Over half of Brits hope to see base rate increase

When the Bank of England originally announced that the base interest rate in the UK was being dropped to an all time low of just 0.5 percent thirty months ago, there were many people who were ecstatic as a result of being able to save money on their outgoings and borrowing in what had become a very difficult financial and economic climate.

However, thirty months on the base rate is still at this record low and whilst the economic and financial climate is still difficult a rising number of people are now starting to hope that the base rate will soon start to increase again. Whilst many borrowers have indeed benefitted from the low base rate there are also many that have suffered, such as savers who have lost a fortune in interest on their savings and consumers who have seen inflation soar.

A recent survey has revealed that more than half of UK consumers are now hoping that the base interest rate in the UK will increase for one of a number of reasons. In total, 52 percent of consumers are hoping to see the base interest rate increase. Of these, 41 percent wanted the base rate to rise so that they would be able to get better returns on their savings, which have really suffered over recent year. A further 11 percent said that they would like to see the base rate rise in order to tackle soaring inflation.

One industry expert stated: “With the Bank of England Base Rate sitting at a record low for the past two and a half years it is clear that there have been winners and losers, with savers generally feeling the combined impact of low rates and high inflation. Some borrowers have benefited, particularly those mortgage borrowers with large deposits, or those who want to borrower larger amounts on personal loans.”

Tags: recent survey, low rates, rate increase, interest rate, increase, winners and losers, combined impact

Repossessions increase by 15 percent

It has been reported recently that repossession numbers have increased by 15 percent in the UK, with the first quarter of this year reflecting the first quarterly increase since the third quarter of 2009. According to officials repossession figures have been in decline for the past five quarters. However, a range of factors has now seen this figure increase with many officials stating that it is likely to continue increase over the course of this year.

The Council of Mortgage Lenders released these figures, and it is officials from the CML that believe the number of repossessions will continue to soar over the coming year. In the three months to the end of March 9,100 property were taken back by lenders and it is predicted by the CML that this could rise to as many as 40,000 or more over the course of this year. Some people are coping at present simply because of the base interest rate being at its rock bottom low of just 0.5 percent. However, if this increases over the next few months, as many believe it will, more and more people could find their homes being repossessed.

Officials have highlighted a number of factors which are thought to be partly responsible for the increase in repossession numbers. There are concerns that more and more people are struggling with their finances and finding it difficult to meet mortgage repayments because of factors such as frozen wages, increased taxes, government cutbacks, and rocketing living costs.

The Council of Mortgage Lenders stated: ‘Looking ahead, the financial position of many households is likely to be stretched for some while, and some will inevitably find themselves in difficulty. Lenders have a range of options to nurse borrowers through temporary problems, but will clearly need to be mindful of the regulator’s concern that too much forbearance may be as bad as too little.’

Tags: concern, regulator, while, repossessions, March, rate, officials, increase

Are you considering a fixed rate mortgage?

There are many people at the moment who are considering switching to a fixed rate mortgage amidst fears that the base interest rate could increase over the next few months, leading to a rate rise on variable rate mortgages and resulting in higher mortgage repayments. Over recent months many homeowners have waited with bated breath each time a Monetary Policy Committee meeting takes place to see whether the base rate is set to increase.

The speculation with regards to whether the base rate will increase over the next few months has continued to increase. Many believe that the base rate will stay at its record low of 0.5 percent for some time to come because of concerns about the continued fragility of the UK economy. With the rate setters still having to consider the effects a rate increase could have on the economy at what is still a very difficult time some believe that it would be irresponsible for the MPC to increase the rate at this stage.

At the same time many believe that the fact that inflation has soared to way over the 2 percent target set by the government means that the MPC will have to increase the base rate in order to bring inflation down and then keep a lid on it. If this is the case then the base rate may increase sooner rather than later, which could result in homeowners with variable rate mortgages seeing their interest rates and repayments go up.

Anyone that is considering whether or not to switch to a fixed rate mortgage needs to do a little research. It is important to look at the fixed rates that lenders are offering to determine what sort of rate you will be able to get if you do decide to switch. It is also important to work out whether you would be able to afford any increases in repayments if the base rate was to rise.

In this particular climate, with so many differences in opinion with regards to future interest rate movement it is difficult for people to decide whether to switch to a fixed rate deal or just continue with a variable rate one and hope for the best. Some people have already taken action and switch to a fixed rate before the rates go any higher in anticipation of a base rate rise.

One official said: “The stand-out trend in the mortgage market at present is the increase in the number of rate-wary borrowers remortgaging onto fixed rates. People know that rate rises are coming and they are locking in now before fixed rates move higher. Essentially, borrowers are running for cover.”

Tags: speculation, increase, anyone, committee meeting, fact, interest rate

A third of cardholders hit by fraudsters

According to recent figures one third of cardholders have been hit by card fraud in the past five years. The figures show that around fifteen million Brits have fallen victim to card fraud over the past five years, which reflects a sharp increase on the figure eighteen months ago, where the number of cardholders hit by card fraud stood at 27 percent.

According to ACI Worldwide a greater number of Brits have been defrauded on their cards than in any other major country apart from China. However, despite this there was a greater level of consumer satisfaction amongst British consumers with regards to how banks dealt with their claims than there was in other countries.

Around 80 percent of customers said that they were satisfied with how their fraud case had been dealt with by their bank, and this compared to 75 percent in 2009. Around 40 percent of these said that the main reason for this high level of satisfaction was the speed at which they received their money back after falling victim to card fraud.

It is estimated that card fraud in the UK costs the economy around £30 billion a year, and with fraudsters using a range of sophisticated methods and hunting grounds to commit their crimes this is a figure that could easily increase.

David Divitt, from ACI Worldwide, said: ‘Fraud is constantly changing and, looking forward, the industry will need to increase focus on identifying identity theft and assisting victims to maintain this improvement in customer experience.’

However, the UK Cards Association has stated: ‘The most recent card fraud figures for the UK, which are based on actual losses and not on research, show that card fraud is falling – a 28% fall in 2009 and a further 20% fall in the first half of last year.’

Tags: satisfaction, greater number, GBP, money, focus, increase, show, aci worldwide

Make 2011 the time to get a better credit card deal

Whilst many people in the UK are on poor credit card deals, with high rates of interest and little to nothing in the way of benefits, many fail to take any action such as switching to a more favourable credit card. However, with 2011 almost upon us now could be the time to act, and by doing this cardholders could enjoy far greater benefits or could enjoy paying far less – or even nothing – in interest.

At the start of 2011 new regulations will come in, which will see credit card providers having to make a number of changes to the way in which they operate in order to benefit consumers. This will include a new minimum payment system, which will ensure that cardholders are not left festering in debt indefinitely because of minimum repayments, and more importantly the need for card providers to apply repayments to more expensive debt rather than the cheapest debt, which could save consumers a small fortune in interest.

However, there are fears that these changes, which are due to come in soon, could result in credit card provider trying to bring in sneaky new charges and increase interest rates in order to recoup their losses, and some credit card holders could find themselves paying even more for their borrowing as a result of this.

Rather than just putting up with the way that credit card providers decide to change the account many cardholders could find that they can benefit hugely in terms of their finances by taking the time to find a more competitive deal on their credit card, which will help them to start the New Year in the way that they mean to go on – with streamlined finances and in a better financial position.

Whilst credit cards are not as easy to get as they once were, prior to the onset of the global financial crisis, it is possible to get a good deal on a credit card if you have a decent credit rating. The easiest way to do this is to get online and find a credit card that suits your needs, but which offers far better value for money than your existing card. You can then save money on the amount of interest that you pay, or if you do not tend to spread your repayments you could even opt for a rewards based credit card.

Tags: increase, amount, favourable credit card, Business Finance, number, minimum payment, personal finance, Credit Cards

Beat the VAT rise and pick up your big ticket items now

As outlined in the emergency budget earlier this year, which was delivered by the Chancellor of the Exchequer, George Osborne, VAT is set to increase from the start of next year, rising from 17.5 percent to 20 percent, as the coalition government strives to make more money to clear the huge public deficit.

This will come as bad news for the many cash strapped consumers who are already struggling to make ends meet, because it means that price on many things will soar even further. This is why many people are now rushing to make their purchases in the few weeks that they have left prior to the rate of VAT increasing.

The items that many people are rushing to buy include big ticket items such as electrical items like televisions, fridge freezers, washing machines, and the like. Many are also rushing to book holidays before the prices go up, as the effect of even a small 2.5 percent increase on the cost of more expensive items can make a big difference.

Bearing in mind that VAT is set to increase by 2.5 percent at the start of the year it is a good idea to determine whether you are going to be making any big ticket purchases in the early part of next year, and then bringing the purchase forward if possible. This could save you the cost of the additional 2.5 percent, which on higher priced items can make a difference.

If you time it right you could get a bargain on your big ticket items. Directly after Christmas the price of many items is slashed by retailers, and the VAT increase is not set to come in until the start of January. This means that if you purchase your items between Christmas and New Yearn you could benefit from the lower prices from the sale, and you can avoid the VAT hike, which means that you could get a bargain.

In order to make the biggest savings plan you sales shopping, and try and work out which retailers are holding sales between Christmas and New Year so that you can plan your sales shopping accordingly. You should also consider planning ahead, and if you are considering anything such as booking a holiday make the booking early to avoid the VAT increase so that you pay less for your holiday.

Tags: chancellor of the exchequer, budget, New Year's Day, cash strapped consumers, time, additional 2.5 percent

Further increase expected with credit card interest rates

Over recent years there has been a lot of controversy with regards to the high rate of interest that is charged on many credit cards, with campaigners, consumers, and various other officials pointing out that the gap between the base interest rate – which is at its lowest level on record at just 0.5 percent – and the average credit card interest rate was getting wider and wider.

Whilst the base rate has been at its all time low for well over a year now credit card interest rates have continued to increase, leaving many credit card customers who are unable to settle their balances in full at the end of each month facing very high levels of interest on their debts. However, despite the controversy it appears that the problem could be set to get worse.

According to reports experts from the credit card industry are predicting that credit card companies are set to increase credit card interest rates even further, and this could further impact on the finances of many people that are already struggling to stay afloat. Experts believe that credit card providers will increase their rates in order to offset the risks that they are having to take.

Recent research showed that over five million consumers in the UK had admitted to using their credit cards on a regular basis to make bill payments and other essential payments, and this means that the higher interest rates could take their toll on many people.

A spokesperson from Moneyfacts.co.uk said: “Providers have been putting rates up and obviously there’s high unemployment and the risk of people defaulting and not repaying their debts is still quite high, so they’re very strict on who they give their cards to. The customers that pay off just the minimum every month are going to be the ones who are hit hardest. They’re going to add, maybe, hundreds of pounds extra on to their debt and take a lot longer to repay [it].”

Tags: personal finance, risk, rate of interest, Credit Cards, increase

More people putting money towards funerals instead of savings

According to a recent report an increasing number of consumers are now putting money towards their funeral costs rather than putting it into savings. It appears that the recession has caused a new trend to emerge, and rather than leaving their loved ones to foot the bill should the worst happen many people are already putting money aside for their funeral rather than putting their spare money into a savings account. Read more

Tags: service, report, space, money, savings, london, increase, year

Yorkshire bank seen increase in mortgage activity

It has been reported that the Yorkshire Bank has seen an increase in mortgage activity of late, with an increase in mortgage applications from interest parties as well as an increase in the number of mortgage applications that are being approved by the bank. Read more

Tags: income households, increase, low base, Mortgages, May, mortgage applications, borrowers

Insured patients being charged hundreds of pounds more for cover

A recent report has claimed that patients with insurance cover are being charges hundreds of pounds more for treatment by a private hospital chain simply because they have insurance. Read more

Tags: position, transparency, increase, patient, private hospitals, insured patients, charities

Overdraft interest rate increases from Barclays

Barclays Bank has recently hiked up the interest rates charged on its overdraft facilities on many of its accounts, including its packaged current accounts for which customers have to pay a monthly fee. Read more

Tags: increase, Additions, overdraft interest rates, bank accounts, Bad news

Council tax to rise by 3 percent in England

Recently released reports have stated that council tax in England is set to rise by just 3 percent, which is the lowest rise in ten years. However, officials have said that the rise in council tax will still be higher than the rate of inflation. Read more

Tags: council tax rises, meantime, Local taxation, increase, local authority official, core services, rate of inflation, local businesses

Increase in jobless figures

According to a recent report there was in increase in the number of jobless people in the UK towards the end of last year, and the rise in the number of unemployed is expected to continue this year. Read more

Tags: claim, jobless people, stability, increase, unemployment, Labor

Improvement seen in consumer confidence levels

Over the past year consumer confidence in the UK has plummeted, with soaring inflation, rising living costs, rocketing petrol and food costs, and the effects of the global credit crunch on the housing and financial markets all impacting upon confidence levels and leading to the ongoing economic downturn. However, officials have suggested that there has been an increase in consumer confidence levels for the second month in a row. Read more

Tags: VAT reduction, drop, improvement, increase, confidence levels, consumer confidence, money

August retail sales levels cause surprise

According to recent reports industry officials were pleasantly surprised recently when data showed that there had been an unexpected surge in retail sales levels for the month of August. The rise in retail sales levels was not a huge one, but many industry experts had been expecting sales levels to fall by around 0.5%, so the increase of 1.2% in high street sales came as good news. The figures came from the Office for National Statistics. Read more

Tags: Marketing and Advertising, retail sales, sales, street, school period, increase

Inflation at 4.7%

Recent figures have shown that inflation levels in the UK have soared even further out of control, rising from 4.4% to 4.7% for August. The government target for inflation is just 2% so the current rate of inflation is way beyond the target. The jump to 4.7% was higher than many industry officials had anticipated, according to recent reports. There is also speculation over how far inflation will keep on rising, with some senior officials predicting that it will hit 5% or beyond by the end of the year. Read more

Tags: current rate, marked slowdown, increase, Monetary Policy Committee, inflation, October

House prices have plunged over last year

Over recent months homeowners and industry officials have seen one report after another that has shown how house prices are falling steadily on a month on month basis, and there has already been a significant fall in the value of homes compared to last year before the housing bubble burst. It has now been said that property prices have started falling at the fastest pace since the 1990s, and thousands of pounds have been wiped off the value of the average house price over the past year. Read more

Tags: house prices, Peak oil, Business Finance, October, property prices, increase, housing bubble burst

Gas bills could rocket within the space of a year

A recent report claims that gas bills could rocket within the space of a year, with some households paying in excess of £1000 a year for their gas usage. The cost of gas usage went up earlier this year, along with electricity prices, and the energy firms are now in the process of raising prices or arrange price raises for later in the year, blaming a rise in the cist of wholesale energy prices for the increase in energy usage costs. Read more

Tags: global contagion, increase, production costs, inflation, household budget, energy, Readings, significant proportion

Curb to charges could mean increase in bank fees

Britain could see an end to free banking in the near future depending on what happens with the banks charges case, and whether the fees that banks are allowed to charge for overdraft fees and charges can be curbed. If the charges are cut then banks and other financial institutions may decide that they are going to try and recoup the costs by imposing hefty service fees and charges elsewhere. Read more

Tags: twenty years, Banking, savings, british bankers association, road, housing, unjust charges, increase

House building halted as buyers struggle to get mortgages, says FMB

The number of new houses being built in the UK has dropped in recent months because property developers have backed out of projects as people struggle to find mortgages to buy property, according to the Federation of Master Builders (FMB). Read more

Tags: lifestyle choices, divorce, house builders, lifestyle, mortgage, Barratt, increase

‘Incredible choice’ in ethical investments

The ethical investment market now offers savers an “incredible amount of choice”, according to F&C Asset Management.

According to the investment house, British investors can choose from more than 90 different funds, including a number of specialist environmental investments and climate change-focused ones.

Jason Hollands, head of group communications at F&C Asset Management, said that these types of funds have grown in popularity in recent years and now include ethical bond products as well as equity funds.

Despite the amount of choice available in the market, Mr Hollands said: “One of the dilemmas facing investors is how to understand the different options available out there and find the investment that is appropriate for them and their own requirements.”

The Co-operative Bank recently reported that ethical investments were worth £32.3 billion per year in 2006, an increase of nine per cent from the previous year.

Household spending on ethical products rose by 81 per cent from 2002 to 2006.

Tags: jason hollands, equity funds, asset management, british investors, Investment management, increase, choice

Consumer increase care over their personal data

One of the major issues that have raised concern across the UK over recent months is that of personal data security, with many people concerned over the risk of identity theft and fraud. Read more

Tags: credit, personal data, Financial institutions, Revenue, result, increase, bank account

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: Charcol, February, fixed rate mortgages, survey, rate deals

Credit card spending hits record levels

British consumer spending on credit and debit cards hit record levels during the last quarter of 2006, reveals new research.

Findings from the Association of Payment Clearing Service (APCS) showed that out of the total £91.5 billion spent during the Christmas period – an increase on the £86.6 billion spent at the same time last year – £32.3 billion was on credit cards.

Up to £2 million of this figure was spent on food and drink during December 2007, a rise of 25 per cent compared with the same period last year.

Chris Tapp, of Credit Action, a debt charity, said that as the financial squeeze on household budgets is tightened many people may start to use their credit cards to pay for shopping.

He said that, despite retailers’ sales figures being down, credit card spending has increased.

Speaking to the London Stock Exchange, he said: “This is not good news. People using their credit cards to meet their monthly bills is the first sign of a spiral of debt trouble.”

Meanwhile, Nationwide has been voted the UK’s most responsible credit card provider.

Tags: service, debit, research findings, increase, food, record, consumer, credit

2008 will be a ‘double-edged sword’ for first-time buyers

Falling house prices and uncertain times will make next year a “double-edged sword”, according to the Council of Mortgage Lenders (CML).

Sue Anderson, head of external affairs at the CML, said: “On one hand, if the prices come down or even if they just stabilise, to a degree, that is good news for first time buyers.”

It is expected that consumers’ earnings will close the gap between that and house price inflation.

On the other hand consumers may “feel a bit wobbly in light of what has been going on in the market,” said Ms Anderson.

First-time buyers will be subject to confidence issues in relation to predicting behaviours in the housing markets, she concluded.

The Halifax House Price Index detailing the month of November stated that prices dropped by 1.1 per cent, yet prices are 6.3 per cent higher in annual terms.

Overall growth in house prices has slowed over recent months as the increase in interest rates between July 2006 and July 2007 has taken effect.

Tags: house, mortgage, loan, increase, council of mortgage lenders, sue anderson, time

Reduction in approvals ‘less dramatic than expected’

There has been a less substantial tightening in the mortgage market than was previously thought, according to the Council of Mortgage Lenders (CML).

In the Bank of England’s report today, the number of approved mortgages was shown to be steady, despite predictions that there would be a significant tightening of the market.

While there has been a slowdown, it is not unusual for the time of year and also reflects a slowdown in funding, explained Sue Anderson, head of member and external relations at the CML.

“To that extent this is pretty good news. It shows that the level of lending is looking as if it is holding up to a greater degree than some of the pessimists have been expecting,” she said.

The Bank of England report showed that net consumer credit in October this year was up on September as well as the average for the preceding six months.

Meanwhile, net credit card lending was up by £0.2 billion, which fell short of the net increase for September.

Tags: lending, reduction, Offset mortgage, bank, significant tightening

Millions may decide to switch banks

According to a recent report from consumer group Which? millions of UK consumers may end up switching bank accounts in the future if monthly or yearly bank charges are introduced for those with bank accounts.

Which? conducted a survey of 1022 people, and out of the respondents nearly 80% stated that would look at switching to another bank. Around 73% stated that they thought that fees charged on current accounts would be unfair. However, banks have indicated that these fees are a possibility in the event that they lose the right to impose charges for exceeding overdraft limits, bouncing cheques, and for returned direct debits.

A High Court test case is scheduled for next year to determine the legalities of these charges, which have been at the centre of controversy for the past couple of years. If the banks lose the case then many banking customers could be hit with high monthly or annual fees simply for having a bank account. Nearly 90% of those polled by Which? added that the government needed to ensure that caps were placed on any such account fees.

An official from Which? stated: “Consumers don’t want to be charged for their current account and will vote with their feet if their bank introduces a monthly or annual fee. Our research shows that customers would support Government intervention to make sure banks don’t overcharge.”

A spokesman from the British Banker’s Association said: “UK banks offer the most cost effective and comprehensive package of current account services around and are keen to continue to do so. We have always said there is a place for the current model of free banking and part of the reason for seeking the clarity of a court decision on bank fees is to defend this.”

Tom Smith
14th November 2007

Tags: interest, better, accounts, bank, increase

Credit cards hit by widespread rate increases

Over 120 increases in rates and fees have hit the UK’s credit cardmarket.

According to Moneyfacts.co.uk, in the past two months, cards have felt the indirect impact of the sub-prime mortgage crisis that has led to a global credit squeeze and resulted in rising charges.

The website’s research has found that cash withdrawal fees have increased on 69 cards, 25 now have higher rates on cash withdrawals and foreign usage charges have spiralled on 18 cards.

Esther James, credit card analyst at the website, said: “Following a year of rising rates and fees, its time to take a look at your card. Check the interest rate you are paying, as there are still some great 0 per cent deals on purchases and balance transfers to be found.

“So don’t pay interest unnecessarily. Make sure you look after your own pocket instead of fuelling the profits of the card providers.”

She added that there is enough choice for consumers not to be caught out, with 300 credit card providers on the market.

Tags: credit, increase, rates, cards, interest, apr

Consumers advised to inflate earnings to get mortgage

A recent report has revealed that many consumers in the UK are being advised to lie about their earnings on mortgage applications forms in order to enable them to get a larger loan – one that many cannot realistically afford based on their actual earning as opposed to the inflated amount that they state they earn.

This advice is being given to those that self certify, which means that they state their own income and this is often not checked out or verified by the lender.

A number of industry professionals, such as brokers and advisers, have been found to have been advising consumers to put down that they earn far more than they actually do, and this means that they get a larger mortgage loan. However, it also means that the repayments are far higher, as the lender will have based affordability on the earnings reported on the application form.

One man told investigators that he had managed to get a mortgage for eight times his salary by stating that he earned £50,000 per year as advised to do so by his financial adviser – he was actually earning half of that amount. As a result, stated the consumers, he was left repaying a huge mortgage that takes up the vast majority of his income, and has even had to deal with the threat of repossession through difficulties with affordability.

Campaigners are now urging financial regulators to look into this practice and put a stop to it, as it could add to the problems that have spread from the sub-prime market in the United States, leaving many of those in the sub-prime sector unable to cope with their repayments. The practice came to light following an investigation conducted by the BBC.

Tom Smith
24th October 2007

Tags: repossession, mortgage, income, increase, extra, earnings, loan, huge, salary

Millions of Brits to switch credit cards

It is estimated that 6.5 million people in the UK will change their credit card provider in the coming year.

Over half of Brits switch credit cards to profit from interest free introductory offers for balance transfers, according to a study by Abbey.

The figure will see a five per cent increase on changes made last year and represents a total transfer between cards of £11 billion.

Roger Lovering, managing director of Santander Cards Limited, said: “These figures just show the intense competition in the credit card market. With £11 billion at stake, it’s the credit card with the best deal that wins.”

Furthermore, Abbey’s research showed 19 per cent of consumers change cards in order to take advantage of a lower APR.

Six per cent felt that a different card might have more “kudos”.

Mr Lovering added that Abbey offers interest free balance transfers for 12 months, as well as three months of interest free purchases.

Virgin are currently offering 15 months of free balance transfers with a typical APR of 15.9 per cent.

Tags: increase, Credit Cards, interest rate, free introductory offers, advantage, 5 million, card, year.Over half

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: wait, first, Mortgages, interest, future, england, time, increase

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: rate, committee, interest, rise, fixed, england, increase

Inflation Report Signals Further Rate Rise

The Bank of England has given clear signals that interest rates may have to rise yet again to make sure that it keeps inflation under control. Homeowners will be dreading the possibility of yet another rate rise as they have seen five quarter point rises already ion the past 12 months.

Experts now believe that the rise will come sooner rather than later after the Governor of the Bank, Mervyn King, said that he believed the turmoil in credit markets – set off by the sub-prime crisis in the US – was far from being an international financial crisis. Given that comment, experts think that he will not be afraid of recommending a further rate rise in the UK in the near future. Indeed, there are some doom-mongers who suggest that an interest rate of 6.5% – or even higher – could be reached.

A quarter point rise on a mortgage of £110,000 would mean an increase in monthly repayments of over £16, and on a mortgage of £200,000 the increase would be £30 a month.

A further quarter point rise now looks likely in September. Mr King said: “[We] cannot be sure if what we’re seeing so far foreshadows a more disruptive move on the markets or whether there’s a more gradual easing of pressure that allows credit spreads to widen to more sensible levels. So it’s impossible at this stage to judge how large and how persistent the tightening of credit conditions is likely to be.”

Adding that he did not see the recent events, which have seen some US investment banks in trouble because of defaults on loans and some big takeovers postponed, as an international financial crisis, he went on: “We are seeing signs of bad loans arising clearly in the US, but I don’t think we are seeing signs of these bad loans in other markets. The developments in [the widening of] spreads is a more realistic pricing of risks which we welcome.”

Mr King said that it was not the duty of central banks to give protection to any financial institutions if they get in trouble for poor lending practices.

The Bank’s quarterly inflation report said that inflation would come back down to 2% if interest rates rose according to market expectations, and that would be one more quarter point rise before the end of the year. It is difficult to see the Monetary Policy Committee waiting too long before implementing the rise. The report said that risks to inflation remained on the upside but not as much as a few months ago. It now expects economic growth to dip to 2.5% in the next two years from about 3% now.

Mr King was concerned that official figures did not accurately measure the strength of the economy, and may be revised upwards. The near term outlook for inflation had the bad news of higher food prices from flooding influencing it.

Inflation was also under threat from rising oil prices and potentially increasing wages demands, but Mr King did note that consumer spending was cooling. However, there has been surprise at the resilience of consumer and housing markets despite the five rises since last August.

Mr King insisted that 6% was not yet a done deal.

Tom Smith
1st October 2007

Tags: interest, markets, inflation, rates, housing, economy

London Leads The Way On House Prices Again

The Land Registry’s latest House Price Index suggests that the average price of a property in England and Wales was £181,039 in June 2007. That is a 0.4% increase for the month (slightly less than the May), and the annual house price inflation rate is now at 9.1%.

It is prices in London that once again have driven the price growth. For the third consecutive month London’s rate of increase was more than 6% a year higher than the rate for England and Wales overall, and the difference is at its greatest since early 2005, but at that time it was London that was behind the rest of the country by 6%. The average house price in London in June 2007 was £338,950.

Average property prices across England and Wales for detached house were £271,530 in June 2007, up 7.5% from their level of £252,573 a year before. Flats and maisonettes showed the greatest increase on the previous June at 9.7%, increasing from £154,838 to £169,874 on average. For semi-detached properties the rise was 8.7% from £157,244 to £170,952, and for terraced houses the rise was 9.3% from £129,246 to £141,278.

All regions saw increases in their average prices over the last 12 months. The highest annual increase was in London at 15.8% – 1.5% on the month. The next highest annual increase was in the South East 1t 9.1%, although the region experienced a 0.3% decrease in prices during the month. The highest monthly change behind London was in the West Midlands at 1.2%, and an annual increase of 7.1%. The biggest loss in the month was in Wales at 1.1%, although its annual change was still an increase of 6.6%. The smallest annual rise was in the East Midlands at 5.5%, with a monthly fall of 0.6%. All in all half (five of ten) regions showed a decrease in average prices during the month.

In terms of county and unitary authorities Brighton and Hove saw the greatest annual price change with a rise of 16.3%. There were 25 areas in total that experiences an annual price increase in double digits. There were no county or unitary authorities that saw an annual price fall to June 2007. Strongest monthly growth was seen by Rutland at 2.5%, whereas Powys saw the highest fall of 2.4%. Behind London, Windsor and Maidenhead has the highest average prices at £327,345. Lowest prices were to be found in Merthyr Tydfil at £81,697.

The metropolitan district with the biggest annual increase in average prices was Manchester at 11.7%. Bury saw the highest monthly increase of 1.7%. The lowest annual rate of house price growth was in Salford, with growth of 2.8%. The district with the largest fall in house prices for the month was Barnsley with a fall of 0.6%. In Metropolitan districts Solihull had the highest average prices at £210,139, and the lowest average prices were in Oldham, at £106,971.

In London, the borough with the fastest rate of growth was Kensington and Chelsea, up by 25.7% for the year. The same borough had the highest monthly growth at 2.2%. Newham saw the lowest annual growth of only 6.3%, and Barking and Dagenham saw a monthly fall of 0.1%.

In the first four months of 2007, the number of house sales averaged 87,734 per month, representing an increase from the same period last year when sales volumes averaged 87,559.

Tom Smith

Tags: home, increase, cost, london, prices, house

High number of claims over lost luggage

Insurance companies in the UK have reported that the level of claims coming in over lost luggage has soared over the first half of this year, increasing by a huge amount compared to the same period last year.

One leading travel insurer reported that between January and June there were nearly three thousand claims made over lost luggage to the company, which reflected an increase of 85% on the same period in 2006. The average claim was for over £200 according to the insurance company.

The travel insurance company also reported that there was a 22% rise in the number of bags lost across Europe in the same period, despite the level of passengers travelling only rising by 1.4%. The figures have been compiled by the Association of European Airlines. However, some budget airlines such as EasyJet were not included when these figures were put together, and therefore the actually number and level of lost luggage could be even higher.

A spokesman for the insurance company stated: “We have seen an enormous rise in claims for lost luggage. With the summer holiday season now in full swing, we can unfortunately expect more families’ holidays to be ruined by lost baggage.”

Another leading insurance company, Norwich Union, reported a rise of 40% in claims over lost luggage in the first half of this year. The figures from the Association of European Airlines also showed that in 2006 British Airways lost more luggage than any other European airline following a variety of problems that resulted in luggage problems. The reports also highlight the importance of having adequate travel insurance in place when going on holiday or even travelling on business, as loss of all of your luggage can prove very costly.

Tom Smith
28th September 2007

Tags: claims, policy, airline, luggage, company, travel, Insurance, lost, increase, premium

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: bank, interest, rate, deals, fixed, Mortgages, long, england, increase

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
26th September 2007

Tags: british, increase, year, August, personal finance, Longer-term trends, remortgages, surge

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

Flooding costs to affect insurance premiums

The UK has seen some of the worst rain and floods in years over the past few weeks, and for many this has resulted in severe damage to their property and huge insurance claims.

Many insurance companies have been inundated with claims following the flood damage, and millions of pounds worth of claims have had to be processed and paid out. Insurance companies have stated that the level of claims coming in has been high and the payouts have made a big dent.

The recent flooding is said to have been the worst in the UK for around sixty years, with many households devastated by the damage caused. A number of leading insurance companies are now stating that they will have to push the cost of premiums up because of the level of claims that have had to be paid out as a result of the flood damage. Both contents and buildings insurance cover is now expected to rise as a result of the situation.

One of the leading insurance companies in the UK, Norwich Union, has confirmed that its premiums will be going up. From next week those taking out cover with the insurance giant can expect to pay around 10% more than previously. All customers will be affected by this price increase and not just those that were hit by flood damage and had to therefore make a claim on their policies.

One insurance company official stated: “People are spending more on home improvements. When things go wrong they’ve got flat-screen televisions and expensive flooring. So, when the do damage, it’s costing us more.”

An official from Direct Line insurance stated: “We do recognise that premiums will rise, and that goes for all RBS brands.”

Tom Smith
19th September 2007

Tags: claim, flood, cost, increase, premiums, cover, payments

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: interest, rate, increase, england, bank, base, Mortgages, payments, rise

Eight million Britons have five-figure debts

Britain’s debt crisis is worsening, new figures released today show.

According to debt consultancy firm Thomas Charles, eight million Britons – one fifth of the entire adult population – hold debts of over £10,000.

The firm largely blamed heavily advertised store cards and credit cards for the growth of the problem.

Director of Thomas Charles, James Falla, said that the figures show a “sharp increase” in debt holders over the last year.

“These high levels of debt are linked to the rise in interest rates over the year”, he added.

The Bank of England’s monetary policy committee has also announced today that it will not be increasing interest rates for August.

Rates had been raised five times in the previous twelve months to 5.75 per cent, putting the squeeze still further on indebted Britons.

The chief economist at the Institute of Directors, Graeme Leach, termed the decision “a pause for thought”, and said that a further rate rise to six per cent would likely come in the autumn.

Tags: increase, Britain, cent, fifth, Thomas Charles, britons, policy, interest

Future demand for buy to let mortgages could fall

According to a recent report the demand for buy to let mortgages could fall in the future, as a slow down in the rise of property values hits, lumbering landlords with higher mortgage repayments but lower house value inflation and rental income.

However, reports have also indicated that at present landlords are doing very well, and in the past year enjoyed returns of around 13%. Reports indicate that landlords saw the property vales rise on average by around 7.3% and saw rental returns of around 5.5% of the property value.

The figures come from a report issued by Birmingham Midshires. The report indicated that although the 13% property value rise seen was up from the previous twelve months of 11.9% rental payments dropped from 5.7% in the previous twelve months to 5.5% last year. Birmingham Midshires warned that the interest rate rises had led to mortgage repayments being higher than rental payments, and that this could have a dampening effect on the popularity and take up of buy to let mortgages.

One economist from the building society stated: ‘While house price growth in the sector is expected to be more subdued near-term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long-term investors. There also remains the potential for healthy long-term capital appreciation in the buy-to-let sector, particularly given the backdrop of more households being formed each year than there are new properties being built.’

Along with homeowners buy to let landlords are likely to be hit hard by the interest rate rises that have been applied by the Bank of England over the past year, as it means higher repayments on the mortgage without higher rental income.

Tom Smith
1st August 2007

Tags: rise, payments, interest, rates, property, rental

Is fixing your bills a good idea in light of interest rate rises?

The recent interest rate rises enforced by the Bank of England have hit many homeowners really hard, leaving them with very little in the way of finances due to rising repayments. In light of these rises, many people are now wondering whether it might be a good idea to fix not only their mortgage but also other payments as well in order to benefit from increased financial stability.

Interest rates have gone up five times in the past year, with rises of 0.25% each time, and each of these rate rises has added a significant amount to the repayments of many homeowners, pushing many into the red. With these increased repayments along with the threat of further interest rate rises some experts feel that fixing as many payment as possible, including a mortgage, could prove beneficial in terms of financial management, although others feel that this could prove costly in the long run, particularly when interest rates start to fall again.

One industry expert stated: ‘Having certainty of monthly outgoings is worth its weight in gold, especially for people who are stretching themselves to take out the loan. People have been buying two year fixes, but with arrangement fees and other costs so high, we are now seeing more three and five-year fixes being taken out to avoid paying these fees so regularly.’

Another stated: ‘Fixed rates are going up as lenders factor in possible future base rate rises. Trackers are cheaper, but you have to accept that the rates are likely to go up before coming down, so you have to make sure you can afford higher monthly payments. The rates for three and five-year fixes are quite similar, so the key is to do your homework to get the best deal and make sure you are clear how long you want the fix to last for.’

Tom Smith
1st August 2007

Tags: cost, debt, house, rises, increase, fix, pay, Mortgages

Negative equity from 110 per cent mortgages

So-called ‘110 per cent’ mortgages, which do not require an initial deposit from holders, are becoming an increasingly popular option among home buyers, with house prices in the UK growing fast.

First-time buyers in particular, who tend to be younger and have little or no savings, find them particularly appealing.

However, industry experts, including those at Baronworth Investment Services, counsel against seeing taking out such a mortgage as a risk-free endeavour.

Michael Brill, a director at the company, said that the ideal 110 per cent buyer was “The young professional… who hasn’t got a deposit and knows they are going to have a nice increase in salary in a couple of years time.”

However, he warned that “if we have a crash in property with a negative equity from a 110 per cent mortgage”, holders “could end up with further negative equity.

“That is one of the big disadvantages”, Mr Brill surmised.

The Council of Mortgage Lenders (CML) recently revealed that the proportion of first-time buyers in the UK rose from 48 per cent to 56 per cent in 2006.

Tags: Economic history, couple, proportion, professional, increase, house prices, first time buyer, salary

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, interest, rises, Mortgages, bank, fixed

Government wants longer term fixed rate mortgages to be available

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

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

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

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

Tom Smith
31st July 2007

Tags: interest, buyers, Mortgages, Loans, rate, fixed, first, time, building, young

Super-Prime London Prices Shoot Upwards

The price of houses at the very top of the London property market achieved record growth in June. Research by estate agent Knight Frank shows record growth of 3.1%, which is the fastest growth in a month since the agency began its records in 1976. It also found that the annual rate for the same market was 34.5% in June, which is the largest figure for a years seen since 1979.

Those properties seeing the largest rises were between £1m and £2m, and those valued at over £4 million. House prices in the latter bracket have gone up by an amazing 43% in the last twelve months. The areas where house prices have gone up the most are SW3 and SW10, with a 40% rise on houses valued at over a million in the last year. Properties over a million pounds represent 7% of the London property market.

It looks as though prime London is having an almost unstoppable surge in house price inflation, but deeper research actually shows that the highest growth is at the very top end of the market – super-prime London. For example, the growth of properties valued at just below a million in the same areas had slowed down, no doubt under influence from recent interest rate rises and other economic factors putting the squeeze on homebuyers. A slowdown for super-prime London house prices would probably mean that there was a huge economic problem on a global scale as many buyers are foreigners.

Further out of central London, areas like Hampstead, Wapping and Wimbledon have seen growth of 11.4% in the first six months of 2007, giving annual growth of 21.8%. These don’t match up to super-prime increases, but still show superior growth to the broader London house market.

Knight Frank’s assessment is that the normal house market slowdown in the summer will be cooled even further by other economic factors, but super-prime central London will still have annual growth of around 25% come December.

Meanwhile it has been calculated that the cost of an extra bedroom in a large property in London is £161,221. That figure is £20,000 higher than the cost of an average home in Scotland. The figure is worked out from the average price of a three-bedroom property in the capital as £396,387, and the average price of a four-bedroom home is £557,608.

It is such a difference that forecasts are that London homeowners will look for more ways to improve or increase the size of their existing property such as an extension or loft conversion, rather than seek to move.

The difference between and one-bedroom property and a two-bedroom property is much less, at an average of £89,751. In London there are currently around 13,600 two-bedroom properties up for sale, but less than 6,000 one-bedroom properties. Such as shortgage of smaller properties is a concern for first-time buyers as that key difference in price for an extra bedroom would evidently be a showstopper for many new buyers. It is unlikely that this situation will ease with London market continuing to push upwards.

Tom Smith
26th July 2007

Tags: Mortgages, london, foreigners, property, prime, inflation, prices, increase, house

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: drop, Mortgages, prices, negative, boom, equity, slow, england, bank, fall

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: increase, house, home, interest, rates, bank, england

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, lender, england, interest, borrow, bank, afford, loan

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: prices, hips, down, bank, increase, decrease

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: interest, variable, bank, cost, england, increase

50% of income going on mortgage

Some Londoners are spending as much as 50 per cent of their take-home income on their mortgages.

New figures from Woolwich highlight the precarious situation that many homeowners find themselves in and things could get worse with the Bank of England widely expected to announce a 0.25 per cent interest rate rise today (July 5th).

The average first-time buyer in the UK is said to be forking out 32.4 per cent of their take-home income on mortgage payments as property prices boom and people become evermore desperate to get onto the housing ladder.

The figures are a concern for many industry figures and Andy Gray, head of mortgages at the Woolwich, said further rate rises are likely to have a massive impact on the housing market.

“We fully expect the average age of first-time buyers to go up until people are well into their 30s,” he revealed.

“For those lucky enough to be on the ladder, the data suggests that in certain areas of London they are already stretched. The last thing any of them need is a further increase in base rates.”

First-time buyers, many of whom are understandably desperate to get onto the property ladder, are advised to carefully calculate their finances before taking out a mortgage to ensure that they are financially prepared for any future rate rises or changes to their circumstances.

Tags: Real estate, andy gray, rise, housing market, United Kingdom, market, increase, mortgage

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: interest, earn, savings, internet, rate, saver, accounts, rise

Some people may never own their own home

According to recent reports future homebuyers could face house prices that are up to ten times the amount of their salaries, which means that many of today’s younger people could face the prospect of never being able to purchase their own home.

The research from the government backed National Housing and Planning Advice Unit (NHPAU) indicates that in order to avoid this situation many more homes will have to be build, otherwise millions of people will be left out in the cold when it comes to home ownership in the UK.

According to the research over a third of those that do not own their own home at the moment are doubtful that they will ever be able to afford to buy their own home. Another 20% of non-homeowners believe that they will have to wait a minimum of five years before they can afford to consider getting onto the property ladder. The purpose of the government run National Housing and Planning Advice Unit is to offer advice on improving affordability in the housing market.

The figures indicate that just seven years ago the average house prices was around four times the average salary of the consumers. However, with prices set to rise to ten times the average salary future generations face a very bleak future when it comes to the possibility of home ownership.

According to the chairman of the NHPAU: ‘First-time buyers have seen a big rise in the deposit needed to buy a home and the amount of their income spent on mortgages. Demand for housing is growing and unless action is taken, pressure on the market will only get worse.’

Tom Smith
4th July 2007

Tags: increase, salary, price, housing, time, home, demand, wages, buyers, Mortgages

Motor insurance at 2yr high

Comprehensive motor insurance premiums are at their highest level for two years.

Figures from Experian show that premiums in the direct market peaked in May, sitting 7.9 per cent higher than they were in the same month in 2006.

Experian has developed a Motor Insurance Benchmark to accurately measure insurance premium movements and this shows that the current average in the direct market is £560.

The intermediary market also saw the average premium rise to £529, the highest level for 11 months.

“The last 12 months have seen comprehensive motor insurance premiums in the direct market increase and overtake premiums in the intermediary market,” said David Murby from Experian.

“Traditionally, premiums in the intermediary market have been higher, but after peaking in February 2006 [reaching £557], they started falling significantly. They passed each other in July 2006, when intermediary premiums were at their lowest.

“The whole motor insurance industry is going through a period of transition and it is not as clear-cut as it was 15 years ago,” he added.

At present, it would seem that people looking for motor insurance are better off going through an intermediary but buyers should always shop around for the best deal and remember that things can change very quickly.

Tags: direct market increase, rise, increase, Insurance, current average, GBP, comprehensive motor insurance

Council tax rises by 91% in 10 years

Increasing council tax bills are putting the squeeze on mortgage holders throughout the UK.

According to research by Halifax, the average council tax bill has risen by 91 per cent in the past ten years.

This huge increase is clearly going to cause trouble for many homeowners, particularly first-time buyers who may be struggling to keep up with mortgage payments anyway.

Halifax points out that the average annual bill currently sits at £1,078, almost double the £564 that most people paid in 1997-98.

The largest percentage rise has been seen in Monmouthshire, where council tax has increased by 184 per cent in the last decade.

People living in Richmond-upon-Thames pay the most council tax in Britain, with a bill of £1,665.

Halifax points out that the 91 per cent average increase is well above percentage rises in other areas, with average earnings goring by 51 per cent and the Retail Price Index growing by 31 per cent in the same time period.

“Council tax bills have increased significantly faster than either average earnings or retail prices over the past ten years,” said Martin Ellis, chief economist at Halifax.

“Bills diverge across the country. Growth rates over the last decade differ by a wide margin between billing authorities too.”

People considering getting a mortgage are advised to ensure that they have calculated their finances properly before signing up to ensure that they will have enough cash to pay for things such as council tax and household bills on top of their mortgage payments.

Tags: trouble, billing, Subprime crisis background information, bill, Business Finance, Local Government

Medical insurance popular with Brits

More and more of us are choosing to take out private medical insurance (PMI).

The latest figures from the Association of British Insurers (ABI) show that 2006 saw a 1.8 per cent increase in PMI subscriptions compared to the year before.

In 2005, 1,012,000 people signed up to PMI, while in 2006 this number jumped to 1,030,000.

The ABI points out that this means 5.9 million adults and children in the UK are now covered by PMI and says that the benefits are clear to see.

“Private medical insurance offers people greater choice of treatment and other services for a wide range of medical conditions and injuries,” said Nick Starling, director of general health and insurance at the ABI.

“It also takes pressure off the NHS, so by buying PMI, people are effectively reducing the burden on Britain’s hard-pressed health service.

“It is encouraging that more individuals are choosing to buy PMI for themselves and their families. PMI bought by companies on behalf of their employees has continued to increase in popularity too, helping to ensure that people can get back to work sooner after illness or injury,” he added.

Tags: Insurance, increase, range, director, PMI subscriptions

Mortgage bills set to soar for former fixed rate customers

Recent reports indicate that a million mortgage payers in the UK could soon see their mortgage repayments shoot up by over thirty percent in some cases, as their fixed rate deal comes to its end.

It is thought that consumers that took out a fixed rate deal several years ago for two or three years are going to have a shock, as their mortgage repayments soar to hundreds of pounds more per month as a result of the four interest rate rises enforced by the Bank of England over the past year.

Many consumers took out low rate fixed rate mortgages a few years ago, but these are now set to come to the end of their term, which means that those mortgage holders now have to face the financial pinch of all four interest rate rises in one fell swoop.

Although consumers could switch to another fixed rate deal once their previous one expires, it will be at a much higher rate than their previous one, which means that they will still have to pay out a small fortune each month in additional repayments.

Some industry professionals feel that the million or so people that are set to see their repayments soar over the next year may find it a real struggle to cope because of the amount by which their repayments will rise. It is likely that these customer took out a fixed rate at around 4.5 percent a couple of years ago, and the most favourable rates on fixed rate mortgages now are around 5.5 percent. And with interest rates set to rise again in the coming months this could rise yet again.

One banking analyst stated: ‘For some customers we see a 25-30% increase in interest payments.’

He also stated that those people that had to struggle with repayments in order to get onto the property ladder may now find that repayments are totally unmanageable because of the number of interest rate rises that have been applied since they took out their initial loan.

Tom Smith
19th June 2007

Tags: rate, introductory, fixed, end, incentive

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: Mortgages, home, bank, rise, house, deals, rates, increase

Homeowners warned about fixed-rate deadline

Mortgage holders are being encouraged to plan ahead if they are due to reach the end of their fixed-rate deals in the coming months.

The Council of Mortgage Lenders (CML) says that around 1.3 million people took out a fixed-rate deal in 2005, while a further 1.5 million did the same in 2006.

Most would have had just a one or two-year period of paying a fixed rate and the CML is warning that borrowers must be prepared to start paying increased levels of interest.

According to the CML, the average borrower will face a rate increase of between 0.75 per cent and 1.5 per cent.

This could potentially have a devastating effect on many homeowners and, although the Bank of England has chosen to freeze interest rates at 5.5 per cent in June, rates are likely to increase further in the coming months.

“While today’s [June 7th's] decision not to raise rates is welcome, there is no cause for complacency. More than two million borrowers over the next year and a half will reach the end of fixed-rate deals, and will face the prospect of higher mortgage payments,” commented Michael Coogan, director general at the CML.

“For most people, the scale of the increase will be manageable. But it makes sense for borrowers whose fixed-rates will end soon to start planning ahead now and to recognise that their monthly costs will be higher in the future.

“Anyone who thinks they may face financial difficulties should talk to their lender at an early stage to see what steps can be taken to improve their situation,” he added.

Tags: half, financial difficulties, increase, end, rate deals

Three billion barrier smashed by Icesave

In a recent announcement Icesave, which only launched in October 2006, has revealed that since its launch it has taken over three billion pounds in deposits and has opened over eighty thousand savings accounts.

Part of Iceland’s Landsbanki, Icesave officials feel that the combination of easy, convenient online savings management along with highly competitive interest rates has helped to secure this level of success in such a short period of time.

Icesave has been offering interest rates in nearly six percent to savers, with a minimum account balance of £250 and a maximum of £1000,000. There is no penalty of loss of interest for withdrawals on the accounts, and all that is required of savers is for the account to have a t least £250 in it at all times. Those wishing to open an account with Icesave must be over the age of eighteen.

On the other hand the Dutch bank ING has seen around £3M worth of deposits withdrawn from its operations after failing to pass in interest rate rises to savers. Although ING is planning to pass on the latest interest rate rise in June, the interest rate has been stagnating at under five percent for some time, which has outraged savers, many of whom have decided to try and open accounts elsewhere in order to get a better rate of interest.

One official from the online savings operation Icesave stated: ‘In achieving this new milestone of £3bn in total deposits, Icesave has shown Landsbanki’s ability to diversify its balance sheet and develop its proposition in the UK market place.’ 

Icesave has guaranteed customers that the AER on savings accounts will exceed the Bank of England base rate by at least 0.25% until 2009.

Tom Smith
7th June 2007

Tags: savings, invest, increase, deposits, earn

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: rate, savings, customers, bank, england, accounts, rise, increase

Protect your expensive wedding gifts

A new report has highlighted the importance of home insurance for newly weds, citing the cost of ever extravagant wedding gifts as the main reason for needing to get home insurance cover pretty much right away following the wedding.

According to reports wedding gifts are getting more and more extravagant, and with gifts as expensive and luxurious as plasma screen TVs and the like being purchased as wedding gifts in some cases, home insurance cover is more important than ever for newly weds with thousands of pounds worth of presents.

Research was carried out by NFU Mutual, which showed that under ten percent of newlywed couples actually check their insurance policies immediately after the wedding, which means that millions of pounds worth of extravagant wedding gifts could be at risk, as it could be left in the new homes of newlyweds as they jet off to enjoy their honeymoon still caught up in the excitement of the wedding.

Research also showed that many newlyweds couldn’t remember whether they had checked their policies or not following the wedding. Officials reports that millions of pounds are spent on wedding gifts each year in the UK, and those gifts could be at risk from damage or theft – particularly if they are being left in the house whilst the couple go on honeymoon – which could mean huge financial losses for the newlyweds just as they embark upon their married life together.

One official from NFU Mutual stated: “There is a great deal of excitement in the run up to a wedding and naturally, the practicalities of checking your home insurance can sometimes be forgotten.”

Tom Smith
31st May 2007

Tags: value, steal, burglary, gifts, house, honeymoon, break, home, wedding

Savers could benefit from another interest rate rise

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

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

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

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

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

Tom Smith
28th May 2007

More Information:

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

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

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: inflation, prices, surveyors, england, cost, bank, increase, mortgage, rise, interest

HSBC to improve insurance products

One of the UK’s leading banks, HSBC, has announced that it is extending its relationship with insurance underwriter Norwich Union in a bid to improve the insurance products and services that it provides.

Over ten million customers with HSBC can now opt for a range of general insurance products through HSBC that will be underwritten by Norwich Union. The bank and the insurance company have already been working together for over twenty years on certain insurance products, and their relationship will be strengthened as the bank increases the insurance products that will now be provided through Norwich Union.

HSBC hopes that this latest move will place it amongst the top ten providers of general insurance in the UK. Previously, HSBC offered a number of insurance products through Norwich Union, and this included travel, vehicle, and home insurance.

The bank also hopes that profits from its insurance products can be doubled through this improved joint venture, with the bank’s managing director of insurance stating: ‘Creating preferred strategic partnerships with leading general insurers is a key element of that plan. In the UK, an estimated £1 in every £5 of financial services expenditure is spent on insurance. That is why we have chosen Norwich Union, the leading UK insurer with whom we already have a strong working relationship, to help HSBC satisfy its customers’ insurance needs.’

The Chief Executive of HSBC stated: ‘It would be fair to say that HSBC has historically punched below its weight in insurance but we have shown before that our customers want to stay with us if we offer well serviced, good value products.’

Tom Smith
23rd May 2007

Tags: home, increase, car, hsbc, norwich union, travel, contents, products, Insurance

Insurance policyholders could be paying out million to compensate for fraud

According to industry professionals holders of UK insurance policies could collectively be paying out millions upon million of pounds simply to compensate for fraud levels losses.

Experts claim that policyholders could be shelling out four million pounds everyday simply to make up for the financial losses that are caused by fraudulent claims that are made to insurance companies.

The data comes from the Association of British Insurers, and the ABI states that over one and a half billion pounds is paid out by honest policyholder each year to make up for the cost of fraudulent claims made by millions of others. Around five million people have admitted to making a fraudulent insurance claim in the past. This adds an average of forty pounds a year to the cost of cover according to the Association of British Insurers.

The insurance fraud relates to different types of claims. Some people cheat their insurance company by making a valid claim but inflating the amount that they are claiming for. Others actually take out insurance cover for the sole purpose of making a fraudulent claim so that they can cash in their cover – this is known as ‘planned’ insurance fraud.

Around £8M had to be paid out in extra premiums by honest policyholders last year to make up for claims where the amount had been inflated by the claimant. Around fifty percent of fraudulent claims relate to home and contents insurance cover.

One spokesperson from the ABI stated: “These figures highlight that greater deterrents, such as criminal prosecutions, are needed to discourage fraud. This is why we are calling for police forces to be given more resources so that fraud can be treated with the seriousness it deserves.”

Tom Smith
23rd May 2007

More Information:

• What is Insurance?

Tags: abi, damage, fraudulent, fraud, inflate, cover, Insurance, claims, contents

Scottish house prices grow

Those of you considering taking out a mortgage on a property in Scotland may want to act quickly after prices in the country recently spiked.

Figures from Lloyds TSB Scotland show that house prices in Aberdeen, Edinburgh and Dundee increased in the last quarter.

The reasons behind this are varied, with Lloyds putting it down to a rise in mortgage transactions, a low number of homes on the market and a rush to take advantage of fixed-rate deals as interest rates rise.

The average property price in Scotland rose by 6.8 per cent in the three months to April 30th, putting the average price at £154,344.

“Average prices [in Scotland] are some three quarters of the UK level and continue to be propelled by a combination of favourable economic background and demand for houses exceeding the supply,” commented professor Donald MacRae, chief economist at Lloyds TSB Scotland.

“Recent rises in interest rates will have a slowing effect on these house price increases. This latest surge is expected to moderate and may be followed by a decrease in the next quarter.

“This latest increase in Scottish prices may well be the last surge before the much forecasted slowdown,” he added.

The biggest house price increases were seen in Aberdeen where the year-on-year rise was 25 per cent.

Tags: professor donald macrae, aberdeen, edinburgh, uk, lloyds tsb, £154, increase, Economic history

Kent quake leads to increased insurance claims

Following the earthquake that struck Kent on Saturday April 28th, Lloyds TSB Insurance has reported a significant rise in the number of claims being received.

The quake registered 4.3 on the Richter scale and caused damage to a number of homes and properties in the region.

Lloyds says that it has been contacted by many of its 2,000 customers in the area, with many reporting collapsed chimneys, damaged walls, driveways and pathways.

However, the firm says that it is also actively contacting its customers in the affected region to see if they need to make a claim on their home insurance.

“As always in situations like this, time is of the essence,” explained Phil Loney, managing director at Lloyds TSB Insurance. “We have made sure that all our staff are fully prepared to handle the increase in claims following the earthquake.

“However, we’d urge anyone who has been affected to follow our advice and give us a call as soon as possible.”

Those who need to make a claim are also being encouraged to check their policies to see what exactly is covered.

Emergency repairs should be carried out as soon as possible and receipts should be kept so that a claim can be made later, however, it is vital that the insurer is contacted first as they may wish to inspect the damage first.

Tags: Lloyd's of London, April, emergency repairs, Saturday, pathways, increase, damage, home

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: increase, earn, england, bank, savings, Banking, rate

Buy-to-let landlords expanding their portfolios

As further evidence of investor confidence in the buy-to-let market, the average number of properties held by buy-to-let landlords has risen to over 11, according to new research.

In November last year, the average landlord owned 10.2 properties, but in February this had risen to an average of 11.1, a study conducted by mortgage lender Paragon has found.

Additionally, the average portfolio has increase in value by seven per cent over the past three months.

“Our buy-to-let index has shown that in recent months rents have been rising faster than house prices,” said Paragon’s managing director John Heron.

“Because of high tenant demand, landlords are able to achieve strong rental incomes and good yields – and are responding by extending their portfolios.”

Such confidence in the sector was mirrored in landlords’ expectations of an eight per cent rise in the size of their portfolios over the next year.

These results suggest that recent interest hikes have not deterred buy-to-let investors from entering the market so far, although they may be tested by next month’s expected quarter-point increase from the Monetary Policy Committee of the Bank of England.

Tags: Index, Renting, buy-to-let investors, buy-to-let market, increase, Managing director, bank

Isa limits grow but not enough

People who are looking to invest money in a cash Independent Savings Account (Isa) have been given a welcome boost in Gordon Brown’s 11th Budget.

The Chancellor of the Exchequer announced that investors can now save an additional £600 in an Isa and will be free from paying tax on that money.

When cash Isas were first introduced in 1999 the maximum tax-free savings amount was £3,000. This figure has never changed until now.

Despite the increase being well received by many, Mr Brown has been criticised for only raising the total Isa limit by £200 to £7,200.

Critics argue that while the £3,600 limit is in line with inflation, the £7,200 limit falls well short.

“While the increase in the cash Isa allowance is a welcome move, we believe more should be done to encourage long-term savings,” commented Mike Regnier, head of savings at Halifax.

“If the total ISA allowance had risen in line with inflation, savers would now be able to invest around £8,500 per year, free of tax.”

The increase on total Isa limits has been labelled “meagre” by the Association of British Insurers, which called for the government to continue increasing limits in the years to come.

Gordon Brown’s new Isa limits will come into effect from April 2008.

Tags: total isa allowance, total isa, money, increase, long-term savings, stock, inflation, tax

Youngsters buying to let

The buy-to-let (BTL) market in the UK is beginning to be dominated by people aged between 26 and 35 years.

It has traditionally been a market for older people but new figures from Mortgage Trust show that the youngsters are catching up.

Around 26 per cent of new investors who own one property are aged between 26 and 35, while the same age group also makes up 16 per cent of BTL investors with up to three properties.

This rise in numbers appears to be a fairly recent phenomenon, with the number of 26 to 35-year olds with up to three BTL properties rising from 14 per cent in the last six months alone.

“Traditionally buy-to-let has been perceived as something for the more mature investor,” commented John Heron, managing director of Mortgage Trust.

“However, recently we have been witnessing an increase in the number of younger professionals choosing to make a considered and long term investment in property.

“We are seeing a new generation of young people who are preparing for the future by making long term financial plans. New landlords are looking at an investment that will see them safe for the long term – possibly even into retirement,” he added.

As many younger people struggle to put money into a pension scheme, investing in property and then renting it out is a great way to ensure financial security for the future.

Tags: new figures, future, market, Business Finance, investment

Mortgage application fees on the rise

The fees charged for a mortgage application have almost doubled in the last three years, according to website Find.co.uk.

Figures, obtained by Defaqto, show that the average application fee for a fixed-rate mortgage now sits at £611, a massive increase on the £334 that was charged in February 2004.

The disparity between the highest and the lowest fees is also more pronounced in 2007 than it was in 2004.

Three years ago the cheapest was £149 from Darlington Building Society, while the most expensive was £2,5000 charged by Bank of Scotland Mortgages Direct.

In 2007 the smallest fee is £49, charged by Halifax, while the largest is £2,499 which is charged by Bank of Scotland.

Kate Marsden, marketing director at Find.co.uk, commented that those who are taking out a loan to buy a home need to do their homework first if they want to get the best deal.

“Borrowers need to do their sums to calculate the total cost of a mortgage, including all fees, so they can compare like with like when assessing different deals,” she said.

“After all, that upfront mortgage application fee could be your redecorating fund.”

If you are looking to get a mortgage make sure you shop around for the deal that is best suited to you.

Tags: Find.co.uk., Kate Marsden, deal, upfront, increase, United States, Business Finance, massive increase

Online banking fraud rises

More of us are falling victim to online banking fraud, with new figures showing a huge increase within the last 12 months.

Apacs, the UK payments association, says there was a 44 per cent rise in cases of online fraud between 2005 and 2006.

The organisation does reveal that credit card fraud has fallen by 47 per cent in the same period but is concerned that fraud over the net has grown from £23.2 million in 2005 to £33.5 million in 2006.

“Chip and pin has had a hugely positive effect on fraud losses over the counter in UK shops and stores, but we are seeing more fraud on transactions that do not use chip and pin, such as over the internet and phone, by mail order and abroad in countries that have not yet fully upgraded to chip and pin,” commented Sandra Quinn, director of communications at Apacs.

Card and banking fraudsters have developed to keep up with the new security initiatives that are being introduced.

Although chip and pin has had a huge impact on protecting card holders, fraudsters now use technology that copies information from the card’s magnetic strip and create a new card which can be used in countries that do not have chip and pin.

People are being warned to be extremely careful with their cards by ensuring that they do not use an ATM which they think may have been tampered with. The message is: “If in doubt, keep it out”.

Tags: Lebanese loop, online, falling victim, new figures, Technology Internet, chip, increase, fraud

Terraced houses see biggest growth

Terraced houses in the UK have seen the biggest price increases over the last five to ten years.

That is according to Halifax Estate Agents which used its own price data in its research.

Over the last ten years terraced house prices have increased by an unprecedented 239 per cent, with flats and maisonettes a close second with a 235 per cent growth.

However, the five-year picture looks slightly different, with flats and maisonettes seeing just an 87 per cent increase, compared to 95 per cent for semi-detached and 113 per cent for terraced houses.

“Terraced properties have seen the largest average house price increases in both the last five and ten years,” said Tim Crawford, group economist at Halifax Estate Agents.

“Although the average price of a terraced house is still below the UK all property average, the gap has narrowed.”

Detached properties remain the most expensive in the UK, with an average price of £326,396.

This figure is in stark contrast to the average detached property price in 1996 which stood at just £110,240.

That sort of money would not even buy you an average terraced house today, with the majority of people paying around £186,316.

Tags: property, average house price increases, halifax, increase, Terraced, house, Halifax Estate Agents

2006 credit card borrowing down

Credit card borrowing fell in December 2006, according to updated figures released by the British Bankers’ Association (BBA).

Following the release of figures from the Major British Banking Groups earlier this month, BBA has gathered more information,

This new data shows that credit card borrowing fell by £0.3 billion in December, with the overall annual figure rising by just two per cent.

“The annual growth in consumer credit, at only two per cent, is low by historical comparison and, although strong Christmas sales have been reported, our December figures suggest that spending was not fuelled by more borrowing on credit cards,” said David Dooks from BBA.

Mortgage lending in December fell in comparison to November, but even this figure was a seven per cent increase on the same month in 2005.

In total, mortgage lending reached £18.1 billion, with 123,518 mortgages being approved.

The average amount lent for the purpose of buying a home soared in comparison to December 2005, with the average amount being £146,400, nine per cent more than the year before.

“The final quarter of last year, despite seasonally lower activity in December, showed the mortgage market to be stronger than at the same time a year earlier and lending still growing significantly at a time of rising interest rates,” added Mr Dooks.

Tags: increase, activity, consumer credit, Association, interest, quarter, information, british bankers association

Motor insurance set to rocket in the UK

Motorists in the UK are set to face huge increases in motor insurance over the next year according to recent reports relating to some of the larger motor insurance companies in the UK. It has been reported that the biggest motor insurer in the UK could be whacking up the cost of premiums in 2007, increasing the gap even further between the prices from some major insurers and some of the cheaper motor insurance companies.

Unfortunately, the large rise in premiums could mean that those companies currently seen as budget insurance companies, which are able to offer huge discounts, could also be forced to push up premiums, making it even more costly to own and drive a car in the UK. Norwich Union has already raised premiums by up to forty percent over the past few months, and other major players are set to follow.

The largest motor vehicle insurer, the Royal Bank of Scotland, is now set to follow suit and push up its insurance premium rates, and smaller companies could follow. One spokesperson from the Admiral Group stated: ‘We believe Royal Bank of Scotland Insurance is the decisive factor in taking the market up in price. If it were to sustain a series of increases over the next 12 to 18 months, that would take rates up substantially.’

According to statistics forthcoming rises could push up an average insurance premium of around seven hundred and fifty pounds to around nine hundred pounds. Officials from the Royal Bank of Scotland Insurance stated that the rises were largely due to the heft cost of claims that had been made over recent years. An AA spokesperson also spoke about the rises, stating: ‘You will find people will shop around even more now. The market is going to be even more polarised between the highest and lowest prices.’

Tags: Insurance, accidents, norwich union, car, rbs, motor, increase

8000% Rise In Internet Banking Fraud

Many banks have started to offer online banking facilities in the UK, and some banks even operate exclusively online.  Although consumers seem to be growing increasingly confidence with regards to conducting their banking online, the alarming figures indicate that perhaps further information needs to be made available to consumers with regards to Internet banking fraud and how it works.

It seems that the main culprit in the rise of Internet banking fraud is a process known as phishing, and this is where fraudster set up fake website or send out fake emails in a bid to obtain the account details of consumers. Many consumers that are used to banking online don’t think twice about providing their details, but banks have already stated that they do not send out emails to account holders asking them to enter their account details.

Colin Whittaker, Head of Security for APACS, stated: “The rate of growth in phishing is down to a number of factors not least that they have been able to industrialize the process by which they are launching attacks. It seems people are falling victim to phishing attacks less often, which is one of the reasons there has been an increase in the volume of phishing emails.”

According to officials and watchdogs in the UK, millions of pounds have been swindled from unsuspecting consumers, who assume that any emails that they receive with the name of their bank on it must in fact be from the bank. However, consumers that receive such emails should never provide their account details, and should instead report the incident to their bank. 

Tags: online, fraud, increase, internet, abuse, rate, phishing, Banking, identity, theft

Extended Mortgage Terms Means Huge Amounts of Interest For Consumers

The rising property prices in the UK over the years have resulted in many people losing out on the chance to get their foot on the property ladder.

And because of this, over recent years, many banks and building societies have started to offer longer mortgage repayment terms over and above the traditional twenty-five year mortgage, as well as offering higher salary multiples, in a bid to attract consumers that are desperate to get onto the property ladder. Over recent years many lenders have been offering thirty and thirty-five year mortgage repayment terms.

However, experts are now concerned because some lenders have started offering even longer repayment terms, with up to fifty-seven years now being offered as a mortgage repayment term option with some mortgage providers. These mortgages have been labelled as ‘madness’ by experts, who state that although the monthly repayments will be lower for consumers because of the extended term, rising interest rates and the amount of time for which the borrower will be in debt could prove a real problem.

One director of a mortgage broker stated: “Life-long mortgages are a false economy. You end up paying literally tens of thousands of pounds in extra interest. It really is not a sensible thing to do. The idea of paying off a mortgage for 40, 50 or even 57 years is madness.”

With average house prices in the UK rising to well over two hundred thousand pounds, and with interest rates rising to five percent, a number of lenders have made changes to the mortgages that they offer in terms of the length of the mortgages available and the amount that can be borrowed. This is to attract more custom from those that would otherwise be unable to purchase a property.

Tags: price, extend, owe, Loans, Mortgages, costs, length, terms, charges

Fierce Competition Likely to Push Car Insurance Premiums Down

Despite the recent announcement by Norwich Union that it is to increase premiums on its UK motor insurance policies by up to 16 per cent. in the coming year, recent research undertaken by Defaqto indicates that fierce competition among UK car insurance providers is likely going to result in car insurance premiums falling in the coming months.

According to the findings in Defaqto’s recently released report, “Motor Insurance in the UK – Adapting to Survive”, many of the UK’ leading car insurance providers are either electing to keep their car insurance premiums frozen this year or are looking to reduce premium burdens on their customers.  With UK car insurance premiums constituting £7.4 billion in sector revenues for 2006, many of the UK’s leading car insurance policy providers now acknowledge that intense market competition is stopping them from following Norwich Union’s lead and increasing premiums.

To a large extent, most of the competitive pressure on car insurance premiums in the UK is coming from savvy motorist who have now learnt that looking online for discounted car insurance is the easiest and quickest way of finding cheap UK car insurance.  Brian Brown, Defaqto’s head of general insurance research commented that “With the Internet, it is now easy for customers to shop around and so many insurers are still giving introductory discounts, cash-back or guarantees to beat other quotes, that there is little, if any, need for customers to stick with their existing insurer when faced with premium increases”.

The question of whether or not UK motorist can look forward to reduced car insurance premiums is still, however, subject to whether or not large UK motor insurance providers, such as the Royal Bank of Scotland, decide on price freezes.  If RBS were to decide that now is not the right time to push through a price hike, then joint competition from RBS and alternative discount UK car insurance available on the Internet will almost certainly result in premium freezes or reductions in the coming year.

Nonetheless, UK motorist still need to be careful they read their UK motor insurance policy carefully as over 60 per cent. of motor insurance providers in the UK now recoup lost revenue from premium reductions in the form of policy adjustment charges.  Here, Defaqto’s report found that the fee to cancel a UK car insurance policy can cost the policyholder as much as £75.  However, Defaqto are also quick to point out that following the Office of Fair Trading move to reduce late payment fees on UK credit cards, it is likely that these high additional fees will not be round for long – with or without the OFT’s intervention. 

Tags: uk, competition, less, cheap, quote, motor, policy, increase, Insurance, cost

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