Renting more expensive than mortgage repayments

In years gone by many people have rented homes rather than buying because the monthly cost of renting has been considerably lower than the cost of paying off a mortgage each month. However, recent figures have shown that this has gone into reverse, and after a very turbulent few years in the property market it has actually become cheaper each month to pay a mortgage than to pay rent.

According to the figures it costs around £709 per month to rent the average three bedroom property whereas the same property would cost £608 per month in mortgage repayments. This makes it around £100 cheaper on average to make mortgage repayments than to pay rent on a home. On the other hand just a couple of years ago it would have cost £1060 for the same property to pay a mortgage each month and just £761 to pay rent each month.

There have been many changes in the property and mortgage markets that have led to this change. This includes the base rate remaining at a record low of just 0.5 percent for over two years, which has kept mortgage repayments lower. The lack of availability of mortgages for first time buyers, driven by restrictions from lenders and demands for higher deposits, has led to soaring demand for rented homes, and this in turn has resulted in rental costs rising.

One industry expert said: “Such a marked decline in mortgage costs has improved affordability for those able to enter the market as well as helping to ease the pressure on existing home owners’ disposable income. Although the current trade-off between buying and renting is expected to narrow when interest rates start to rise again, the long-term benefits associated with investing in bricks and mortar are likely to ensure that buying will continue to be viewed favourably by many.”

Tags: month, existing home, disposable income, lack, record, GBP, reverse, availability

Government and many other credit cards fail to do proper income checks

In the current financial climate most industry experts would agree that credit card providers need to ensure that they carry out proper income checks on applicants to ensure that they can afford the repayments on their credit card debt, particularly given the high level of defaults. Read more

Tags: political parties, income checks, rate, fact, way, Credit Cards, Labour

Bailed out banks acting up

Earlier this month a number of MPs expressed their concern over how many of the leading UK banks that have been bailed out with the use of taxpayers’ money are acting terribly in the current recession. Read more

Tags: finance, Liberal Democrat, Treasury Select Committee, lack, Politics, banks, quid, List of banks in the United Kingdom

Credit crunch leaves High Streets more deserted

It has been claimed that the ongoing global financial crisis and the recession have resulted in the High Streets of Britain being left more and more deserted, as a rising number of shoppers decide to cut back on their spending. A recent report showed that an increasing number of people deserted in the High Street in March, as the effects of the difficult financial climate continued to take their toll. Read more

Tags: lack, access, credit crunch, recent report, experian's senior uk

Rising Energy Costs Could Be Disastrous For Households

With the rising costs of gas and oil, millions of households in the UK could find themselves in critical financial difficulty in the coming months. This is the warning of an MP committee in light of the fact that the energy costs faced by many manufacturing companies in the UK are substantially higher than in the rest of Europe. Read more

Tags: europe, storage, Household, ofgem, foresight, gas producing companies, lack, manufacturing

‘Blase attitude’ to home insurance to blame for lack of cover

Consumers’ blase attitude to home insurance could be the motivation behind many consumers failing to take out cover, claim financial experts.

Norwich Union estimated that, out of the 25 per cent of home owners who are supposedly without contents insurance, more of them are to be found in larger cities and built up areas as opposed to rural communities.

Alison Palmer, household underwriting consultant for Norwich Union, said that many people take the view that “‘well, it’ll never happen to me. I’ll be alright, I haven’t got anything worth insuring anyway’”.

“As you’ve probably seen from the events that happened last summer it can happen easily. People lose everything and it’s a horrible thing,” she added.

The number of consumers without contents insurance has not changed in the past few years, concluded Ms Palmer.

New research from Legal & General, shows that Britons keep their most valuable personal possessions and documents in their kitchens.

According to reports, the UK insurance industry paid out £9 million to householders for property damage or loss of possessions in 2006.

Tags: property damage, home insurance, number, claim financial experts, Household, norwich union, home, lack

Pensioners increasingly in debt

Despite the credit crunch, borrowing levels have continued to rise and debt levels are increasing with the over-55s being the worst offenders, according to financial experts.

Research from Callcredit reveals that the elderly are the most uncertain about their future with 16 per cent of respondents over-55 financially unaware and unable to define their debt levels.

As a result the pensions gap is continuing to increase, claim the organisation.

Mark Ward, consumer debt expert at Callcredit, said: “It is essential that people start to borrow more carefully in order to avoid having to owe more than we are able to pay back.”

Over 1.5 million of those aged 55 and over claim they can’t afford to retire at state retirement age due to a lack of pension savings.

Another 1.1 million retired homeowners in the UK have outstanding mortgage on their home, with an average debt of £38,000.

Callcredit is a consumer credit reference agency and forms part of the Skipton Information group.

Tags: Banking, reference, information, finance, lack, United Kingdom, Labor

Supply concerns follow Hips launch

Following the implementation of Home Information Packs (Hips) for three-bedroom properties this Monday, the National Association of Estate Agents (NAEA) has expressed fears that the market for three-bedroom properties could now decline.

The UK’s leading professional body estate agency said that 63 per cent of its 10,000 members had seen a similar downturn in sales of four-bedroom properties after Hips were first introduced at the beginning of August.

The fall in sales, which was as large as 37 per cent in some regions, was attributed to homeowners staying away from the property market in order to avoid having to pay for a Hip.

“Our concerns have always been that the introduction of Hips would lead to a lack of supply following implementation,” said chief executive of the NAEA, Peter Bolton King.

“The most important thing for consumers and the market right now is that the government maintains the right for first day marketing of a property.”

NAEA members have also revealed that the average price being paid for Hips is currently around £350, and that most packs are excluding the voluntary home condition report, which is considered by many as the only useful part of the pack after the energy performance certificate.

With the implementation of Hips for three-bedroom homes, 60 per cent of the total housing stock is now covered by the government’s new rules.

Tags: Business Finance, total housing stock, downturn, lack, right, National Association of Estate Agents, GBP, Law in the United Kingdom

CAB recommends teen finance lessons

Financial lessons for Britain’s teenagers have received strong support from the Citizen’s Advice Bureau (CAB).

With debt levels now outweighing national GDP, the bureau said that teaching young people how to budget more effectively was “fundamental”.

The CAB issued the statements in reaction to the government’s announcement last month that a new subject covering financial issues is to be introduced into the secondary school curriculum.

A spokesperson said: “We very much welcome the move to improve people’s skills in personal finance, because what we know that a lot of debt problems are caused, at least in part, by a lack of understanding and a lack of confidence in dealing with money matters.

“There are a whole variety of ways of engaging young people of that age with the issues,” they added. “There are many different methods, ranging from drama to a whole load of other things. So I think that there is no shortage of good ways of making this a subject that young people want to know more about.”

Also supporting the new lessons is recent research from the Institute for Public Policy Research, which suggested that a couple with two children could be as much as £32,000 wealthier due to sound decisions made stemming from an improved financial education.

Tags: Institute, variety, Financial lessons, Britain's teenagers, lack, couple

Increasing numbers of players in small business loans market

Increasing numbers of lenders are getting involved in the increasingly competitive small business loans market, leaving consumers apparently spoilt for choice.

Lloyds TSB said today, however, that customers must be sure that they will be able to pay back money lent, and to have a thorough risk assessment before going ahead with the loan.

Senior manager of lending at the bank, Stuart Wilson, also said that the current climate – with the Bank of England raising interest rates last week – meant that people looking for loans should take extra care, and that those having difficulty with meeting their repayments should seek out their lender for advice.

Referring to small businesses, he added: “In terms of availability I think there are more and more players in the market who would cater for all types of lending options. So I don’t think there’s necessarily customers who are not able to start up because of a lack of funding, it’s just looking around the marketplace and seeing who is looking to lend to them.”

Increasing competition in the market has led lenders to advertise more and more attractive introductory offers to induce new startups to take out a loan with them. NatWest is launching a new small business bank account this month where all bank charges are free for the first two years.

Tags: tsb, Commercial mortgage, bank of england, lack, lloyds, month

Where have all the fivers gone?

You may have noticed in recent months that the humble £5 is in short supply.

It may not seem like a particularly pressing issue but the lack of fivers in circulation at the moment is causing a headache for many people.

When it comes to banking, a £5 note can be particularly useful and shoppers in particular like them so that they are not carrying around too much change.

However, the Bank of England claims that it has a large surplus of the notes in storage but is having difficulty dishing them out to banks which prefer not to store them in their ATMs.

Bank of England governor Mervyn King revealed in a speech to City bosses that banks find it more economical to have £10 and £20 notes in their cash machines and this has led to the lifetime of an average £5 note doubling.

He described how many fivers are “noticeably soiled and scruffy” and revealed that he would be seeking urgent talks with banks over the issue.

“There is a need for an adequate supply of low denomination notes that can be used for small transactions where cash is the predominant means of payment,” he said.

“Such mutual convenience is a public good and may not correspond to the private interest of commercial banks.”

Mr King hinted that incentives may need to be put in place so that banks store more £5 notes in their cash machines.

Tags: New York, fivers, low denomination notes, private interest, Payment systems, Financial services, lack, urgent talks