Chancellor Darling Would Like Longer Fixed Rates

New Chancellor of the Exchequer, Alistair Darling, has indicated that he would like to see longer terms for fixed rate mortgages in the UK.

Darling would like to see more fixed rates lasting up to 25 years and on Monday 9 July he pledged a shake-up of the housing market following concerns that have been expressed regarding lenders only offering short term fixed rates in order to maximise their profits.

If homeowners have to renew their fixed rate deals more often, they will be liable for thousands of pounds worth of charges in arrangement fees, which have rocketed in the last couple of years. As interest rates have risen five times in the last twelve months, consumers are looking to fix their interest rates so they know what their payments will be for a reasonable period of time, but the number of deals beyond two years are few and far between.

The Chancellor said that longer-term fixed rates were available around Europe and would be useful in the UK to reduce volatility. He was unhappy with the incentives built in to products that meant mortgage brokers were more likely to advise homeowners to choose short-term products – and the associated high arrangement fees – some now nearly £2,000.

Mr Darling said that the Financial Services Authority have noted the problem of brokers wanting homeowners to return to them every two or three years rather than every ten or twenty.

The Chancellor also talked about the possibility of building on greenbelt land in the future as the lack of affordable housing in the South East in the last five years was now becoming a problem for the whole country. Last year’s Government target of 223,000 new houses was not met with only 160,000 being built. Mr Darling agreed that planning is a sensitive issue, but whilst determined to protect Britain’s heritage he said that if we don’t increase the supply of houses the problem will get worse and worse and worse. There was no way he would accept that housebuilding should stop.
   
Ex-Chancellor Gordon Brown, now Prime Minister, oversaw house prices that trebled between 1997 and 2007, and promised to end the boom and bust cycle in house prices, but as it is evident that we are coming to the end of a boom cycle in house prices, both Brown and Darling will be hoping that we don’t enter a bust period of falling or crashing house prices. However, with interest rates having risen from 4.5% last August to 5.75% last week the increased payments to be found by most homeowners will bring about a slowdown in the market.

Malcolm Harris, CEO of Bovis Homes, yesterday warned that any further rate rises could bring the housing market to a grinding halt. Average mortgage payments are now at a record level when compared with how much people earn.

Mr Darling acknowledged that housing is a huge issue and concerns more than the buyers, with parents and grandparents keen for their children to be able to afford housing, but a monthly repayment on a £125,000 mortgage s now £130 higher than it was last year.

Tom Smith
16th July 2007

Tags: interest, afford, longer, term, bust, boom

Actions To Ease The Mortgage Pain

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

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

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

Abbey customers find mortgages been extended

There was a shock in store for many customers with the Abbey bank last week, as an oversight resulted in many customers’ mortgages being extended by years without them even being informed about it.

The blunder meant that thousands of homeowners have seen their mortgage repayment term extended, in some cases by up to fifteen years. This resulted from the bank failing to make changes to customers’ repayments, and meant that the term of the loan was increased by a considerable amount of time.

Rising interest rates in the 1980s and 1990s resulted in the customers’ paying more in interest on their mortgage, which meant that out of each repayment a higher amount was being applied to the interest. However, because the bank failed to increase customers’ repayments less of the capital was being repaid. As a result of years of underpayments, many have now found that they will be lumbered with a mortgage for up to fifteen more years.

Abbey should have contacted mortgage customers to explain that the rise in interest rates meant that their repayments would have to increase to enable them to pay off the loan within the arranged mortgage term.

However, the bank did not do this, and as a result customers continued with the same repayments, oblivious to the fact that they were not paying enough to cover the capital and interest repayments without extending their mortgage term.

Following a flood of complaints from those affected, an official from the Financial Ombudsman Service stated: ‘This is an issue specific to Abbey because it was not explained to the customers and they were surprised to discover they would have to pay over longer terms. Those affected could still be entitled to compensation.’

Tom Smith
15th July 2007

Tags: interest, rates, abbey, mortgage, customers

Savings rate war sparked by interest rate rise

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

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

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

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

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

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

Tags: interest, Mathematical finance, supermarket banks sainsbury, finance, government

Lenders announce mortgage rate increases

British mortgage holders will feel the squeeze, as Nationwide, Northern Rock and Halifax all announced a rise in their base rates yesterday.

The rise comes as a direct response to the Bank of England’s decision last week to raise interest rates to 5.75 per cent – their highest level for six years.

The new rates for variable mortgage holders are now 7.75, 7.84 and 7.24 per cent respectively, with all three passing on the full 0.25 per cent increase to their customers.

These increases work out as £33 extra a month for a £200,000 loan. Mortgage holders coming off a two or three year short-term fixed rate deal in the next few months will feel the difference worst of all, with rates having stood at just 4-4.5 per cent when their fixed rate period commenced.

Mortgage holders could find the situation worsening still, with many economists predicting further rate rises by the end of the year.

The Consumer Price Index – the government’s inflation yardstick – stands at 2.5 per cent, according to most recent figures. The Bank of England, which uses interest rate rises to cool inflation, has a target of just two per cent.

Tags: Consumer Price, interest, rates yesterday.The rise, month, loan, Economy of the United Kingdom, rate, price

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: afford, borrow, loan, pay, england, lender

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

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: england, rate, bank, accounts, interest, earn

Do your kids have the right savings account?

Banks and building societies have come under fire on many occasions over the past year due to the failure of many to pass on the full level of interest rate rises onto savers whilst applying the full amount and sometimes more besides on borrowing.

And it seems that it is not only the adults savers of the UK that are getting a raw deal with some banks – many are paying even less in the way of interest on savings accounts for younger savers, often paying way below the Bank of England interest rates.

According to recent reports some savings accounts for younger savers pay under 4 percent in interest, which is over 1.5 percent less than the current base rate. Amongst those paying considerably less than the base rate on children’s savings accounts are C&G, Royal Bank of Scotland, Birmingham Midshires, the Woolwich, and Barclays. Even where balances on the accounts are close to one thousand pounds, many of these banks and building societies pay poor interest rates compared to the current base rate in the UK.

On the other hand there is a great deal on children’s savings account with the Nationwide. The interest rate on the Smart Account with Nationwide has been hiked up to 5.78 percent before tax, and in addition to this the Nationwide has pledged to pay at least 0.25 percent more than the base rate until 2010. This savings account is available to those up to the age of eighteen, and with this impressive interest rate and guarantee younger savers can look forward to seeing healthy returns on their savings.

A number of other banks and building societies are offering some impressive deals on savings, and consumers with kids that are getting a raw deal on their savings should look around and compare different accounts to see whether there is something more suitable available

Tom Smith
29th June 200

Tags: account, kids, Banking, interest, accrue, children, earn

Customers should enjoy ‘positive payments’ order

Nationwide is calling for credit card customers to enjoy a positive order of payments.

Research carried out by the group indicates that over two-thirds of consumers do not know which order their payments are allocated to their account.

Almost a fifth believe that the longest outstanding debt is paid off first, while over one in ten believe that that the highest interest items are paid off first.

Nationwide claims that less than a third of Britons know how their repayments are allocated; that is, with the lowest interest items being paid off first.

Although the group has welcomed government action which mean that from October next year all credit card providers will have to draw attention to the order of payments they use, it worries that the practice is not well understood by consumers.

Nationwide is calling upon the industry to make changes now and to treat their credit card customers fairly by adopting a positive approach to their order of payments.

Tags: Financial services, Electronic commerce, britons, attention, positive order

Online banking is booming

Ten years ago the Nationwide Building Society started the huge phenomenon that has become online banking.

And as we reach a decade of banking via the Internet it seems that this method of dealing with finances and applying for banking services has become more popular than ever. There have been some concerns over the ease of banking fraud via the Internet, but with increasingly stringent safety measures in place and customers becoming savvier than ever when it comes to security, online banking continues to thrive.

One of the UK’s leading banks, HSBC, as reported an increase of fifty five percent in terms of its online business. According to recent figures around eighteen million people in the UK now use the Internet to deal with their finances and manage their bank accounts, and HSBC alone has received nearly two billion visits.

At a recent Annual General Meeting the chief executive of HSBC stated: “More and more of our personal and commercial customers are seeing the benefits of buying online. Our websites handled 1.8 billion visits last year and online sales increased by 55 per cent.”

He also stated that the bank was starting to move more towards interaction with customers through the Internet rather than through the branch.

A number of banks that are trying to encourage customers to deal with them online have offered various incentives and rewards such as increased interest rates on savings and bonuses – this is because it is easier, faster, and more time effective for banks to deal with customers in this way rather than through a branch.

When banking online customers can make bill payments, transfer cash, check balances, apply for services such as credit cards and loans, set up and cancel direct debits and standing order, and more.

Tom Smith
11th June 2007

Tags: interest, rewards, transfers, Banking, payments

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: rise, increase, interest, deals, england, rates, bank, home

Brits losing a fortune by failing to put their cash in savings accounts

In the olden days stashing your money in various cunning locations around the house seemed to be the norm, as many people did not have access to savings accounts as they do today.

However, according to a recent survey there are still an alarming number of Brits that insist on keeping their cash in the house, which not only raises security issues but also means that collectively Brits could be losing out on millions of pounds worth of interest from banks and building societies each and every year.

A recent survey was carried out by Virgin Money, and according to the result of the survey around one in every six adults in Britain are still keeping cash in the home rather than opting to place it in a savings account. The results indicate that if these people were to put the cash that they have kept in the house into an average Internet savings account they could be accruing around £174 million each year in interest collectively. Instead, this money simply sits around earning nothing for them, and increased the risk of financial losses through theft in the event that the cash is stolen by a visitor or the house is burgled.

The survey showed that one percent of Brits that were surveyed admitted to having up to one thousand pounds in the home, whereas two percent of Brits stated that they had up to five thousand stashed in the home. Experts warn that since inflation has been on the rise, and the money is simply lying around failing to accrue any interest, it is in danger of losing its purchasing power, so consumers are doing nothing to help themselves by leaving it in the home.

Industry professional add that there is around three and a half billion pounds in total that is lying around the homes of Brits rather than being placed into savings account, and that this amount could depreciate by two hundred million pounds within the next three years.

Tom Smith
10th June 2007

Tags: interest, lose, spend, value, savings, safe, earn

Interest rates frozen

The Bank of England has decided to freeze interest rates at 5.5 per cent.

The monetary policy committee (MPC) made the decision following a quarter point rise in May and after four rate rises since August 2006.

Industry figures had widely predicted the move as it was thought that the MPC would want to wait and see what effect the last rise had.

Despite the decision being good news for those with loans, mortgages and credit cards, borrowers are being warned that further rate rises are likely in the near future.

“The majority of economists are calling for a rise in July but if we need another increase it would be more logical for the MPC to wait until the next quarterly inflation report in August before making that decision,” said Ray Boulger from mortgage advisor John Charcol.

“With the total previous rise of one per cent looking like it is doing the trick, I believe the MPC will want more time to see if this is indeed the case.”

This sentiment has been supported by a number of figures, with research firm Global Insight also predicting another rate rise in August.

“We believe that the MPC is likely to act by August at the latest to try to stamp out the significant upside risks to longer-term price stability,” said Howard Archer from the firm.

Tags: inflation, report, case, rate, bank of england, interest, longer-term price stability, Insight

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: icesave, interest, invest, earn, deposits, savings, account, increase

Over six billion in premium bond sales

With a number of juicy million pound jackpots up for grabs next month, there has been a massive boost of six billion pounds in premium bond sales.

Savers are ploughing in billions into Premium Bonds in the hope of becoming one of the lucky few that become a millionaire when the draw takes place in June. The million pound jackpots are part of the fiftieth birthday celebration for Premium Bonds. Five people will be drawn as million pound jackpot winners next month as part of the celebration.

Last October saw sales of over two billion pounds worth of premium bonds, which was the highest monthly total on record. Since the start of the celebrations, over six and a half billion has been invested in premium bonds by savers. Half a million new savers have also jumped on board during this period, which gives Premium Bonds a customer base of nearly twenty four million savers.

June’s draw will see a record number of bonds, and there is now over thirty six billion invested in Premium Bonds in all. One draw has already been completed in December, which was also part of the celebrations and also saw five bondholders become millionaires. And with the forthcoming draw record number of bondholders can look forward to the chance to become very wealthy.

A spokesman for Premium Bonds stated: ‘The past eight months have seen a huge surge of interest in Premium Bonds. Despite being launched 50 years ago, they continue to attract new customers. In just the last eight months, over half a million people have begun saving in Premium Bonds for the first time. The anniversary draws, combined with the ease of investing online have appealed to old and new customers alike.’

Tom Smith
7th June 2007

Tags: premium, popular, savings, online, interest

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: increase, rate, accounts, interest, england, savings, market

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: rate, tax, bank, fixed, amount, earn

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: cost, mortgage, bank, prices, rates, surveyors, consecutive, house, rise, increase

Over one fifth of Brits do not save

Over twenty percent of Brits do not put aside any money in the form of savings according to a recent report. Research has shown that twenty one percent of Brits fail to put aside any money in savings.

The savings survey was carried out by Nationwide in a bid to try and determine how best to tempt consumers into opening and running a savings account. The survey also showed other facts and figures relating to Brits and the way that they save – if at all.

According to the survey, over one in five Brits saved nothing at all. However, the results also showed that thirty five percent of Brits do save money on a regular basis. In addition to this the survey revealed that nearly forty five percent of Brits tended to save on an ‘as and when’ basis, putting money aside into savings whenever they had some spare but otherwise using it for day to day cost of living.

Seventy seven percent of those interviewed as part of the survey stated that their most important consideration when it came to a savings account was a good, long term interest rate. Eight four percent also stated that the account needed to allow withdrawals without any form of penalty being imposed. Nearly sixty percent stated that they would only open a savings account with a well known provider.

Shockingly, the survey also showed that some people still use the most primitive methods of trying to save money, such as stashing their cash in various places around the home – including under the mattress. Those interested in savings accounts are advised to shop around and find an account that offers a good interest rate that reflects the rising interest rate in the UK.

Tom Smith
26th May 2007

Tags: money, savings, uk, accounts, spend, income

Consumers should keep an eye on their savings rate

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

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

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

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

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

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

Tom Smith
21st May 2007

Tags: change, moneysupermarket, competitive, rise, current, switch, rate, savings

Mortgage shock on horizon for many

Borrowers with a fixed-rate mortgage managed to avoid the recent interest rate rises but some are set to see their payments increase.

The reason, says mortgage broker London and Country (L&C), is that those who took out a mortgage two or three years ago may be about to see their fixed-rate deals come to an end.

L&C points out that the best two-year fixed-rate mortgage available in May 2005 was available from Newcastle Building Society, with a rate of 4.49 per cent and a fee of £420.

On a £150,000 interest-only loan, a borrower would have been making monthly payments of £561.25 per month. However, once the fixed-rate deal ends, borrowers will be paying 7.34 per cent interest, taking monthly payments up to £917.50.

“The payment shock for many borrowers will be substantial when their deals to come an end and it’s important that they do all they can to minimise it,” said James Cotton, mortgage specialist at L&C.

“The advice is simple: see what new deal your lender is willing to offer and shop around elsewhere.

“Most importantly, plan ahead and don’t leave it until you’re already paying Standard Variable Rate,” he added.

Borrowers are advised to try to get the best deal when taking out a mortgage for the first time but must be prepared to pay higher rates of interest once the deal comes to an end.

Tags: GBP, May, Mortgage shock, Mortgage broker, broker, payment, building

Are You Paying For Your Cash Back Credit Card?

The offer seems to be too good to be true.  Spend money on your credit card and your provider will give you cash back on the card as part of your credit card loyalty program.  The more you spend, the more cash back you become entitled to. This all sounds well and good, but if you’re not careful you may very well find out that it is you who are paying for the cash back bonus you’re getting, not your UK credit card provider.

In order for your cash back reward program to work in your favor you need to be a disciplined credit card user.  This does not mean that you should not use your credit card, or only use it in certain circumstances.  In fact, you really should be using the card as often and as much as you can if you want to take the full benefit of the loyalty program.  What it does mean, however, is that you need to make sure that you clear your credit card balance at the end of each credit card statement billing date.  If you fail to clear your credit card balance on the statement due date, and you carry-over your credit card balance to the next month, then you start to become the person paying for your cash back rewards, not your credit card provider.

The reason why it is so important that you do not carry over a credit card balance to the next payment statement date is because you need to avoid incurring any interest or fees if you want to benefit from the cash back loyalty program.  As soon as you lose this, any benefit you would have got from your cash back credit card loyalty program will be cancelled out by the interest and fees you need to pay for carrying over a balance on the card.  Indeed, you may well find that the interest and fees you pay each month for carrying over the balance on your credit card will exceed any cash back you would be entitled to.  Unfortunately, this aspect of cash back credit cards is something that UK credit card providers are relying on in order to fund the cash back they’re offering you in the first place.

Consequently, if you are the type of UK credit card user who pays off their credit card statement balance at the end of each billing cycle, then having a cash back credit card loyalty program can prove to be very lucrative for you.  However, if like 60% or so of the other users of UK credit cards you are a borrower on your credit card, then it is very likely that you should look for some form of alternative loyalty program or, more importantly, a credit card that offers you a lower monthly interest rate than your current card provider offers, as, in the long run, this is very likely going to save you more money.

If you are in any doubt as to whether or not a UK cash back credit card is for you, be honest with yourself and ask yourself whether or not you have the discipline to pay off your credit card statement each month.  If the answer to this question is yes, then this card is working for you.  If the answer is no, you are paying for your credit card cash back loyalty program offer – and then some.

Richard Smith
13th May 2007

More Information:

• Cash Back or Rewards – What’s Your Preference?
• Available Types Of Credit Cards
• Credit Card Charges

External Links:

• More cash back credit card offers from CardGuide.co.uk
• Cash Back or Rewards – You Choose
  Not sure which would be the best for your spending levels? This article discusses the advantages and limitations of bothtype of credit card offers

Tags: rewards, cash, rate, fees, charges, interest, spend

Consumers having problems finding online savings accounts

For some time industry experts have been urging consumers in the UK to shop around when it comes to finding a suitable savings account and not to stick with a savings account that they may have held for years just out of loyalty or apathy.

According to experts many savings accounts are not following the interest rate and inflation rises, and therefore consumers that save their hard earned money in these accounts are getting a raw deal when it comes to earning interest.

However, according to recent date many consumers that are taking up this advice and trying to find new savings accounts online are hitting a brick wall, with a number of financial institutes refusing to let new customers open online accounts, and reserving them strictly for existing customers – making it more difficult for those with a poor existing savings account to switch to one that pays better interest or offers more benefits.

More information: The Process and Benefits Of Switching Bank Accounts

The review into online savings accounts was carried out by Global Review, and shows that many consumers are being left out in the cold when it comes to finding better interest rates on their savings. According to Moneyfacts there can be a huge difference in interest rate levels between the best savings accounts on the market and the lowest interest ones, but it seems that despite their efforts many consumers can do nothing about the fact that they are stuck with a low interest rate.

Amongst the banks and financial institutions refusing online savings accounts to anyone other than existing customers are Lloyds TSB, Nationwide, and Barclays. Many other banks, such as Halifax and NatWest, have also been accused of not providing adequate information to those wishing to open savings accounts with them.

Tom Smith
13th May 2007

More Information:

• Internet Bank Accounts – The Benefits and Drawbacks
• Can I Have More Than One Bank Account?
• Opening and Closing Bank Accounts
• Savings Accounts – Are They Worth It?

Tags: online, switch, Banking, rate, interest, higher

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, bank, rate, england, savings, Banking, interest, accounts, earn

Consumer group wants investigation into calculation of credit card interest

The UK consumer group, Which?, has demanded an investigation into how credit card companies calculate the interest to be paid on cards, claiming that many companies are using a wide range of methods to calculate interest, which is not only netting them more money but is also causing mass confusion for credit card users.

According to the watchdog, these credit card companies are using around a dozen different methods in order to calculate interest on credit card repayments, and the confusion that this is causing is resulting in the companies making even more money from their customers.

Which? officials have gone on to say that the way that these credit card companies are calculating the interest to be charged means that comparing APRs on credit cards to find the best deal is ineffective. Which? states that credit card companies that make up for ninety percent of the credit card market are using around a dozen different ways to work out the interest. This includes the top twenty providers of credit cards. According to Which? there are now a number of factors that are used by these companies in order to determine how the interest will be calculated on a particular account.

One official from Which? stated: “People believe that APRs are a dependable way of comparing credit cards, but our research shows that APR cannot to be relied upon for true credit card comparisons.”

However, APACS officials state that using just one way to work out interest would also affect consumers, as the process used may not suit every consumer.

One APACS official stated: “There are a huge variety of cards on the market and some people prefer to have a lower APR but pay earlier, others might like a slightly higher APR but only want to pay interest on the amount left outstanding.”

Tom Smith
28th April 2007

Tags: interest, credit, charges, rates, cards

Lloyds TSB’s annual credit card charge

People with a Lloyds TSB credit card that they do not use regularly face being charged for the pleasure of owning one.

It is the first sign that banks may be seeking to recoup the money they are likely to lose as a result of pressure to cut penalty charges, as predicted by research firm Defaqto this week.

The bank has announced that people who do not use their credit cards will be hit with an annual charge of £35.

However, Lloyds has failed to reveal what they define as low-usage, meaning many people may find themselves in a state of limbo.

People who have a card but do not use it at all have been told in no uncertain terms that they will be charged and are being advised to cancel the card and destroy it.

“It costs the bank money to issue cards to customers who are not using them. This is intended to get them to start to do so,” a spokesperson from the bank told the Guardian.

In a bid to tempt consumers into using their cards more often, Lloyds is offering zero per cent interest on all purchases until May this year.

Earlier this week Defaqto’s head of banking, David Black, said that he would be “very surprised” if free banking was still available in the UK in two years time.

“The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead,” he said.

If you have an unused credit card with Lloyds TSB make sure that you cancel it and, for security reasons, cut it up before throwing it away.

Tags: limbo, Financial services, interest, majority, Credit Cards, research

Bank was split over rate rise

The recent freezing of interest rates caused a split within the Bank of England, with two Monetary Policy Committee (MPC) members voting in favour of a rise.

Minutes of the meeting in February have revealed that the vote was split 7-2 in favour of freezing rates but the divide means that the future for borrowers remains uncertain.

Those with a mortgage, credit card or loan could still see interest rates rise, with many people likely to suffer as a result if they do not have the financial clout to withstand another increase.

MPC members decided to wait and see what effect the previous three rate rises would have before moving ahead with another.

“It would take some time for the full effects of the past tightening to be seen. It was difficult to judge whether, and if so by how much, policy might need to be further tightened to keep inflation on track to meet the target,” the minutes read.

The previous rises came in quick succession, with rates jumping from 4.5 per cent in August to 5.25 per cent in January.

It appears that interest rates are likely to rise again in the coming months as the MPC attempts to bring down inflation which is currently running well above the government’s target of two per cent.

Tags: rates, Consumer Price Index, clout, RPIX, interest, interest rates

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

New buyers will feel pinch

First time buyers will be adversely affected by recent interest rate rises, says the Royal Institution of Chartered Surveyors (Rics).

The organisation believes that people taking their first step onto the property ladder are likely to fall behind with mortgage repayments as a result of the rise.

Conversely, Rics points out that buy-to-let investors are less likely to suffer the same fate, with age being cited as one of the key factors.

Figures show that those with a buy-to-let mortgage are generally older and have more disposable income, making them more secure in the market.

Rics says that 0.96 per cent of all mortgages in the UK are in arrears, with only a tiny percentage of these being buy-to-let properties.

“Buy-to-let investors will be less at risk from repossessions in the coming months,” said David Stubbs from Rics.

“Older, wiser investors are likely to ride out periods of interest rate rises looking to the benefits of long term capital growth rather than short term rental income.

“January’s surprise interest rate rise is likely to soften new buyer enquiries in the coming months but those buyers who have already taken the housing market plunge could find mortgage companies knocking at their doors in the near future as affordability conditions bite.”

Tags: interest rate, future, interest rate rise, Business Finance, interest, periods, ladder

Find the right savings account for your holiday savings

As the festive period disappears and Spring approaches many people in the UK start thinking about saving towards their summer holidays. If you are looking to start putting some money aside to fund your annual holiday in 2007, it could really pay to shop around a little and find a savings account that will make your money work harder for you. There are many different savings accounts available these days, and the interest rates on offer can vary dramatically. Depending on how much you will be saving this could make a big difference to the amount that you earn in interest.

The type of saving account that you opt for will depend on a number of factors, such as the initial deposit that you can make, the amount that you intend to put in each month, and the level of access that you require to your savings. You will find a choice of savings accounts, some of which require a certain period of notice in order to make a withdrawal without penalty and others that offer instance access. Some require a minimum initial deposit of just one pound whereas others require more, and some want to see a regular minimum amount going in each month, whereas others will accept deposits as and when you can afford them.

Amongst one of the highest savings account interest rates on offer is the Alliance & Leicester savings account, which offers twelve percent AER on its regular savings account. Choosing the right savings account for regular savings can make a big difference to the amount you make on your deposits, and consumers can quickly and easily compare the different savings accounts available, along with their interest rates and terms by going online. This is the easiest and most convenient way to see at a glance which of the UK’s savings accounts will best suit your needs and give you the best return on your deposits.

Tags: bank, interest, online, return, savings, earn

Choose credit cards over store cards this Christmas

If you are planning to spread the cost of Christmas and the New Year there are a number of options available to you. For many people, particularly those lured into shops when the January sales come around, the temptation to take out a store card is irresistible, with retail employees throwing what sounds like offers in to encourage the consumers to apply for the store card. However, consumers should think carefully about whether a store card is worth it before making a commitment and spending money on such cards.

A store card can only be used in one shop or a certain chain of stores, and is therefore of no use to you if you want to pay for other items in other shops and stores. Store cards also typically have very high interest rates, so even though you might be offered a small discount on your purchases for using the store card you will more than make up for this in terms of the interest that you will pay for the privilege of using the card. With stores cards you don’t get special offers such as interest free periods, so you will be stuck with paying interest on any balance that you have on the card.

A more sensible solution for those planning to splurge out in the January sales is to get hold of a good credit card in plenty of time – one that offers an interest free period on purchases giving you time to repay the balance without having to pay interest. Even if you end up with a credit card that does not offer an interest free period, or where the interest free period expires before the balance has been repaid, you will still pay a lower interest rate than most store cards charge, and you have the added advantage of being able to use the card in other stores.

There are some advantages to taking out a store card, such as discounts on certain lines and products, but in order to really benefit from this type of deal you need to be the type of consumer that pays off the full balance on the store card each month, thus avoiding the extortionate interest charges that will otherwise be incurred. 

Tags: charge, sales, cost, purchases, credit, rates, store, cards

Even more convenience for A&L customers

Following in the footsteps of HSBC and First Direct, the Alliance & Leicester has revealed plans to introduce a new method of banking that will offer consumers even more in the way of convenience and flexibility – mobile banking. Consumers in the UK that have accounts with major banks and building societies can already enjoy the convenience and ease of Internet banking in addition to using the facilities and amenities available at the local branch. It seems that mobile banking could be the next big step for many banking companies.

Through the use of the mobile banking service on offer from the Alliance and Leicester, consumers will be able to quickly and easily check on recent transactions that have been made, will be able to check their balances, and will even be able to top up their mobile phone credit directly from their bank accounts. In the future, according to officials from the Alliance & Leicester, consumers will also be able to make money transfers and pay bills from the account.

For those that want to take advantage of this mobile banking service, registration will be made easy and simple, and can be done via the Internet or via the mobile phone. One spokesperson from the bank stated: ‘There has not been much technical integration and all we need to do is verify the customer and their bank account details, so it has been straightforward.’

One research analyst says that over time consumers will become used to this updated method of banking, as it means that they will have one more valuable facility to help with the smooth-running of their finances and accounts. However, he added: ‘It is taking consumers a while to use their mobile phones for more than voice calls, and it is difficult for a bank to teach people to use them in another way.’

Tags: online, charge, payments, bank, account, interest, cost, transfers

Nationwide puts an end to ’same mortgage’ deal promise to its existing customers

Despite the fact that the UK’s fourth largest mortgage lender has run a very public and prolonged promotional campaign based around its promise of giving exactly the same deal to its existing mortgage customers as it does to first-time buyers, come 1 December the Nationwide’s existing 1.2 million mortgage customers will no longer be given such treatment.

In what many are seeing as incredible marketing blunder, the Nationwide has announced that with effect from the 1 December it will no longer continue to treat its existing UK mortgage customers the same as it does new ones.  Henceforth, existing mortgage customers who want to re-mortgage, switch to a better deal, or borrow against the equity in their homes will be faced with higher interest rates than customers looking to buy new homes.

Unlike its main rivals, the Nationwide has long prided itself on the fact that it will not discriminate against existing customers, but with the new rates coming into effect from 1 December, Nationwide customers wishing to re-mortgage, switch to better deals, or simply borrow more on their equity will now face the prospect of two-tier interest rates that range from 4.73% for house purchases to 5.88% for re-mortgages.

In its defence, the Nationwide are claiming that the change to their policy is in-line with the UK home lending market’s trend of offering “slightly better rates” for home-movers.  This may be so, but for a UK home mortgage lender that has built such a public image around its promise of offering the same service to both existing customers and new customers, Ray Boulger, senior technical manager at Charcol, the mortgage broker, says, “There’s no way you can legitimately claim you’re offering the same deals for everybody if your existing customers don’t have access to the cheaper purchase rates.”

If it is any consolation, existing Nationwide customers will be entitled to receive a £100 discount off the reservation fee if the decide to switch from one Nationwide home mortgage product to another, or if they elect to increase the amount of their UK mortgage loan.  Nationwide also agreed to waive its re-mortgage administration fee of £99 for existing customers who re-mortgage.

Nonetheless, as Melaine Bien, associate director of Savills Private Finance comments, although the changes allow Nationwide to “become more competitive with its pricing when attracting first-time buyers,” the promise that no-one would receive preferential treatment at the Nationwide “no loner stands”.

Tags: paymenst, interest, nationwide, Mortgages, remortgages, forst, offers, buyers, time, cost

Homeowners cautioned over the true cost of unsecured personal loans for home improvements

The latest figures released by the British Bankers’ Association (BBA) show that 198,242 mortgages, totaling £21.8 billion were approved in the UK in October, a six percent increase on September’s figures and an eight percent increase on the figures year-on-year.  At £144,200, the average UK residential property mortgage also saw a slight increase during the month.

Nonetheless, while, “the secured lending market undoubtedly remains robust,” according to David Dooks, director of statistics at the BBA, “after discount price growth, lending volumes are not dissimilar to the same time last year” – indicating that the recent base rates increases by the Bank of England mat be having some effect on the demand for UK property borrowing.  A factor echoed by Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, who foresees a slowdown in the UK property borrowing during the course of the next year once the full impact of those Bank of England rate increases filters through and the true higher cost of borrowing starts to be felt.

In the meantime,  a recent report by Money Expert is warning that an increasing number of UK homeowners are now opting to take-out unsecured personal loans to finance their home improvement projects over more cost effective ways of this type of borrowing. 

While this may, itself, not be too alarming, Money Expert’s findings also indicate that UK homeowners are not fully aware of how much their unsecured personal loan borrowing is costing them in extra interest payments.  In some cases, interest repayments on a four year £10,000 unsecured personal loan taken-out for home improvement projects can vary by as much as £2,500 – or 25%.

Sean Garden, chief executive of Money Expert, therefore warns, “Personal loans can vary in price dramatically – you could end up paying back as much as a quarter of the amount you borrowed in extra repayments unless you research the market carefully.”

As such, if you are one of the many new homeowners who have recently been approved a UK home mortgage loan and are now looking to undertaken some DIY home improvements on your new home, make sure you look around and research the many different types of UK unsecured personal loans available in the market to make sure that you get an unsecured loan that meets your needs without breaking the bank in extra interest payments.

Tags: interest, Loans, cost, improvements, credit

Bank claims that most consumers won’t be affected by new charges

Following its recent announcement to start charging UK customer a ten pounds monthly fee if they did not meet certain criteria, the First Direct Internet bank, a subsidiary of the HSBC Bank, has been defending its decision. The bank has been receiving calls from many angry customers who want to know why they are going to be charged a fee for using the bank’s services. The bank currently has around 1.3 million consumers, but some experts have warned that First Direct may lose a lot of its custom as a result of the new fee.

The new charge introduced by First Direct is due to come into force in February of 2007, and current account holders that do not pay in or maintain a balance of at least one and a half thousand pounds in their current account each month could find themselves being charged. Exceptions to the new charge are those customers that also have other financial products with First Direct, such as a mortgage, credit card, savings account, or loan.

One spokesperson from First Direct stated that he did not think that the bank would lose custom as a result of the new charges, and stated that most consumers that banked with First Direct would not even be affected by the new charges. He stated: “Around 85 per cent of our customers will still pay nothing after these charges are introduced. The only people affected will be those with just a current account, if they do not keep a balance of £1,500 or more. “

He also added: It’s possible that not a single one of our customers will pay the charges. We’ve got a great number of customers who’ve got accounts with us they don’t particularly use. We’re just asking those customers to bring more banking to First Direct to make us their first choice.”

Tags: first, bank, account, savings, direct, fees

Will other banks follow First Direct and charge fees on current accounts?

Following the shock announcement recently made by officials from First Direct Bank, a subsidiary of HSBC, that it intends to start charging customers that do not pay a certain amount into their current accounts each month, many are now wondering whether other banks and building societies will follow suits, bringing to an end the era of free banking for consumers in the UK.

First Direct made the announcement last week, shocking experts and customers by stating that a ten-pound monthly fee would be charged to current accounts that did not have at least fifteen hundred pounds in. It has now been revealed that Nationwide may also be looking into charging bank account holders in the same way at some point in the future, with one executive from Nationwide allegedly stating: “I don’t think we can rule out charging for current accounts totally although we have no immediate plans to introduce such charges at the moment.”

Halifax, on the other hand, have promised that it will not be introducing any such charges on current accounts, and is in fact planning to open three new branches in the UK, as it is thought that many existing First Direct costumers will now be eager to find alternative banking solutions in order to protest against and avoid the new charges being introduced by First Direct.

One official from the Halifax stated: “Halifax is committed to free banking, and we would hope that other banks and building societies share this commitment.” Sadly it looks as though First Direct do not share any such commitment, and the impressive reputation and customer base that this Internet bank has built up over recent years is likely to take a tumble over the forthcoming months, with consumers desperate to get their accounts switched to a non-charging bank or building society.

Tags: Banking, first, account, personal, hsbc, direct, free, charge, interest, uk

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

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

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

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

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

Tags: offers, pay, debt, house, reposses, bank, home, Mortgages, payments

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