Interest rate could rise again quickly

The chief economist at the Bank of England has warned that whilst the base interest rate in the UK has plummeted to its lowest level in history over recent months, following a series of six interest rate cuts in as many months, there is a good chance that it could rocket back up again in the future if policymakers decide that the rate needs to go up in order to keep inflation in check. Read more

Tags: interest rates, bank of england, Central bank, Index, Mortgages, access, order

Unusual investments are not helpful during tough economic times

Consumers need to make a difference between liquid portfolios and investments such as wine and antiques during tough economic times, claims a financial planning expert.

Bloomsbury Financial Planning has countered claims that unusual investments are a good way of putting diversification into an investor’s portfolio.

Jason Butler, partner at Bloomsbury Financial Planning, said: “I’ve got a fine wine cellar I’ve been building up over the last couple of years, [but] I’m not buying it as an investment, I’m buying it because I want to drink it! If it happens to go up [in value], that’s great.”

He warned that consumers should beware of confusing enjoying assets which may or may not go up in value with investments which are liquid traded.

In December 2007 Decanter magazine reported that during that year, fine wine increased more than any other investment except oil.

According to the Liv-Ex index, the measure of fine wine values, wine increased by 39 per cent across 2007.

Tags: december 2007 decanter, investor, wine, Bloomsbury, magazine

Floods put insurance premiums ‘on the increase’

Claims made due to extreme weather conditions this summer have pushed home insurance premiums up.

According to the AA’s British Insurance Premium Index, flood claims are blamed for a three per cent year-on-year rise in home buildings insurance which represents the biggest increase since 1994.

The flooding in July this year is estimated to have cost the insurance industry £3 billion, according the Association of British Insurers.

John Close, insurer relations director at AA Insurance, said: “Some predictions that premiums would rise by 15 per cent were overly pessimistic and, although I believe premiums will continue to rise as insurers dip into their reserves, I expect competitive pressure will keep increases affordable.”

He added that one advantage of the flooding was that people with no contents insurance are realising that it is a necessity leading to “many insurers reporting increasing business”.

Furthermore, he advised, there are variation in prices and “deals to be done” when organising cover. He emphasised the importance of comparing cover charges before deciding on an insurer.

Tags: Financial services, Index, floods, extreme weather conditions, contents insurance, Service industries, Types of insurance

Garden goodies ‘attract thieves’

People in the UK should ensure that the contents of their gardens are adequately insured as opportunistic thieves may be tempted to help themselves.

That is according to John Potter, the director of Saga, who has advised Britons to check that their policies cover items like garden furniture.

“Even the more modest garden furniture sets can cost hundreds and whilst many policies, like Saga’s, do provide cover as standard it is important for people to check to ensure their cover truly reflects the value of their set,” he said.

Research from the Target Group Index showed recently that more than a million people in the UK spend £150 each year just on plants.

“Add to that the cost of a barbecue, patio heater, garden ornaments, garden furniture sets and even bird tables and bird baths and the cost of a garden can soon run into thousands,” Mr Potter added.

A recent report from Halifax warned that during the summer months, many homeowners risk invalidating their home insurance by leaving windows open.

Tags: summer, risk, Insurance, group, bird tables, furniture sets, plants

Villagers “too rich for ATM”

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

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

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

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

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

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

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

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

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

Inheritance tax spreading as house prices rise

Inheritance tax, traditionally thought of as the exclusive preserve of the super-rich, is affecting more and more Britons as house prices rise.

This is the claim made today by Calculis Ltd, an independent financial advisor.

Currently, UK tax laws have 40 per cent in every pound of assets left by a deceased person over £300,000 being made payable to HM Revenue and Customs.

Director of Calculis Alex Pegley said: “The tax is hitting people it’s not supposed to be hitting; it’s hitting people with bog-standard houses in the south.”

According to the latest Halifax House Price Index, average property prices are 11.2 per cent up on the equivalent month in 2006.

Furthermore, a recent report from the National House Price Federation claimed that house prices would rise by a further 40 per cent in the next five years.

Tags: finance, uk, assets, Calculis Ltd, independent financial advisor, month, Index

Card companies spark debt fears with repayment reductions

Minimum repayment levels of some leading credit cards are set to be reduced.

Cards providers have heavily advertised the reductions recently.

However, many in the industry are criticising the new offers, saying that the card providers might be exacerbating the UK’s debt problem.

To take an example from today’s Minimum Repayment Index from price comparison website uSwitch, M&S is reducing its repayment level from three per cent to 2.5 per cent, which might well appeal most to the ’spend today and worry tomorrow’ consumers who are currently racking up debts.

Barclaycard has also recently announced that its rate will be cut from 2.5 per cent to 2.25 per cent.

Lowest of all are lenders such as Bank of Scotland and Egg, who offer a tiny two per cent repayment rate.

Research released by Alliance & Leicester last week showed that the overall level of debt in the UK stands at an enormous £1.3 trillion, with those on lower incomes being particularly badly hit.

Tags: uswitch, debt, lower incomes, today, debts, Index, Financial services

Housing market slowing down

House prices in the UK are increasing in price at the slowest rate they have all year.

The Halifax House Price Index shows that properties increased in value by 0.3 per cent in May, signalling the third consecutive month of the market slowing down.

The average house price sits at a lofty £196,893 and buyer interest fell for the fifth consecutive month.

The housing market is expected to continue to slow down in the coming months, with increasing interest rates and reduced real earnings each playing a part.

Commenting on the 0.3 per cent price increase, Martin Ellis, chief economist at Halifax, cited rising interest rates as the main factor.

“This is the smallest increase so far this year and the third successive easing in the monthly growth rate,” he said.

“The recent slowing in monthly house price inflation, together with further evidence of moderation in housing market activity, suggests that the interest rate rises since last summer are having an impact on the market.”

A slowing down of the housing market is good news for first-time buyers as ever-increasing house prices are making it very difficult for young buyers to get onto the property ladder.

Tags: rising interest rates, halifax, Index, United Kingdom, successive easing, value

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