest rates

UK private housing market valued at £4tn

UK homes are worth a total of £4 trillion, according to new research from the Halifax.

The findings revealed that the value of the UK’s private housing stock rose by 9 per cent (nearly £320 billion) in 2007.

Martin Ellis, chief economist at Halifax, said: “UK home owners have collectively accumulated an extra £2 trillion of equity in their homes over the past decade as property prices have risen.

“This has significantly strengthened the household balance sheet. Mortgage debt accounts for only 30 per cent of the value of the UK’s £4 trillion worth of housing assets,” he added.

The value of the housing stock has more than tripled over the past decade, rising by 208 per cent from £1.3 trillion in 1997.

By comparison, the headline retail price index (RPI) has risen by 31 per cent over the past ten years.

Meanwhile, the Bank of England’s decision to hold interest rates at 5.5 per cent is “not all doom and gloom” for home buyers, according to the Leeds Building Society.

Tags: halifax, price, economics, housing market, interest rates, england, headline retail price index, finance

Premium Bonds big win odds drop

The chances of winning big on Premium Bonds dropped yesterday.

National Savings and Investments (NS&I) reduced the rate of return on its prize fund from 4 per cent to 3.8 per cent from the start of 2008, in response to December’s cut in the Bank of England’s base rate.

While the chances of winning– 21,000 to one per £1 bond – and the number of £1 million jackpot prizes remain the same, the spread between large, medium and small prizes will be skewed further towards small prizes of £50 and £100.

Million of Brits have money invested in Premium Bonds, totalling £36 billion.

Unlike other investments, there is no risk involved in the scheme – but unlike other savings products, there is no guarantee that investors will make anything at all.

The Times noted in 2007 that the chances of winning nothing at all with a £1000 Premium Bonds stake was 60 per cent, while the chances of getting a better-than-inflation return on £1,500 was around 20 per cent.

Tags: bank, The Times, england, fund, savings products, Business Finance, National, England's base rate

Economists give views on where interest rates will go next

There was a sigh of relief across the UK earlier this week when the Bank of England announced that interest rates had been cut by 0.25% from 5.75% to 5.5%.

There are now mixed predictions with regards to what will happen with the interest rate next, with some predicting that 2008 will see another one or two interest rate cuts and others believing that the interest rate could fall as low as 4% in 2008. Financial experts from This is Money interviewed some economists to get their views.

An official from Investec stated: ‘Evidently the MPC is taking much more note of recent signs of a slowdown in the economy and its fears over the possible effects of the credit squeeze have begun to crystallize. The question obviously now is whether rates come down again and if so how quickly. The outlook is very uncertain. We are pencilling two further 25 basis-point cuts over the first half of next year.’

Roger Bootle from Deloitte and Touche stated: ‘Today’s decision by the MPC to cut interest rates from 5.75% to 5.5% is the first step in a prolonged period of monetary easing that could see rates fall very sharply. I previously thought that rates would drop to 5%, but I now think that they could eventually be cut all the way to 4%. Inflation is likely to rise further in the coming months. However, the rise in interbank interest rates means that the risk of a very sharp and prolonged economic downturn is growing by the day.’

A spokesman from Bear Stearns said: ‘We expect another cut in January, with rates to target 5% by the second quarter. UK rates should be at 4.5% by the end of 2008, possibly even lower if the downturn is more severe. This has been a cut to alleviate the credit crunch and provide a rescue remedy for growth. Lower rates should help to put a prop under the UK housing market.’

Tom Smith
10t December 2007

Tags: credit, rates, propert, bank, uk, crunch, interest, housing

Darling accused of incompetence over Northern Rock loan

Chancellor, Alistair Darling, found himself the recipient of a vicious verbal attack by the shadow chancellor George Osborne earlier this week, when he was challenged in the Commons over the loan that was granted to Northern Rock by the Bank of England.

The chancellor has been accused of exercising secrecy in authorising the loan to ailing bank Northern Rock, and the attack came on a day that saw the Rock’s shares plummet again, falling by over 20% in the light of no successful sale to rescue the bank.

Osborne accused Darling of misleading the public by not making the loan public, but Darling stated that the way the Northern Rock loan was handled was normal operating procedure for the Bank of England, and that making the public aware of every move could have adverse effects, which indeed it did when the public did finally learn about the loan. He added that the loan was secured against Northern Rock’s assets after being accused of putting taxpayers’ money at risk.

Mr Osborne stated: ‘Can the Chancellor tell us that all the money lent by the taxpayer will be repaid? Yes or no.’

He also said: ‘This is a tale of incompetence and weak leadership from a government that now reels from one disaster to another. We have a Chancellor who made loans he kept secret from Parliament. We have a Chancellor who has made guarantees to the taxpayer he cannot be sure of honouring. And we have a Chancellor whose weakness is contributing to the instability of the financial system. That is why we have a Chancellor whose job is on the line.’

Darling has been accused by the shadow chancellor of withholding information from the public as well as from parliament, but Darling insists that he did the right thing in authorising the loan for Northern Rock, and said that there was no secrecy involved.

Tom Smith
30th November 2007

Tags: darling, bank, chancellor, northern, rock, england, Loans

Mortgage tightening to ease next year

The tightening of the mortgage market will ease somewhat going into the new year, according to the Council of Mortgage Lenders.

Sarah Robson, a spokesperson for the trade association, explained that interest rate falls would take some pressure off the market making it less tricky for borrowers to obtain adverse credit mortgages.

Interest rates are predicted to fall to five per cent by the middle of next year, offering some hope to borrowers

Ms Robson explained that homeowners with poor credit history may be able to improve their status.

She said: “If they did have a good credit history for five years straight, that would be taken into consideration – but their previous record would still be there.”

The next decision on the Bank of England base rate, currently at 5.75 per cent, will take place on December 6th this year.

Yesterday, the BBC report that a range of its adverse credit mortgages will be withdrawn today, due to market tightening.

Tags: economics, adverse credit mortgages, record, england, New Year's Day

King advised Darling not to lend to Lloyds

The Governor of the Bank of England Mervyn King has spoken out about his advice to the Chancellor of the Exchequer with regards to a loan request from banking giant Lloyds TSB.

The high street bank had approached the Bank of England for a loan to the tune of £30 billion in order to fund the takeover of Northern Rock. However, the governor advised the chancellor not to authorize the loan, which Lloyds wanted to take out over two years at competitive rates.

According to Mr King he told Darling that the Bank of England should not be providing loans to a company in order to allow the takeover of another company.

Speaking on Radio 4 Mr King stated: “I said to the chancellor: ‘This is not something which a central bank can do. They don’t normally finance takeovers by one company for another, let alone to the tune of £30bn, which is rather a large amount of money’.”

When speaking on Radio 4 Mr King also added that it could take months before banks get back to normal following the effects of the credit crunch.

He stated: “I think most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, and have taken measures to finance their obligations that result from that, but we’re going in the right direction.”

He also added: “There is always, in a period like this, the possibility that a shock from outside the UK, one from the world economy, might create further fragilities, but to some extent there are always risks, there are always fragilities. What I would say is that the situation now is, in my view, different from that in August, though it’s not without risk.”

Tom Smith
15th November 2007

Tags: england, crunch, Banking, chancellor, king, lloyds, northern

Halifax house price data contradicts Nationwide data

Recently Nationwide released data that showed house prices in the UK had picked up during the month of October, following an unexpected tumble of 0.6% during the month of September.

The news of rising house prices came as a surprise for many, particularly given industry predictions that house prices would continue to fall over the last quarter and into 2008. However, the Halifax has now released data that contradicts the information provided in the Nationwide report.

According to the Halifax house prices actually fell during the month of October, taking another tumble of 0.5% and bringing the annual rate of inflation to 8.9% for October from 10.7% in September. According to the Halifax report the average house price in the UK is now just over £197,000. If house prices have fallen for the second consecutive month this is the first time since April and May 2005 where there will have been two house price drops in a row.

In the three months to October house prices were 0.3% higher than the same time last year according to reports. The Halifax stated that its figures reflect the steady ‘downward trend’ that many analysts and industry experts have been predicting would take place over the final months of the year.

The Chief Economist at Halifax stated: “The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity.”

He added that the data signifies a cooling market but not a crash. “The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices.”

Tom Smith
15th November 2007

Tags: rates, interest, homes, houses, bank, cost, england

Bank of England comes under fire for failure to reduce interest rates

Following its most recent decision to keep interest rates on hold for a fourth consecutive month the Bank of England has come under fire from a number of agencies for failing the economy by making the decision to keep interest rates unchanged at 5.75%.

Some say that the Bank of England is putting the stability of the UK’s economy at risk by failing to cut interest rates, and both lender and brokers had been hoping for an interest rate cut of at least 0.25% for November.

A broker from firm John Charcol stated: “A cut of 0.25% today would at least have pushed three-month Libor back down to about 6%. It would also have started to redress the Bank of England’s policy mistakes, as outlined in last month’s Financial Stability Report, in dealing with the credit crunch.These are all good reasons why the MPC should have cut today. Their failure to do so means that today’s opportunity to mitigate the potentially serious problems building up in the banking system has been lost.”

A property investment official added: “It’s about time that the Bank of England’s MPC saw sense and realised that the clear and present danger to the UK economy from the continuing effects of the credit crunch is more important than the less clear possibility of future pressures upwards on inflation.”

One economic adviser added: “Credit conditions have become tighter since August, both globally and in the UK. The dangers to the economy have worsened and businesses require easier credit conditions without undue delay, to avoid a nasty reversal. We urge the MPC to announce a small interest rate cut in December.”

Tom Smith
13th November 2007

Tags: cut, finance, bank, Mortgages, interest

Fewer analysts predict a cut in interest rates in November

Following the last Monetary Policy Committee meeting in October, 14 out of 52 economists that were polled by Reuters expected interest rates to fall in November.

However, according to the latest poll the number of analysts that are predicting a fall in interest rates has now fallen, with just 5 out of 60 analysts polled expecting the Bank of England to cut interest rates by a quarter point. It is thought that healthy economic growth could have something to do with the change in the level of predictions in terms of whether interest rates will fall.

Out of the 60 analysts and economists that were polled by Reuters at the end of October 55 predicted that after the next Monetary Policy Committee meeting on November 8th interest rates will remain on hold at 5.75%. Rates have gone up five times between August 2006 and July 2007, each time by 0.25%, which took the rate from 4.5% to 5.75%. However, since July of this year interest rates have remained stable at 5.75%, which is thought to be partly due to the possible effects of the credit crunch.

The poll also showed that 47 out of 59 economists that were polled expected interest rates to fall by at least a quarter point by the first quarter of 2008. Many had predicted that this interest rate would come in November’s meeting. However, these predictions fell after it was revealed that the British economy grew at its fastest rate in three years in the third quarter of this year.

One industry professional stated: “We would expect them to continue to bide their time and allow more data to come in on the extent of any economic slowdown before changing rates. With the UK economy as a whole apparently still growing slightly above trend in Q3, there is certainly no immediate need for such a cut.”  

Tom Smith

Tags: england, bank, november, cuts, interest, rates, Mortgages

House prices fell by 0.5 per cent in October

More evidence that the housing market is slowing down was published yesterday.

Halifax’s monthly housing market report, published on Thursday, found that average prices fell by 0.5 per cent in October.

Although this contradicts figures published by Nationwide late last month, it is the second consecutive month in which Halifax – the country’s biggest mortgage lender – has recorded a drop.

Halifax reported that house prices fell by 0.6 per cent in September.

Nevertheless, the lender was confident about the long-term strength of the housing market and the economy.

Chief economist Martin Ellis said: “The UK economy is in a strong position. High levels of employment and a shortage in the number of properties available for sale will continue to support house prices.”

A recent study of the market by PriceWaterhouseCoopers claimed that houses in the UK are 10 per cent overpriced compared to average salaries.

Halifax’s study comes as the Bank of England held interest rates at 5.75 per cent for the fourth month in a row.

Tags: uk, interest rates, position, england, halifax, martin ellis, second consecutive month

Who is covered by the Treasury guarantee over Northern Rock savings?

Over the past week Northern Rock has suffered huge problems after it was revealed that the bank had taken a loan from the Bank of England.

Despite assurances from the government and from Northern Rock that the company was still solvent and financially sound savers flocked to the branches of the bank for days, queuing to take out their money, with billions being withdrawn by many of its 1.5 million savers. Share prices also plummeted leaving the future looking very bleak for the bank.

Earlier this week the Treasury decided to step in, and in addition to assuring consumers that it would not have considered lending money to a company that was not financially viable and stable, it also offered guarantees to savers to try and reduce the number of people hastily withdrawing their money from the bank amidst fears that Northern Rock would go bust.

The Treasury has now elaborated on its guarantee to ensure that consumers in the UK are clear with regards to who is covered and who is not. For those covered the government has guaranteed the safety of every penny of their savings. Bank accounts that were open as at midnight on 19th September, and any accounts that were closed and are now re-opened will be guaranteed. However, new accounts opened after this time will not be under the guarantee.

Officials stated: “This guarantee covers future interest payments, movements of funds between existing accounts, and new deposits into existing accounts. Since it would otherwise be unfair to other banks and building societies, the arrangements would not cover any new accounts set up after 19 September.”

Tom Smith
17th October 2007

Tags: cover, bank, guarantee, rock, england, savings, accounts, treasury, northern

Predictions of further interest rate rises fall

Earlier this year, following July’s 0.25% interest rate rise in the UK, many economists and analysts in the UK predicted that there would be another interest rate rise before the end of the year.

Interest rates have gone up five times since August of last year, with the series of 0.25% interest rate rises taking the base rate from 4.5% to 5.75%. Another 0.25% rise, as predicted by these industry experts, would have taken the base rate to 6% – it is already at its highest in over six years.

However, many industry experts appear to have changed their minds in light of the current turmoil that is hitting the mortgage markets, and following the credit crunch that is having global repercussions the number of analysts predicting a further interest rate rise has fallen. According to reports only one fifth of economists and analysts now believe that the interest rates will rise again this year.

The drop in the number of experts predicting another rise is in part the result of a recent statement that was released by the Monetary Policy Committee following its last meeting early in September, where it was decided that interest rates would remain on hold. The MPC claimed in its statement that its two main reasons for leaving interest rates on hold were that CPI inflation was now within government targets, and also because of the effect that the credit crunch could have upon the industry.

Howard Archer, an economist at Global Insight, stated: “We now no longer expect interest rates to rise to 6 percent in the fourth quarter, but instead anticipate that the Bank of England will sit tight for an extended period. We suspect that growth will lose momentum over the coming months, and that underlying inflationary pressures will gradually abate. This will become even more likely the longer that the current financial market turmoil continues.”

Tom Smith
16th October 2007

Tags: monetary, committee, england, interest, fall, policy

Many first time buyers taking a ‘wait and see’ stance

Over the past couple of years things have been extremely difficult for first time buyers in the UK.

Firstly there were problems being able to raise the money needed to purchase a property, with house prices soaring in the UK requiring buyers to obtain larger mortgages.

For first time buyers there is not equity from a previous property to rely on, which means that they have to take out a loan for all or the majority of the value of the property they wish to purchase. In order to address this problem many lenders have started offering increased income multiples and longer repayment periods on mortgages for first time buyers.

However, there is now a fresh problem for first time buyers to consider. Rising interest rates mean that in addition to having to take out a huge mortgage in order to buy a property these buyers also have to deal with huge repayments because of the increased interest rates, which have shot up by 1.25% in the past year.

Even those starting out on fixed rate mortgages have to put up with a high fixed rate, and will therefore be stuck with this high rate for a fixed period even if interest rates start to fall again in the near future.

Rumours of house prices falling towards the end of the year, combined with predictions of further interest rate rises, has now seen many first time buyers take a step back, with many deciding to rent and wait it out to see what happens before rushing to get onto the property ladder in the current economic climate.

One first time buyer stated: “I am desperate to get onto the property ladder, because I feel that the chances of ever getting my own place are getting slimmer and slimmer. But with all of these rumours about decreasing house prices and rising interest rates I want to see what happens before I make any long term commitment.”

Tom Smith
6th October 2007

Tags: rise, first, rates, buyer, Mortgages, future

Worries over interest rates from 40% of consumers

According to a recent report around 40% of consumers in the UK are concerned about further rises in interest rates, with many already having been hit hard by rising repayments on their variable rate mortgage.

Interest rates have already risen five times since last August with a rise of 0.25% each time, taking the base rate from 4.5% last August to 5.75%, and reflecting a total rise of 1.25% within the period of a year.

Although inflation has come down to within the government’s target of 2% recently, many consumers fear that the next Monetary Policy Committee meeting will result in yet another interest rate rise, which could make matters even worse for those that are already struggling to keep up with repayments.

The rising interest rates have affected many financial areas, including resulting in an increase in repossessions as the result of many consumers being unable to keep up with repayments on their mortgages. Fixed rate mortgages have been taken up by many consumers to try and combat the problem of rising interest rates, and the Council of Mortgage Lenders stated that a record number of fixed rate mortgages were taken out in June of this year.

The recent survey was carried out by Intelligent Finance. According to the research four out of every ten consumers are very concerned about a further rise in interest rates, as they feel that they are not covered or prepared for yet another rise in repayments. Officials from Intelligent Finance state that consumers must take preventative action to try and ease the pressure of another interest rate rise by tightening the purse strings where necessary, and making every penny count.

One official from Intelligent Finance stated: “With interest rates on the rise and purse strings tightening, it’s important to make every penny work as hard as possible.”

Tom Smith
6th October 2007

Tags: cost, rate, fixed, interest, Mortgages, monetary, rise, increase, committee

Don’t rush in to long term fixed rate deal

Gordon Brown’s new cabinet has been pushing the issue of longer term fixed rate mortgages in the light of decreased affordability across the housing sector in the UK, and in response to this a number of lenders have started to offer longer term fixed rate deals, with many fixed for as long as 25 years.

The latest to offer these extended fixed term deals is the Halifax, which is offering a 25 year fixed rate mortgage set at 6.39%. The Nationwide also offered a 25 year fixed rate deal on the same rate following the government’s call for longer fixed terms.

However, consumers are being urged to think very carefully before jumping into a fixed rate deal for such a long period. The Halifax and Nationwide mortgages both charge an arrangement fee of £599 and also penalties for early repayment for the first ten years of the mortgage. Consumers are being urged to ask themselves whether they want to face the tough decision of either sticking with the same mortgage for at least a decade or paying potentially extortionate penalties for attempting to switch lenders by paying off the mortgage early.

Of course there are benefits to these longer term fixed rates, the main one being that borrowers can enjoy stable repayments and interest rates throughout the term of their mortgage without having to worry about the effects of rising interest rates. However, should interest rates fall these borrowers will be stuck with a very high interest rate throughout the term of their mortgage, or at least until they can switch mortgages without being hit by early repayment fees.

One official stated: ‘At first glance the option of a 25 year mortgage might seem attractive. Interest rates are rocketing and the cost of living is increasing, making money tighter than it has been for years. So you might be forgiven for thinking that Halifax is offering you a quarter of a century’s peace of mind. The reality of course is that rates go down as well as up – true, rates were as high as 14% 25 years ago, but they also went as low as 3.5% when the going was good.’

Tom Smith
27th September 2007

Tags: rate, england, increase, bank, term, interest

Rush on remortgages amidst fear of rate rises

July of this year saw over a billion pounds worth of mortgages being taken out each day with many homeowners deciding to remortgage amidst fears that that interest rates would continue to rise following five interest rate hikes in the space of a year.

The highest in over six years the base rate currently stands at 5.75%, following five rate hikes of 0.25% each since August of last year. Many homeowners have had to cope with rising repayments as their mortgage repayments have soared along with interest rates.

According to figures from the Council of Mortgage Lenders nearly £35 billion was borrowed in the month of July on mortgages, which reflects a 13% rise on the amount that was borrowed in July of last year. According to the CML this increased figures result from the surge of homeowners that have decided to remortgage in order to try and get a better deal on their mortgage in the light of the series of interest rate rises that have taken place – and the threat of further interest rate rises that may yet take place.

A spokesman from the British Bankers Association stated: ‘Longer-term trends in mortgage lending are little changed but July’s strong rise was surprising, given the expected cumulative impact of higher interest rates. The resilience shows the popularity of home ownership and also reflects more remortgaging activity.’

 An official from the Building Societies Association stated: ‘As mortgage payments increase, household finances are likely to be squeezed further. Even if interest rates are near their peak, potential borrowers need to think about all their outgoings to make sure they do not overstretch themselves financially.’

Tom Smith
21st September 2007

Tags: base, interest, increase, england, rise, bank, remortgages, rate

Interest rate rises result in increase in repossessions

The five interest rate rises that have been enforced by the Bank of England over the past twelve months have taken their toll on the finances of many consumers, and there are many households that are now struggling to keep up with repayments.

A number of experts have been predicting that an increasing number of people will find it extremely difficult to keep up with repayments due to the rising interest rates, and recent figures indicate that this has already started to take effect.

Interest rates in the UK have shot up from 4.5% to 5.75% in the past year, after a series of five interest rate hikes, each of 0.25%. Homeowners have seen their repayment shoot up considerably over this time, and those with already steep mortgage repayments have had to find hundreds of pounds more in some cases as interest rates have risen. Those that went on fixed rates several years ago are now finding themselves in hot water too, as the fixed rate period ends and their interest rates shoot up to today’s base rate.

The predictions of many experts is already coming true as the first half of this year has seen home repossession resulting from bad debts hit an eight year high. Interest rates at the moment are at their highest in six years, and struggling homeowners are risking their homes because of difficulties in making repayments on their mortgages. Around 77 homes per day are currently being repossessed.

One official from the Royal Institute of Chartered Surveyors stated: “With the housing market slowing into 2008 and interest rates expected to hit 6 percent, homeowners slipping behind with their repayments may be left stranded, unable to sell their way out of trouble.”

Tom Smith
17th September 2007

Tags: bank, england, base, rise, Mortgages

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

Britons using savings to ease cost of living raise

An increasing number of Britons are being forced to raid their savings to keep on top of a rise in the cost of living, new research has shown.

According to the Birmingham Midshires Saving Britain report, the average consumer has been forced to withdraw £400 from their savings in the past three months, a rise of 14 per cent on the comparative figures for the tail end of 2006.

The statistics suggest that Londoners were the most likely to turn to their rainy day funds and that northerners were the least likely.

And the over 50s were the age group most in need of the saviour of savings – taking four times more from their back up accounts than the over 30s

Urging Britons to take advantage of the financial climate to make more savings, Jason Robinson, director of savings operations at Birmingham Midshires, said: “While homeowners are feeling the pressures following Bank of England rate decisions, there has never been a better time for people to put away their money.

“Interest rates at a six-year high mean great returns for savers, whatever amount you can afford to put away.”

Previous research conducted by Birmingham Midshires found that almost a quarter of Britons had dipped into their savings accounts between July and September 2006.

Tags: rainy, research, advantage, england, Cost of living, Midshires, tail end

Villagers “too rich for ATM”

Residents of a Cornish village have been hit with an unusual banking issue – they are just too rich for a cash point to be installed.

Local MP for Porthleven, Andrew George, has revealed the problem to the West Briton today, after receiving a letter from cash machine supplier Link Interchange Network Ltd.

Mr George said: “I am not sure how the people of Porthleven will react to this news. I’m not sure how [Link] have gathered their data.”

Pointing out the fact that many rich city-dwellers’ holiday homes are in the area, he added that “it may well be that some of this [affluence] is experienced by some residents who do not spend all of their time in the community”.

In the letter, Link Interchange said: “This programme looked at areas which were more than one kilometre from a free ATM (Automated Teller Machine) and which were ranked in the lowest 25 per cent for the Index of Multiple Deprivation.”

Unable to find a sufficiently “deprived” district, they passed on supplying the machine, due to Porthleven’s “relative affluence”.

Mr George told reporters that “some constituents have asked me to make representations to Link to request that they provide free access to cash as otherwise they would have to travel to Helston on what is now a poorer bus service than has been experienced in the past.

“I would be interested to know what local people thought about this.”

Tags: england, Payment systems, Network, issue, relative affluence".mr george, rich city-dwellers

House price growth slows down due to interest rate hikes

According to recent reports there has been a slow down in the growth of house prices in most areas of the UK following further interest rate rises in the first half of the year. Exceptions to the rule are Scotland, Wales, and the West Midlands in England. However, in most regions house price growth has slowed down by around 50%, and it is thought that this is due to lower demand for properties as a result of rising interest rates.

The data comes from the monthly report from the Royal Institute of Chartered Surveyors, and this report is the second one in a row that indicates a slow down in the rate of house price growth in most parts of the UK. According to the figures just 10.6% more members from the RICS reported a rise in house price growth rather than a fall last month, and this compared to 22.5% in the previous month.

The report also indicated that the number of enquiries from new buyers had fallen at the fastest pace since February of last year, reflecting the lower demand for properties. According to the RICS the five interest rate rises over the past year – and in particular the last two interest rate rises – have taken their toll when it comes to buyer demand, with many people having to reconsider property purchase because of the higher interest rates and sky high repayments.

One spokesman from RICS stated: ‘House prices have finally started to cool significantly for the first time since the recent mini boom in the housing market got under way in 2006. Interest rates hikes have begun to affect the psychology of the market with potential new buyers starting to think twice before buying a home. The July rate increase may not mark the peak of the current interest rate cycle and earlier rate rises have yet to fully filter through. A softer landing for the housing market is in store as we move into the autumn.’

Tom Smith
31st July 2007

Tags: repayments, england, increase, rises, rate, fixed, Mortgages

Further disappointment for ING Direct customers

ING Direct customers are facing increased disappointment when it comes to their savings, with ING once again failing to pass on the interest rate rise that was applied by the Bank of England.

The online savings account from ING Direct now pays 5% to savers, which is well below the best rate savings account and stands at 0.75% less than the base interest rate. The account initially attracted over a million customers when it advertised its impressive interest rates in 2003, but since then ING has come under fire for leaving interest rates to stagnate despite a series of rate rises.

The Websaver account from ING will also see interest rates remain static, at 5.5%. The rate on this savings account was actually higher than this initially, opening at 5.65%, but was cur to 5.5% before the interest rate rise in May of this year. Since this time the interest rate has not gone up, despite Bank of England rises of 0.25% in both May and July. ING Direct was hugely popular amongst savers previously, but has lately received a great deal of negative press over its refusal to pass on interest rate rises.

According to recent figures customers of ING Direct have taken over £3 billion worth of savings from their accounts and placed the money with other banks as a result of poor interest rates based on the current base rate. Although interest rates in the UK have gone from 4.5% to 5.75% in the past year through a series of five interest rate rises, the interest rate on the ING Direct savings account has risen by only 0.5% in this time.

According to ING Direct other banks get around this by offering lower rates on other accounts. One official stated: ‘If these savings providers had to pay all of their customers our 5% it would cost them a fortune and they wouldn’t be able to afford to keep offering their headline grabbing accounts.’

Tom Smith
26th July 2007

Tags: rises, Banking, cost, rates, england, leave, bank

House Tipping Point On The Way

Figures from HM Revenue and Customs have indicated that the number of properties sold in England, Wales and Northern Ireland was at its highest point since the late eighties.

During 2006-7 the number of properties being exchanged was 1,859,000. The number of sales was up by 11% compared with then figure for the previous twelve months. House prices went up by the same percentage and are growing at more than their average rate over the long term.

The number of homes sold at the last peak in 1988 was 2,148,000 for England and Wales. In 1989 sales of property slumped by 25% and the house price boom that had run for six years fizzled out after the Bank’s base rate was pushed up and mortgage rates followed suit.

That crash in house prices in 1989 came as a shock to most of the nation who had seen house prices only going upwards for the previous thirty years. The Nationwide BS House Price Index showed that average house prices in the UK had gone up every year from 1955. But 1989 changed all that and house prices fell by 11% and it was 1998 before house prices reached the same levels as 1989.

The early nineties became the period of negative equity for many people, with many houses worth less than the mortgages owed on them. Unemployment went up and the recession bit. With homeowners finding it difficult to make their mortgage repayments, many fell into arrears and there was a rise in repossessions. Mortgage lenders had a glut of properties under their ownership and off they went at auction at bargain prices. Between 1991 and 1998 over 400,000 homes were repossessed and a million people were left without a home.

A lot of the sequence of events that led up to the 1989 house-price crash are being repeated in the current situation. The parallels are undeniable: house prices are out of reach of first-time buyers; house prices seems to be going upwards for ever; interest rates are on the increase; and mortgage rates are on the rise too. Also, the ratio of house prices to incomes is now at its record level, and customer debt is an ever-growing problem in this country. The noises coming out of the Bank of England suggest strongly that interest rate rises have not finished yet – there’s almost been a promise that there will be another quarter point rise in July. And, most strikingly of all, repossessions have started to rise again.

Property prices on average are still on the up and have been for eleven years, but it sure looks unsustainable. Many experts are still saying that they do not believe there will be a house price crash, but more of a gentle deflation. There is so much talk of the possibility, however, that it’s hard to see people continuing to fork out large sums for houses and the repayments at such high levels, when a downturn may indeed be just around the corner. The tipping point must be in sight. It’s just a question of how steep the drop is going to be on the other side.

Tom Smith
17th July 2007

Tags: boom, negative, bank, slow, fall, Mortgages, bust

Actions To Ease The Mortgage Pain

There have already been several interest rate rises since August 2006, taking the Bank of England’s base rate from 4.5% to 5.75%. Read more

Tags: payments, rates, bank, england, Mortgages, offset

Interest Rates Up To 5.75%

The Bank of England has increased interest rates by another quarter point in July, to 5.75%, the highest level since March 2001.

Only twelve months ago interest rates were down at 4.5%. The last year has seen hundreds of pounds added to mortgage repayments of householders. On an average £200,000 loan, there will be another rise in payments of £33 to add to the £127 since August 2006.

There are also more than a million homeowners with fixed rate deals from two years ago which are around the 4-4.5% level, who will soon have to look for a new mortgage deal and they are going to be faced with rates of over 7.5% on the lender’s standard variable rate (SVR). That could mean crippling increase of £215 per month. Even with a new deal, they are looking at two-year fixed rates of 5.5% and a rise of nearly £100 per month, plus the fees on top.

Many experts think interest rates will go up again. A rate of 6% has been forecast, and Mervyn King was unhappy at the rate being held at 5.5% in June. He warned a higher peak might be needed in the future. That sounded like a threat of 6% to come.

The Bank has been striving to keep inflation and house prices under control, but the signs that they have started to do this since the last rate rise in May, they didn’t come soon enough to head off July’s rise.

Consumer Price Index (CPI), the government’s measure of inflation, reached 3.1% in March and has come down to 2.5% in the most recent figures. Nevertheless, this is still above the government target of 2%, and the MPC may still feel that more action will be needed. Lower gas and electricity prices should help CPI fall again soon. The MPC said: “Although pay pressures remain muted, the margin of spare capacity in businesses appears limited and most indicators of pricing pressure remain elevated. The committee judged that, relative to the 2% target, the balance of risks to the outlook for inflation in the medium term continued to lie to the upside. Against that background, it further judged that an increase in Bank Rate of 0.25 percentage points to 5.75% was necessary to meet the 2% target for CPI inflation in the medium term.”

Higher rates have begun to slow down the housing market. The Halifax, the UK’s biggest mortgage lender, has reported that house price inflation has cooled in the last quarter, lower than the first quarter of the year and the last quarter of 2006.

New Prime Minister Gordon Brown and his new Chancellor Alistair Darling will be frustrated by the rate rise, fresh as they are in their new roles. Mr Brown was always very please with the way his prudent monetary policies worked, but he may have to revise his comments if rates hit 6%, the level they were at when Labour came to power in 1997.

The UK has a big debt problem and these are becoming a bigger burden as interest rates continue to rise. PricewaterhouseCoopers suggest that 19% of an average household’s income goes towards paying debts which is a record level and beats that of 1990 when interest rates stood at 15%.

Tom Smith
15th July 2007

Tags: england, rates, interest, bank, house

Savings rate war sparked by interest rate rise

Last week’s rise in interest rates to 5.75 per cent has caused consternation among both mortgage holders and first time house buyers.

However, savings accounts have also been made potentially more lucrative from the rise, which has in turn sparked a rate war between providers.

One internet savings account – ICICI Uk – is now paying a full 0.55 per cent above the base rate by offering 6.3 per cent. Supermarket banks Sainsbury’s and Icesave are also now offering 6.25 and 6.2 per cent respectively.

All three carried the Bank of England’s 0.25 per cent rise to customers, and will offer the new rates on the same day as it comes into effect: August 1st.

Currently, Icesave offers the longest guarantee to remain 0.25 per cent above the base rate – extending until October 2009.

This follows more good news for savers, as National Savings & Investments also raised the interest rate on its popular ‘children’s bonds’ to a fixed rate of 5.1 per cent late last month. This followed rises in gilt yields (returns from government bonds).

Tags: supermarket banks sainsbury, first time house buyers, rate rise, england, interest, Mathematical finance, government, finance

BOE governor warns on borrowing and lending

The Governor of the Bank of England, Mervyn King, has stressed the importance of consumers being careful not to borrow money that they cannot afford, and lenders being more careful about who they lend money to.

Mr King stated that consumer debt levels in the UK could lead to a major debt crisis. And with another interest rate rise due in July – which will be the fifth interest rate rise since last August – many more people in the UK could find themselves struggling with unmanageable debt.

Speaking at the Mansion House Banquet in London, Mr King addressed families and individuals, stating: ‘be cautious about how much you borrow’.

He also addressed lenders stating: ‘be cautious about how much you lend’.

At last month’s Monetary Policy Committee meeting Mr King actually voted for a quarter percent rise in interest rates, but the majority vote was to keep interest rates stable in June. However, this month’s meeting is likely to see a different result, and a further quarter percent rise is widely predicted.

At the dinner – also attended by new Prime Minister Gordon Brown – Mr King stated: ‘Be cautious about how much you borrow is not a bad maxim for each and every one of us here tonight.’

He also addressed lenders, adding: ‘Excessive leverage is the common theme of many financial crises of the past. Are we really so much cleverer than the financiers of the past?’

One LibDem spokesman said: ‘A combination of an economic slowdown and higher interest rates could spell disaster for large numbers of heavily-indebted families. If interest rates rise further, many home owners will simply not be able to pay.’

And the Shadow Chancellor added: ‘Millions of people are struggling as the cost of living is rising faster than their incomes.’

Tom Smith
9th July 2007

Tags: rise, bank, rates, increase, lender, loan, borrow

Housing Market Cools

It seems that the UK property market may be cooling at last, as estate agents are reporting that there has been an increase in properties coming up for sale. In the last few months that number of sellers has increased, but interest from buyers has taken a downward turn.

One online agency reported that the number of properties for sale has risen by over 13% in April, far above expectations. Another internet agency said that it had seen an increase in properties on the market by nearly 20% compared with the same time a year before. The trend appears to be the same across the market.

Although the time of year does see an increase in properties on the market, this time the numbers seem higher than usual. The shortage of housing stock that has had an influence on the way the market has risen seems to be reducing. The sellers’ market looks as though it is coming to an end, and the market may be close to its peak.

It seems that properties in the £150,000-£350,000 price bracket are having the toughest time, where affordability is tight and the slowdown is likely to bite hardest. First-time buyers are finding it extremely difficult to get into the market as property has been pushed further beyond their reach.

Another influence on the number of properties coming to market has been the wish to avoid the need for Home Information Packs (HIPs) in the lead up to their planned introduction of 1 June, and again in the lead up to the new date of 1 August.

Bank of England mortgage figure approval figures reached a twelve-month low in April at 107,000.

The Royal Institution of Chartered Surveyors believed that the HIPS, the continued increase in house prices and the increase in interest rates have combined to lead bring about a cooling of the market.

Estate agents believe that HIPs are single biggest reason for the increase in properties coming to market. These look to be extremely unpopular with sellers who will have to go to more trouble than before and, of course, pay for the packs.

Buyers, however, will see benefits with all the information they need in a single accessible pack. The uncertainty surrounding the introduction of HIPs has led to confusion, especially with the change in emphasis by the government, who said that the Packs would only be applicable to homes with four or bedrooms when the new date was announced.

Since then there has been even more confusion with a recent comment that there will be enough trained energy assessors by 1 August to encompass three bedroom houses. The government maintain that they announced that houses of smaller size will be included in the scheme as soon as enough assessors are available. If that happens by 1 August then three-bedrooms homes are likely to be included.

The general economy remains strong and interest in property is liable to remain so too. When confusion over HIPs dies down in the coming months, we are likely to see a return to normal trends.

Tom Smith
8th July 2007

Tags: rise, decrease, housing, bank, england

Variable rate borrowers could be heading for a fall

Industry professionals are warning consumers that they could be heading for a fall if they have high levels of variable rate debts, from mortgages and secured loans to credit cards.

With four interest rate rises over the past year the Bank of England base rate has gone from 4.5 percent to 5.5 percent between last August and this May, and further interest rate rises have been predicted by experts before the year is out.

Many borrowers with variable rate loans and cards have seen their interest rates rise, and for many this has resulted in real financial difficulties when it comes to making repayments. Many consumers seem to have been banking on interest rates remaining stable in order to comfortably afford repayments on their borrowing, and the four interest rate rises since last August have really taken their toll.

The Governor of the Bank of England stated: ‘Anyone who borrows at a variable rate should recognise that the interest rate they will pay in the future may vary. It is unwise to borrow so much that the repayments are affordable only if interest rates remain at their initial levels.’

To many, this is something of a warning that further interest rates are indeed on the way, and those planning to take on more debt should be very careful as they may not be able to afford repayments should the interest rates continue to rise.

One economist stated: ‘Rates are going to go higher. A base rate of 6% is not necessarily the top. Borrowers should brace themselves for another increase. I would be surprised if base rate hit 7%, but not if it reached 6.5%.’

An official from the London School of Economics stated: ‘Base rate will peak towards the end of the year at or close to 6%. As long as inflation is under control, it could come down in a couple of years.’

Tom Smith
7th July 2007

Tags: bank, variable, borrowers, borrow, rates, increase, england, interest, higher

Good news for savers with Sainsbury’s

Those with Internet savings accounts with Sainsbury’s are in for some good news, as the supermarket giant and bank has now raised the interest rate on its Internet savings account to 6%, a rise of 0.25% from its previous interest rate of 5.75%.

According to This is Money this makes the Internet savings account from Sainsbury’s one of the best savings accounts to have. Prior to the interest rate rise the top savings account according to This is Money was with Icesave, which offered a rate of almost 6 percent.

Last week the Bank of England opted to leave the interest rates stable at 5.5 percent. Interest rate rises have taken place four times within the last year, rising each time by 0.25 percent.

However, in many cases savings accounts operators have been very slow to apply any interest rate rise to savings accounts, and in some cases have failed to pass on all or any of the rises to savers.

One the other hand they have been quick to apply to interest rate rise on borrowing, which means that those that have borrowed money have to repay more and those that are saving money get lower returns.

Sainsbury’s, on the other hand, has decided to raise the interest rate on the Internet savings account by 0.25 percent, even though there was no interest rate applied by the Bank of England last week.

The account does no require any notice and does not have any penalties attached to making any withdrawals. There is also no minimum deposit with the Internet savings account.

One spokesperson from Sainsbury’s stated: ‘With so many accounts in the market, savers need to think about which savings account best suits their needs, whether that’s benefiting from a short term bonus or being able to access their funds without any penalties. Our Internet Saver is ideal for those savers who want to receive a great rate but also want to have regular access to their cash without any restrictions.’

Tom Smith
5th July 2007

Tags: saver, increase, interest, rate, internet, accounts, england, earn, bank

Financial benefits of quitting smoking

Smokers are being encouraged to kick the habit ahead of the June 1st ban on lighting up in public.

The health benefits of kicking the habit are clear but Alliance & Leicester is encouraging smokers to look at the financial benefits of stubbing out.

Around 24 per cent of people in England smoke and with the average 20-a-day smoker spending £1,909 each year on cigarettes, their banking situation is suffering as a result.

Alliance & Leicester points out that this money would be better invested in a high interest savings account which would see the saver earn up to £1,962.

“Kicking the habit isn’t an easy thing to do, but the benefits speak for themselves,” said Ross Dalzell, manager for savings at Alliance & Leicester.

“The English population spends billions of pounds on cigarettes each year – money which could be going towards that new kitchen you’ve dreamed of, a two week holiday in the sun, or simply kept as a nest-egg for the future.”

Around 70 per cent of people who smoke say that they want to quit and there is hope for those who want to kick the habit.

Figures show that 21 per cent of women and 27 per cent of men are now ex-smokers.

The smoking ban is introduced in England from July 1st and will mean that lighting up is prohibited in all workplaces, including pubs, restaurants, airports and train stations.

Tags: england, English, population, result, billions, future, ex-smokers.The smoking ban, public.The health benefits

Bank Considers Latest Rate Decision

Since the last announcement on 10 May when rates increase by a quarter of a percent to 5.5% there has been a lot of speculation about the way interest rates may go in June.

The latest forecast is for rates to remain unchanged, but another quarter percent rise is still possible. At 5.5% in May rates went up to their highest level since February 2001. Read more

Tags: england, bank, rates, rise, deals, interest, house, Mortgages, home, repayments

Savers missing out on interest

The Bank of England yesterday (June 7th) froze interest rates at 5.5 per cent but many savers would not have seen any benefit if the rate had risen anyway.

Despite there having been four rate rises since August 2006, the Post Office says that many high street savings providers have not been passing on the benefits.

Interest rate rises are generally viewed as having a negative impact on most people, as those with a loan, mortgage or credit card see their repayments increase.

However, people with savings benefit from a rise in the base rate but only if the provider passes on the new rate.

“Banks and building societies are quick to raise mortgage rates in line with base rate increases, but less inclined to pass on the benefits to their savings customers,” said Richard Norman, head of savings at the Post Office.

“There have been four base rate rises in the last year and the majority of savers have missed out on the full benefit of these.

“Although the Bank of England decided to hold rates today, further rate rises are expected. To make the most of their money, savers need to ensure they check which accounts will consistently pass on rate rises and switch,” he added.

Much like a mortgage with a fixed-rate period, many savings providers offer customers a guarantee that the interest they earn will increase in line with inflation for a specified period of time.

Tags: Financial institutions, mortgage, england, money, rate period, interest rate, period, Post Office."There

Three billion in savings pulled from ING

Annoyed savers with money saved with ING Direct have pulled three billion pounds in savings from the bank.

Many customers have been outraged by the bank’s failure to pass on interest rate rises to savers, and as a result many have pulled large sums of cash that they were savings with ING. According to bank officials there are a number of customers that have removed large balances from the bank to try and find a better interest rate elsewhere, but the bank also stated that overall customer numbers hadn’t been affected.

According to bank officials ING is not prepared to compromise on services for other customers in order to try and get better rates for others. Launched in 2003, ING Direct has boasted a reputation as a bank that offers competitive rates of interest as well as good customer service. However, the interest rates on savings accounts with ING Direct have been stuck at 4.75% for some time.

The Bank of England has raised interest rates four times in the past year, with interest rate rises in August 2006, November 2006, January 2007, and May 2007. Customers are angry because ING has failed to pass on the interest rates that were applied by the Bank of England in November 2006 and January 2007. However, bank officials state that the latest interest rate, which was announced in May, will be applied to savings account in June.

One ING official stated: ‘The vast majority of customers are still with ING but those customers with higher balances who are rate conscious are people who are constantly looking for best rates in the market. Are there better rates out there? Yes there are. Do those companies pay all their customers the same rate? No they do not. We are trying to be consistently fair with all our customers so 5% is the highest and the lowest interest rate they will receive.’

Tom Smith
4th June 200

Tags: interest, customers, market, england, increase, accounts, bank, savings

What the recent interest rate rise means for your mortgage repayments

On 11th May the Bank of England increased its rates by another 0.25% to 5.5%, meaning that six million homeowners in Britain will face bigger monthly payments for their mortgages. Read more

Tags: prices, bank, house, increase, mortgage, consecutive, rates, inflation, rise, cost

House price growth slows

UK house prices have risen at their lowest rate this year, with Home Information Packs (Hips) and interest rates being named as the reasons.

May house prices increased by an average of just 0.4 per cent, with some regions actually seeing prices fall.

The east Midlands, west Midlands, north, and north-west of England all saw the average price come down but areas such as London and East Anglia saw strong rises.

The figures come from estate agent Rightmove and the firm says that with the introduction of Hips now just days away, it is almost impossible to predict what will happen to the market.

“It’s all rather confusing at the moment,” said Miles Shipside from the firm. “The future direction of the market is very hard to read with two external influences likely to coincide at once.

“You have the potential of Hips artificially increasing the supply of property and, within the same month, a six-year high in interest rates potentially depressing the number of buyers.”

If prices continue to level out it will be good news for those seeking to get a mortgage, particularly first-time buyers who are struggling to get onto the property ladder.

Tags: cent, number, england, information packs, buyers."If prices, Economy of the Republic of Ireland, six-year high, Business Finance

Hips divide industry figures

Home Information Packs (Hips) have won the first round of debates which could see their introduction on June 1st postponed.

The packs were given the go-ahead following a House of Commons vote but now they face a challenge in the House of Lords.

The housing market has been responding to the victory in the Commons, with the Association of Home Information Pack Providers (Ahipp) saying that it is good news for the environment.

“Yet again, government has demonstrated its commitment to reducing the carbon emissions of our housing stock and to improving the house buying and selling process for consumers across England and Wales, through the implementation of Home Information Packs,” said Mike Ockenden, director general at Ahipp.

“Industry is ready to deliver Hips and the benefits that the packs will offer to both consumers and the environment.”

The same view is not shared by the Royal Institute of Chartered Surveyors (Rics) however, which has commenced Judicial Review proceedings against the government over the introduction of Hips.

It has called upon the government to take “action” and postpone their roll out on June 1st.

“The introduction of Hips will have few benefits to the consumer and adversely affect the housing market and the wider economy,” said Jeremy Leaf from Rics.

“The government should be brave and postpone their flawed plans for home buying reform. By preventing this potentially damaging and chaotic policy Gordon Brown could give substance to his claim to lead a listening government.”

Tags: hips, reform, england, gordon brown, Politics, Jeremy Leaf, director

Customers could be losing out on savings accounts

Many consumers in the UK like to save some money towards a rainy day, to build a nest egg, or simply for emergencies, but recent data has revealed that an alarming number of savers in the UK are getting really raw deal on their savings and could net much more in interest each year on their savings simply be taking the time to find a savings account that pays a decent rate of interest.

Experts claim that the apathetic attitude of some savers, and even misplaced loyalty to their banks, could mean that many savers are losing out on a small fortune in interest each year.

Recent research was carried out by Sainsbury’s Bank, and according to the information from the research, around forty percent of savers in the UK are earning less on their savings than the rise in inflation.

With inflation working its way up to over three percent according to the Office for National Statistics, it seems that around two in every five savers are earning under the three percent mark on their savings, with around sixteen percent of banks and building societies paying even less than this, at two percent or under.

The Bank of England has increased interest rates three times since August of last year, taking the base rate from 4.5% to 5.25%, and many predict that there will be a further rise of at least 0.25% in may this year, which would take the base rate to 5.5%. However, despite these increases only a fifth of banks and building societies offer savings accounts that have an interest rate of fiver percent or higher.

As an illustration, officials from Sainsbury’s Bank stated that someone with £3000 in a savings account paying 5.5% could earn around £100 more in interest each year than someone with the same amount of money in an account that paid 1.5%. 

Tom Smith
28th April 2007

Tags: bank, savings, rate, earn, Banking, increase, england, interest, accounts

Fifth paying higher stamp duty

Almost a fifth of us are being forced to pay stamp duty at higher rates because house prices are soaring.

That is according to Halifax which says that the government should act by moving the stamp duty thresholds so that they better reflect the current housing market.

The bank says that in the past five years the number of homes in England and Wales which have been sold for more than £250,000 has increased fourfold.

Halifax points out that this means 19 per cent of homebuyers are paying at least three per cent tax, a vast increase compared to the six per cent who were doing so in 2001.

“Stamp duty revenue raised from home sales continues to rise rapidly,” said Tim Crawford from Halifax.

“Bracket creep has been a key factor as a growing percentage of property sales now occur above the higher stamp duty thresholds of £250,000 and £500,000, which have not been changed since their introduction in 1997.

“Nearly a quarter of postcode districts in England and Wales now have an average price above the three per cent stamp duty threshold of £250,000, compared to only one in 20 districts five years ago,” he added.

Stamp duty is only applicable to house sales above the £125,000 threshold, with buyers paying a one per cent tax. The higher duty comes in when a property is bought for £250,000, while an even higher duty of four per cent is levied on properties above £500,000.

Tags: higher duty, stamp, stamp duty, percentage, england, house prices, finance, property

Bailiffs may be given greater powers

Bailiffs may be given the power to break into your home for as little as an unpaid credit card bill.

At present only certain bailiffs are allowed to do this but the tribunals, courts and enforcement bill is set to get its second reading in the house of commons today (March 5th).

If it becomes law, all bailiffs will be able to enter your home to collect a debt but fears are growing that this may lead to an increase in cases of bailiffs abusing their powers.

Citizens Advice is pushing for an independent regulator to be included in the bill, ensuring that bailiffs are acting within the rules.

The organisation also wants to see safeguards brought in that will guarantee bailiffs are only forcibly entering a property as a last resort.

“This Bill should have been the perfect opportunity to modernise the law and end abuse once and for all,” said chief executive at Citizens Advice David Harker.

“Instead it gives bailiffs greater powers without any proper regulation – a recipe for abuse on an unprecedented scale.

“It is a scandal and a disgrace that six years after the government made a commitment to bring in independent regulation, the misery and abuse continues. It has to stop,” he added.

Research by Citizens Advice shows that 64 per cent of bailiffs were guilty of harassment and intimidation in England and Wales since October 2006.

It also found that 40 per cent had misrepresented their powers, while 42 per cent charged debtors excessive fees.

Tags: Citizens Advice, power, card, safeguards, credit, england, Reuters, government

Debts hitting the young

Debts are hitting the young, with over half of England’s teenagers having experienced debt by the time they are 17, according to a new survey.

The survey, by pfeg (Personal Finance Education Group), found that 90 per cent of teenagers worry about money and spending, and two thirds think about money on a daily basis.

When it comes to overdrafts and credit cards, 90 per cent view them as an easy way to spend more than they earn.

The survey was conducted as part of a schools initiative being mounted by the pfeg in a bid to deliver improved personal finance education to the young.

Wendy van den Hende, chief executive of pfeg, said: “We owe it to our young people to ensure that they have the financial acumen to deal with the responsibilities of being an adult.”

“We firmly believe that incorporating financial education into the existing school curriculum in a way that is relevant to young people’s lives is the best way to help them gain and retain the financial skills they need for the future.”

Consumer debt in the UK has now exceeded £1.25 trillion.

Tags: england, Credit card, finance education, group, Youth, teenagers

Interest rates frozen

Interest rates are to remain at 5.25 per cent after the Bank of England decided not to increase the rates further.

Last month the bank surprised everyone by announcing an increase of 0.25 per cent, but today’s decision had been widely anticipated.

The Bank of England’s Monetary Policy Committee (MPC) has increased interest rates three times in the last six months, as it tried to bring inflation rates under control.

Today’s decision to freeze interest rates will be welcomed by those who have a mortgage, but there are warnings that future rises are almost inevitable.

“Today’s MPC decision to maintain the base rate at 5.25 per cent will come as a welcome relief to borrowers, but many market analysts will view this latest decision by the Bank of England as a mere delay of an inevitable further rate rise,” said Mehrdad Yousefi from Alliance & Leicester.

“Inflationary pressures on the economy remain strong, including some above inflation pay deals, and they will play a key part in future base rate decisions.

“The consensus of opinion is that it is very likely that we will see another rate rise in the first half of 2007, so it is crucial that borrowers assess what impact any possible future base rate rises could have on their finances,” he added.

In January it was revealed that inflation was running at levels not seen since 1997 when the Bank took control of setting interest rates from the chancellor.

People borrowing money should be sure that they have the financial flexibility to cope with a sudden rise in interest rates.

Tags: england, base rate, yousefi, Mehrdad, today's decision

Council Tax rebates

Millions of people may have been paying too much council tax due to rushed housing valuations which were carried out in 1993.

Many households are in line to receive thousands of pounds, with hundreds of people having already been given their windfall.

The news could go a long way to helping many homeowners who are struggling to keep up mortgage repayments as a result of rising interest rates.

Some homeowners have received thousands of pounds in back payments and campaigners are urging more people to see if they too are entitled to have their council tax cut.

It is possible to find out if you are paying too much council tax by making a simple online check.

Campaigners say that the problems arose when the Conservative government worked to quickly replace the hugely unpopular poll tax.

As many as 60 per cent of council tax valuations were carried out by estate agents, with a large number being labelled ’second gear valuations’, because agents would simply drive past a house and allocate it a band.

As a result, many people are now paying too much or too little council tax, with large discrepancies between homes on the same street.

Homeowners are being warned that their council tax could just as easily rise as a result of a revaluation.

Tags: windfall.The news, Council, england, Valuation Office Agency, finance, rise, gear

Interest Rate Rise Could Mean Nearly £300M More To Pay For Homeowners

A recent study carried out in relation to the recent interest rate rise enforced by the Bank of England has shown that mortgage payers in the UK could be paying nearly three hundred million pounds more collectively in monthly repayments on their mortgages. The interest rate hike was recently announced, after Bank of England officials increased it from 4.75% to 5%.

The figures with regards to the monthly rise in total mortgage repayments came from an analysis carried out by Egg. Officials from Egg have advised consumers to start shopping around for a better deal on their mortgages in order to try and save money on the amount that they will otherwise have to pay out as a result of the interest rate increase. Those on a variable rate mortgage could find that the 0.25% rise in the base rate could make a significant difference to their monthly outgoing based on the value of their mortgage.

According to the report from Egg, those with variable rate mortgages in the UK will each pay an average of around £35.92 more each month as a result of the interest rate increase. With over eight million mortgage payers currently on a variable rate, this could mean a rise of around £292 million per month on total mortgage repayments.

Officials state that by doing a little research and shopping around for a more competitive mortgage deal consumers could cut back on the financial impact that the interest rate rise has on their monthly outgoings. There are a number of deals available on the market at the moment, and some consumers may prefer to opt for a fixed rate mortgage to avoid further financial implications in the event that the interest rate rises again early next years, as predicted by some financial experts.

Tags: rise, bank, reposses, pay, offers, england, house