Personal loan costs on the up

The worsening credit crisis is pushing up the cost of taking out a ce.co.uk/loans/” target=”_self”>loan, despite cuts in the Bank of England base rate.

Moneyfacts, a financial data provider, claims that the average rate on a three year £5,000 unsecured personal loan has risen by 1.7 per cent in the past year, adding an extra £300 to the bill.

Nearly a third of personal loans taken out in the past year were for debt consolidation. A quarter of those borrowers ran into further debt, and 85 per cent of all those taking out loans were not asked to pay off existing debts by their lenders.

Worryingly, 70 per cent of loan applicants were not asked for proof of income, according to price comparison service uSwitch.com.

Mike Naylor of uSwitch.com commented: “With more than 7,716 loan repayments being missed every day and record write-offs, you might think that lenders had learnt their lesson.”

Figures released by the Bank of England last week showed that new consumer credit rose by £2.4 billion in February, compared to an increase £900 million in January.

Tags: comparison, credit, cent, year, finance, crisis, bill

Fixed-rate mortgages proving popular

Despite predictions that interest rates will likely fall again in 2008, fixed-rate mortgages are continuing to grow more popular, new research suggests.

Data from Abbey reveals that 35 per cent of homeowners would choose a fixed-rate loan if they were re-mortgaging tomorrow, which is an increase from February’s figure of 31 per cent.

Nici Audhlam-Gardiner, director of Abbey Mortgages, said that the findings suggest that “the appetite for fixed-rate mortgages remains high”.

“We expect that economic uncertainty is contributing to this trend, as people try to take control over their outgoings,” she commented.

The survey also found that five-year fixed-rate deals were the most attractive to homeowners looking for a new mortgage, follwed by two and three-year deals.

Meanwhile, the Charcol Mortgage Monitor also recently revealed an increase in the uptake of fixed-rate mortgages, with 52 per cent of all borrowers choosing this option in February.

Tags: rate deals, fixed rate mortgage, Charcol, increase, February, survey

New phone-driving laws

New laws concerning the use of handheld mobile phones while driving have come into force today (February 27th).

Stricter punishments will be dished out to those who are caught breaking the law as research shows that using a phone while behind the wheel greatly affects reaction times.

Previously an offender would have been hit with a £30 fine but now police will issue a £60 fine and three points on the lawbreaker’s licence.

The tougher penalties have received widespread support from most motoring bodies, with a wealth of research showing that using a handheld phone while driving is dangerous.

“Mobile phones are probably the biggest distraction, with research evidence suggesting that holding a conversation on the phone leads to drivers having similar reaction times to someone twice over the UK drink-drive limit,” said Andy Price from Zurich Risk Services.

“At 40mph, a concentrating driver will travel 13.3 metres before activating the brakes in the event of an emergency.

“A driver at the UK drink-drive limit will travel 20 metres and the sober, hands-free phone user will travel 22.3 metres before activating the brakes,” he added.

The introduction of the stiffer penalties is likely to lead to an increase in car insurance premiums for some drivers.

With an offender being hit with three points on his or her licence, it is extremely likely that insurers will bump up premiums for those caught using a phone behind the wheel.

Tags: Stricter, Andy Price, limit, car, mobile phones while driving, concentrating driver, New phone-driving laws, February