Osborne fails to instil confidence in consumers

Earlier this week the Chancellor of the Exchequer, George Osborne, delivered his 2011 Budget speech, which was watched by many people hoping to get a glimmer of hope with regards to their financial situations. Osborne did announce a range of measures that were aimed at trying to boost affordability for different groups such as first time buyers and drivers. However, according to the results of a recent poll many people are still facing uncertainty and are not feeling any more confident about their futures following the budget.

The chancellor announced a number of measures designed to try and help struggling consumers in the current climate, such as a new equity loan scheme for first time buyers to help them get onto the property ladder and a cut in fuel tax instead of an increase in order to help drivers cope with the soaring cost of petrol.

Despite these measures a recent poll carried out by uswitch.com has shown that many people now feel less confident about their financial situations than they did before the budget speech was delivered. The survey resulted showed that around 36 percent of consumers were less confident about their finances now than they had been prior to the budget speech. Another 20 percent of respondents admitted that they were concerned about their jobs.

Around 58 percent of the people that were polled as part of the survey said that they believed that now as not a good time to take on any additional financial commitments or make any major decision relating to finances because of the uncertainty that they faced with regards to their finances and their jobs.

One official from uswitch.com stated: “Stripping down living costs and household bills to the bare minimum will help consumers enjoy more disposable income.”

Tags: part, chancellor of the exchequer, fuel, additional financial commitments, Kenneth Clarke, George Osborne, chancellor, loan

Loan sharks could become bigger problem because of Christmas

There are concerns amongst industry officials that problems relating to unlicensed and unregulated loan sharks could get worse as a result of the festive season and the current financial climate. Many people have struggled to get finance such as loans, credit cards, and overdraft, for the past couple of years due to the financial crisis, and with Christmas around the corner money will be tighter than ever leading to increased desperation for many.

 

The lack of finance availability for many people has resulted in many vulnerable consumers turning to other measures such as doorstep lenders and loan sharks, and this is something that has already been causing concern for officials. Whilst doorstep lenders charge a lot of interest they do not cause as much concern as loan sharks, as these are not even licensed lenders and have been known to swindle borrowers, resort to violence to get their money, and more.

 

Authorities are now continuing to urge consumers to steer clear of loan sharks no matter how desperate they get, as taking money through an illegal loan shark will not only financially crippling but could actually end up ruining the lives of people who get caught up with some loan sharks who will resort to anything to get their money.

 

Officials are also worried that with Christmas coming up more struggling consumers could end up turning to these sharks, and could put themselves in financial and physical danger as a result of this. Many people do not have any savings to spend on Christmas, and reports have shown that there are many consumers that are unable to raise even £200 to cover the cost of Christmas gifts and other purchases, which would increase the chances of them turning to less reputable lenders and illegal lenders.

Tags: authorities, climate, loan, finance availability, GBP, credit

Loan service launched to help consumers avoid loans sharks

A new loans service has been launched in the UK to help consumers get the finance that they need to manage financially without having to turn to loan sharks, according to recent reports. There have been many concerns expressed about consumers that cannot get traditional credit, as many turn to unscrupulous and unregulated loans sharks out of desperation.

The new loans service in the West Midlands has been launched by the National Housing Federation, and it is hoped that it will help consumers that cannot get traditional finance to avoid going through a loan shark. Consumers will be able to borrow up to £500 as part of the service, and this will be subject to a 45 minute interview to ensure that the borrower will be able to repay the loan.

Repayments on the amount borrowed will be paid weekly, and in addition to being able to get a modest loan consumers will also be able to benefit from debt advice. The scheme is being called My Home Finance, and it will offer a range of services including helping consumers to open bank accounts and offering advice on their debt and financial problems.

One concern that some have about the new service is that the interest charged is higher than the maximum level that credit unions are allowed to charge, which is 26.8 percent APR. The new scheme charges interest of 29.9 percent APR during the pilot, and this will then increase to 49.9 percent APR.

An official from the National Housing Federation said: “By offering fair loans at fair prices, we hope to offer an alternative to both loan sharks, who cynically prey on hard up families, and doorstep lenders, who are all too willing to lend cash to the desperate at hugely inflated rates of interest.”

Tags: traditional credit, debt, new scheme charges, personal finance, loan, finance, National Housing Federation, Title loan

Consumers fleeced over bill payment methods

Many people these days are keen to try and reduce their outgoings, and in the current financial climate with so many people struggling financially making cutbacks has become vital for some people. One of the ways in which many people try and cut back is through reducing their bills by doing thing such as switching providers, which can help to make significant savings.

However, one way in which many consumers are wasting millions of pounds a year between them on their bills is via their payment methods. Many people fail to realise that companies these days often charge a small fortune based on how the consumer pays their bills, and that by making a simple change to their bill payment methods they could make a significant saving.

Companies such as energy suppliers, home phone providers, and broadband providers often make additional charges to those that do not pay by direct debit. Most consumers have a number of choices when it comes to making payments on bills, such as direct debit, standing order, cheque, or in person at banks and post offices.

For those that do not pay by standing orders some companies such as broadband and utility providers apply an addition monthly or quarterly charge, which can really bump up the cost of services for the customer. For example, Virgin Media, which provides phone, television, and broadband services, will charge consumers an extra five pounds a month for failing to pay by direct debit, which equates to £60 a year. In addition to this the company charges extra when customers ask for paper bills to be sent to them.

In order to save more money on their bills consumers should set up direct debits wherever possible, as otherwise they can end up being charged a small fortune on the cost of their bills. There is also another benefit to setting up a direct debit for a bill payment, and this is because it can reduce the chance s of making a missed or late payment, which can also incur charges when the payment is on something such as a credit card or loan. These missed or late payments can also result in the consumer’s credit rating being affected, which can make it more difficult to get finance in the future and makes it more expensive to get credit due to higher interest rates charged.

Tags: Payment systems, Direct debit, payment, debit, way, finance, loan, Standing order

Government advises consumers to be aware of payday loan risks

There have been mixed opinions about payday loans over the past year or so, with these loans being highlighted as a result of the rising number of people that have been turning to them because of difficulties in getting credit elsewhere during the recession and financial crisis.

Many officials have expressed concern over the rate of interest that is charged on payday loans, stating that consumers often fail to realise what they are getting themselves into when they take out payday loans because they cannot get finance in any way. However, there are also many people and officials that state that payday loans provide a useful service to those that are in need of finance but can’t get it from other sources because it stops them having to go to loan sharks.

On its DirectGov website the government is now advising consumers to ensure that they learn about the dangers of taking out payday loans before making any commitment, and to ensure that they do not jump in without doing their research as they could otherwise get caught up in a debt trap.

The site states that there are rising numbers of people that cannot get finance from traditional banks and lenders, which means that a rising number of people are likely to go to payday lenders in order to get finance. This could have a further impact on the number of people that find themselves with spiralling debt, which will add to the already worrying personal debt problem that exists in the UK.

The site advises consumers to fully understand the charges and costs involved with payday loans, ensure that they do not borrow more than they need or for any longer than they need to, and to ensure that the lender is a member of the British Cheque and Credit Association (BCCA).

Tags: consumer debt, credit, debt, loan, Payday loan

Personal loan rates need to be capped

Calls have been made for the government to put a cap on the interest rates charged on personal loans. This follows research that showed that most consumers in Britain want to see a cap on the rates of interest that lenders can charge for personal loans. The research was carried out recently by Compass on behalf of YouGov.

According to the results of the study around 68 percent of consumers believe that the government has a responsibility to protect consumers who take out personal loans by ensuring that a cap is put on personal loan interest rates. In addition to this the research found that a similar number of people, around 69 percent, wanted to see government officials promoting affordable means of credit such as credit unions.

Earlier this year a report was produced by consumer watchdog group Consumer Focus, and this showed that the popularity of ‘legal loan sharking’ was increasing. The watchdog’s report showed how the number of people that were taking out payday loans had quadrupled in the past four years, with around 1.2 Brits now taking out such loans.

The Association of British Credit Unions also issued a recent warning to consumers, warning them to be vigilant for loans that seemed attractive but in actual fact charged up to 2500 percent in interest per year. Compass said that the calls for caps on personal loans would be a test to see whether the new government would be supporting consumers or lenders.

One Compass official said: “This is a key test of the coalition government’s stated commitment to create a fairer society. Now we need to see if it backs the people or the financiers.”

Tags: cap, credit, finance, interest, Britain

Payday loans soar due to credit crunch

Payday loans have been at the centre of controversy for some time, and this is largely due to the high rate of interest charged by these lenders on an annual basis. However, some have argues that these lenders receive unnecessary bad press, because the interest charged is not that much providing the loan is paid back in time, and some officials argue that these loans can be very useful for those that desperately need short term financial help.

It has now been reported that the level of payday loans being taken out has soared partly as a result of the global credit crunch, which has left many people short of cash and in financial dire straits. In the space of four years the number of people taking out these payday loans is said to have quadrupled, as more and more people find themselves desperate for cash for a short term period.

The APRs that some of these payday lenders charge has caused a lot of concern over recent years, but for those that only borrow for a short period and repay the loan on time rather than rolling it over the cost of borrowing is not as bad as it sounds. Some charity officials have said that it is preferable for consumers to go to payday loan companies for short term loans to tide them over rather than unscrupulous loan sharks.

Whilst there have been calls for these loans to be banned officials from Consumer Focus said: ‘These products are controversial, but we don’t agree with calls for them to be banned. Outlawing payday loans could leave some borrowers vulnerable to illegal loan sharks. Instead we need sensible safeguards now to stop borrowers becoming dependent on this high cost credit and prevent even more stringent controls being needed in the future.’

Tags: debt, help, credit, borrowing, rate, concern, loan, Payday loan

What to look for with a personal loan

Whilst credit conditions have undoubtedly been strained over the past couple of years many believe that things are now easing up in the financial markets, and whilst lenders have not gone back to the days of easy credit the availability of loans and finance does appear to be easing up to some degree.

With this in mind many people may now start to think about taking out a personal loan for a variety of purchases, and with things easing up in the financial markets the choice of personal loans is greater than before, and there are some pretty good deals available for those that have a decent credit history and score.

There are many lenders that offer personal loans, and which cater for the needs of a wide range of people and needs. It is important for those that are looking for a personal loan to do some research and familiarise themselves with the different loans and deals available so that they can make a more informed choice when it comes to deciding which of these loans to opt for.

It is easiest to use the internet to browse and compare the different personal loans available, as this will allow you to quickly see which loans fit in with your needs and your budget without having to deal with any pushy sales people or feel embarrassed about going through your finances with someone on the phone or in person.

There are a number of key areas that you need to look at when browsing personal loans with a view to taking one of these loans out. The interest rate that you will be charged is a very important consideration, so this is something that you need to compare. However, do bear in mind that if a lender advertises a typical APR this does not mean that you will necessarily get that rate of interest but that most of the lenders customers get that rate.

The repayment periods on personal loans can vary from one provider and loan to another, so this is something else that you need to look at when you are deciding which loan you should go for. If you want to keep your repayments down then you need longer repayments periods, so make sure that you know what’s on offer.

Other things that you need to look at include the overall monthly repayments to ensure that you can afford the repayments, the eligibility requirements, the terms and conditions of the loan, and the borrowing limits, although this will vary based on your financial status.

Tags: loan, personal finance, overall monthly repayments, Unsecured loan, consideration, credit, interest, status

Mortgage default levels falling

Over the past few years problems with finances, higher mortgage rates, and the global financial crisis has plunged many people into severe financial difficulties, and as a result of this many homeowners have been unable to keep on top of their mortgage repayments.

The high level of mortgage defaults over recent years has resulted in many people having their homes repossessed, which naturally caused a great deal of concern amongst consumers and officials. The recession also took its toll on the ability of homeowners to make repayments on their mortgages, with many people losing their jobs as a result of the recession.

However, with the recession now over and the financial markets easing up the level of mortgage repayment defaults has been falling recently. The Bank of England has issued figures showing the fall in the level of mortgage repayment defaults in the UK, which will come as good news for banks and industry groups.

The fall in mortgage defaults has been occurring for a while now, and industry experts have said that in the latter part of 2010 it will remain largely flat. Some have even predicted that in the short to medium term mortgage repayment defaults could actually start to increase again as a result in an economic slowdown caused by changes made in the recent emergency budget by the new Chancellor of the Exchequer, George Osborne.

Further job losses are also expected to occur as a result of the budget changes, and this could affect the ability of more people to make their mortgage repayments. Officials advise those that feel that they are in danger of falling behind with mortgage repayment to contact their lender or a debt advice group as early as possible so that the problem can be sorted out before banks have to resort to repossession action.

Tags: chancellor of the exchequer, homeowners, default, Mortgage loan, mortgage rates, mortgage

Problems with loan sharks being tackled by specialist team

A specialist team is dealing with problems relating to illegal loan sharks, with officials from the team expressing concerns about the number of people that are falling for illegal loan shark finance due to desperation in the current financial climate. One official from the illegal money lending unit covering North Staffordshire said more people were turning to these lenders as a result of the effects of the recession.

The global credit crisis has resulted in credit drying up for many people, making it difficult for them to get the finance that they need, and for many desperate times has led to desperate measures, forcing them to turn to less reputable lenders when it comes to borrowing money.

The problems relating to loan sharks are now being tackled by the Central England Trading Standards Illegal Money Lending Team, which was launched back in 2004. The team is funded by the government and is responsible for gathering evidence on loan sharks.  

As part of their investigation into the practices and activities of loan sharks the team has set up a twenty four hour hotline that allows consumers to ’shop a shark’ and give the team more ammunition when investigating these loan sharks.

As a result of the hotline the investigators recently managed to catch out one loan shark and get him sentenced. The team hopes to be able to catch out many other loan sharks through the hotline.

An official from Staffordshire County Council, where the sentenced loan shark was from, stated: “We hope this sends out a strong message to anyone thinking they can make money illegally. These people prey on vulnerable residents without any remorse which is thoroughly shameful.”

Tags: finance, loan, credit, Loan shark, Shark

Fall in lending to businesses seen in May

According to recent reports the level of lending to UK businesses fell in May, despite efforts from industry groups and the government to try and boost lending by banks to businesses. Whilst the level of mortgage lending in May improved compared to the previous month the level of business lending took another hit.

The figures have been released by the British Banker’s Association. The level of lending to private, non-financial companies is said to have plunged by £1.3 billion in the month of May, which was slightly higher than the fall seen in April but slightly lower than the average decline seen over the past six months.

These businesses are said to form the backbone of Britain’s economy, and many have highlighted the importance of enabling these businesses to borrow the money that they need. However, banks are still being very cautious when it comes to lending, as many are still reeling from the financial meltdown.

In addition to this the falling demand for finance from these businesses is also affecting lending levels, and many businesses are loathe to take out costly loans and finance in the current climate. With fewer businesses wanting to take the financial risk of borrowing more money demand levels have fallen and subsequently so have lending levels.

Officials have also said that there has been an increase in retail sales, with the higher property sales levels now impacting upon the retail sector. Household goods and furniture retailers were said to have seen improvement, as did grocery retailers who may have benefitted from people stocking up for the World Cup.  Electrical retailers also benefitted as a result of people buying new television sets in preparation for the World Cup.

Tags: finance, credit, bank, business, loan

Increase seen in debt consolidation loan enquiries

According to a recent report the number of enquiries relating to debt consolidation in the UK has been rising, as consumers struggle to cope with their debt and look for solutions to try and ease the financial strain. Over the last couple of years debt problems have become a major issue for many people, with the global financial crisis and the recession taking their toll.

There are a number of options that are available to those that have unmanageable levels of debt these days, and one of these is to consolidate their debts. A debt consolidation loan is designed to allow borrowers to wrap all of their different unsecured loans, credit cards, store cards, etc into one more convenient, lower interest loan.

By consolidating their debts borrowers can enjoy reducing the overall amount of interest that they pay, will only have to deal with one creditor and one repayment each month, and can greatly reduce the amount that they are paying out each month by taking out the consolidation loan over a longer period so that repayments are smaller.

The report claims that over the past couple of years many people have accrued high levels of debt through having to borrow money to manage their day to day costs and even through having to use their credit cards for essentials, bill payments, and in some cases mortgage repayments.

Many of the enquiries that are being received by lenders who offer consolidation loans are from homeowners who want to use some of the equity in their homes to borrow money and repay their smaller debts. Consumers that are looking to consolidate their debts are being advised to compare a range of loans from different lenders to boost their chances of getting the best deal.

Tags: finance, lenders, loan, debt, debt consolidation, crisis, longer period, store cards

Lloyds cracks down on interest only mortgages

Over the years interest only mortgages have become popular amongst certain property purchasers, such as first time buyers that want to keep repayments down and those on lower incomes. With interest only mortgages the borrower repays only the interest on the loan over the specified term, which means that at the end of the term the actual loan itself still needs to be repaid.

The idea is that when these mortgages are taken out the borrower also sets up another investment so that over the years they can raise the money to pay the loan off in full at the end of the term. However, officials believe that many people that took these mortgages out had no plans in place to save for repayments of the loan at the end of the term, and many were simply relying on the value of their property increasing sufficiently to sort out the loan.

Lenders have become far more cautious about taking risks over the past couple of years, since the onset of the global credit crisis, and according to recent reports have now started to crack down on risky interest only mortgages. Many lenders have been reluctant to deal with interest only mortgages for some time, but more and more are now set to become wary of these deals according to reports.

One banking giant, Lloyds TSB, is said to have already started its crackdown on interest only mortgages, and has placed a cap on the amount that customers can borrow without repaying the capital. It is now thought that other lenders will quickly follow suit in terms of clamping down on these mortgages.

An official from Savills Private Finance commented on these interest only mortgages, stating: ‘Lenders see them as being extremely risky, and they would much prefer everybody to have a repayment deal. There will be fewer and fewer of them, and they could eventually disappear.’

Tags: tsb, Mortgage loan, finance, mortgage, Interest-only loan

Should Brits take out loans for weddings?

As most married couples will already know getting married can be an expensive affair if you want all the trimmings, and those that are looking to have the perfect wedding, entertain guests, provide food and entertainment, and round things off with a romantic honeymoon will know that the cost can run into thousands of pounds.

In the current financial climate it can be difficult for couples to save the kind of money that they need for a wedding within a reasonable space of time, particularly if they also want to put a deposit down on a property. It would therefore be natural to think that many couples look into taking out a loan for their special day.

Many couples do turn to personal or wedding loans in order to pay for the big day, and those that do are advised to look for the best rate of interest and the best deal possible, although some people may be put off from starting their married life in debt.

Whilst those getting married may consider a loan for their big day, recent research has shown that attendees are far less likely to take out a loan in order to pay for expenses at the weddings of their loved ones. In fact, Santander carried out research showing that only 1 percent of Brits would actually take out a personal loan to fund the cost of going to the wedding of a loved one.

Emma Roberts from Santander said: “It’s easy to overlook the cost involved in being a wedding guest but the outlay can be significant, both before and during the big day. The last thing people want to be thinking about when preparing for a loved one’s wedding is the expense involved but costs can quickly mount up.”

Tags: Brits, property, interest, loan, Marriage, debt, wedding, whilst

Have things improved for first time buyers?

Over recent years things have gone from bad to worse for many non-homeowners that may have been hoping to get onto the property ladder. After years of soaring property prices many would be first time buyers will have been pleased to learn that prices starting plummeting following the onset of the global credit crunch in the latter part of 2007.

However, just as things looked as though they were on the up first time buyers were hit with a plethora of new problems, with the global financial meltdown resulting in severe restrictions on mortgages. This also led to banks increasing the level of deposit that they wanted from first time buyers, making it impossible for many people within this group to scrape together the minimum deposit that lenders were demanding to get an affordable mortgage.

The global credit crunch and he recession left many first time buyers hoping that their luck had changed and that things would ease off. For many this marked the chance of being able to get a property at last. However, this is not what has happened according to recent reports. Despite the recession being over and reports that banks were being more relaxed over lending first time buyers are still in for a bad time.

A number of reports have claimed that the banks are being increasingly cautious about mortgage lending and are still only offering their best deals to those that have a fairly sizeable deposit. This means that first time buyers need to be able to stump up a fair amount of cash towards a property if they want to get a mortgage that is affordable.

A number of things are thought to be affecting the decision of banks to continue their caution when it comes to mortgage lending. One has been the uncertainty over the running of the country resulting from the hung parliament following the general election recently. Whilst this is some way to being sorted, with leader of the Conservative party, David Cameron, now named as Prime Minister the country still finds itself in a situation that it has not seen for decades in the form of a coalition government formed with the Liberal Democrats.

Another of the factors thought to be affecting mortgage lending is continued uncertainty over jobs, with banks loathe to take the risk of lending in a climate where the risk of job losses is high.

Tags: last, finance, loan, whilst, Mortgage loan, mortgage, time buyers, first time buyer

Getting a good deal on a personal loan

Over the past couple of years the availability of personal loans has become somewhat restricted, and the global financial crisis and recession have made it difficult for many people to get a good deal on personal finance. However, the market is now starting to ease, and this means that whilst personal loans are by no means being dished out like smarties, as they were in the days before the credit crisis, it is a little easier to come by a good deal on a personal loan than it may have been a year or so ago.

These days people use personal loans for all sorts of purposes, and if you get the right loan this can be a great way to fund a range of things that you may want. Whilst the use of personal loans for debt consolidation has fallen over recent years many people use these loans for things such as improving their homes, buying a new vehicle, paying for a wedding, or even funding a dream holiday.

Your ability to get a low cost personal loan will depend on a number of factors, including your credit history and rating. Those with good or excellent credit should be able to find a low rate personal loan without any problem, whilst those with a tarnished credit history may find it difficult to get a personal loan or may have to pay a higher rate of interest because of the increased risk they pose to the lender.

In order to get the best deal on a personal loan you need to make sure that you compare the deals on offer, as this will boost your chances of finding a loan that comes with affordable repayments. You can compare loans quickly and easily online, and using a comparison site could help to save you time as you can check out a range of personal loans and providers at a glance.

When you are comparing personal loans there are a number of things that you need to look at to check the suitability of the loans. You should check out the interest rate on the loans, as this will determine how much you repay on the loan. Also, compare the repayment periods available, as this will give you an idea of how much you need to repay each month. Always ready the terms and conditions of the loans to check on any penalties or extra charges.

Tags: loan, credit, personal finance, finance, Unsecured loan

Number of empty homes reached five year peak last year

Recently released figures have shown that the number of homes that were left empty reached their highest level in five years in 2008. The number of homes that had been left empty for at least six months in England is said to have increased by 9 percent in the year to April 2008, with the number of private homes that had been left empty for at least this length of time rising to 303,285. This was the highest figure since April of 2003. Read more

Tags: average earnings, loan, homes, big gap, empty properties

Should you Remortgage at a Lower Rate of Interest?

Lenders are offering sweet deals to homeowners who wish to remortgage their homes. HSBC is currently offering two-year fixed rate remortgage loans at the low rate of 2.69% and Nationwide has announced lower interest rates for those who can make a small deposit on the remortgage loan. Read more

Tags: loan, remortgage, fixed rate mortgage, homeowners, interest rates, bank, fixed terms, five-year fixed rate

90 percent mortgages fall by 97 percent over two and a half years

Most people are well aware that the mortgage market has been experiencing problems over the past couple of years, since the onset of the global credit crunch, and many mortgage products, particularly for groups such as first time buyers, have been disappearing from the shelves making it difficult for many people to get an affordable mortgage loan. Read more

Tags: loan, 90% mortgages, Mortgages, worrying, 90% LTV mortgages, Loan to value

Many people putting their overdraft debt onto their credit cards

It has been claimed that many people are now turning to credit cards to get rid of their overdraft debt, with many putting their costly overdraft debt onto low interest or interest free credit cards in order to try and save some money on interest. Read more

Tags: free credit cards, overdraft debt, 0 balance transfers, debt charity, Credit Cards, interest charges, credit card debt, loan

Building society admits to mistake over mortgage email

The Skipton Building Society has recently admitted that it made a mistake after sending out an email relating to mortgage lending. The lender described the email as a ‘mistaken communication’. Read more

Tags: American Home Mortgage, loan, Mortgages, housing, bed, Business Finance, society, skipton building society

Mortgage rationing could get worse states CML

The Council of Mortgage Lenders has recently warned that mortgage rationing in the UK could continue to get worse, adding that mortgage lending has already been restricted for the past year due to the effects of the global credit crunch but that the restrictions on lending levels could get even worse over the coming year. A senior official from the CML, Michael Coogan, said that things could get increasingly difficult for many people as a result of the ongoing restrictions on mortgages. Read more

Tags: mortgage rationing, mortgage, whilst, loan, lending levels, Banking

Lenders issued with deadline to prove fairness

The UK’s financial regulator, the Financial Service Authority, has been contacting lenders that deal with home loans, and has advised them that they have a deadline by which they must prove that they are exercising fairness when it comes to their customers. Lenders will have to prove that customers that have arrears or are facing repossession are being treated fairly, and they have until the end of January to prove that this is happening. Read more

Tags: mortgage, loan, loan afirness, fsa, fairness, Arrears, repayment, deadline

Many new buyers getting help from parents

A recent study has shown that many first time buyers are getting help from their parents in the current financial climate, especially when it comes to getting a mortgage. Conditions in the mortgage and financial sector have become increasingly difficult, and for many first time buyers getting a mortgage has become very difficult or even impossible. This has resulted in an increasing number of first time buyers turning to their parents for help in order to boost their chances of getting a mortgage in the current market. Read more

Tags: stark contrast, loan, current market, parental help, first time buyers, record, property

Buying better than renting in some areas but not all

Over recent months first time buyers have experienced huge difficulties when it comes to getting a mortgage to purchase a property, with the global credit crunch resulting in far tighter credit conditions, and with lenders demanding higher deposits and increasing the interest rates on mortgage loans. With house prices falling, and expected to fall further, those that now commit to purchasing a home could end up facing negative equity in addition to the other problems. Read more

Tags: addition, MP, property, mortgage loans, loan, homeowner

Payday loans becoming more popular what hard up borrowers

In the past many people that were hard up and needed to raise some extra cash opted for a credit card or a loan. However, for many consumers these lines have credit have dried up over recent months, with the global credit crunch resulting in far tighter credit conditions that have left many would be borrowers out in the cold. This means that many have had to seek other ways of raising money, and this is reflected in figures that show an increase in the take up of payday loans. Read more

Tags: doorstep, payday loans, doorstep lenders, limit, credit, tighter credit conditions, card, loan

Consumers ‘no longer king’ in mortgage market

The mortgage market has completely changed over the last year and it is now likely that consumers wishing to take out mortgages will be hit with arrangement fees, an expert has commented. Read more

Tags: Mortgages, move, loan, Super jumbo mortgage, king, economy, editor, mortgage market

We won’t have cheap credit for ‘a number of years to come’

According to a financial analyst, Brits will not be seeing the days of cheap credit “for a number of years to come”.

Darren Cook, a spokesperson for Moneyfacts.co.uk, said that some experts have predicted the Bank of England base rate will increase another three times before the end of the year.

“These uncertainties, paired with the house price adjustments and many households finding themselves in negative equity, [means] lenders are prudently hedging themselves on pricing due to fears of a massive increase in the probability of default,” Mr Cook commented.

In related news, Experian recently advised consumers looking to secure a loan to check their credit report first.

By doing so, consumer education manager at the organisation James Jones said that consumers give themselves a better chance of their loan application being accepted as they can make sure that the information on their report is correct before it is checked by a lender.

Tags: Darren Cook, England base rate, Brits, personal finance, bank of england, loan

Fewer mortgage lenders willing to offer £1m deals, says expert

Homebuyers looking to spend in excess of £1 million on a property may have difficulty finding a large mortgage to fund their purchase, according to Bestinvest. Read more

Tags: expert, Mortgages, Financial services, downturn, mortgage lenders, loan, economic downturn, Mortgage loan

Clever consumers check their credit reports, says Experian

With attractive loan deals becoming increasingly difficult to come by, Experian has offered consumers advice on how to make sure that their applications stand the best chance of being accepted.

According to James Jones, the consumer education manager at Experian, people should take a look at their credit reports before making a loan application to ensure that all the information on them is correct.

“Lenders are using credit histories not only to decide whether to say yes or no to people but also to decide what rates to charge.

“So, clever consumers are checking their credit reports,” Mr Jones concluded.

Research from CreditExpert.co.uk has revealed that many people do not feel confident that they will be successful when making a loan application.

The company’s study found that 23 per cent of those polled believe they will be refused a loan of £1,000 and 42 per cent think they would not be able to secure a loan of £10,000.

Tags: loan deals, CreditExpert, loan, Credit bureau, equifax

Are you looking to refinance your mortgage?

People in the UK have become far more savvy about finances over the years, and when it comes to mortgages many people have realized that there are some great deals out there that could save them a fortune in interest as well as reducing their monthly repayments. However, for many consumers simple apathy or misguided loyalty has resulted in them staying with the same mortgage provider through thick and thin without giving any thought to just how much they could save by simply refinancing the mortgage, whether with the same lender or with another one.
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Tags: extra money, amount, refinance mortgage, loan, Mortgages, Real estate

UK Insurance overview

Consumers in the UK can enjoy a wide range of insurance options to provide them with protection against a range of issues and eventualities, and with some really good deals on offer from a wide range of insurance providers it is possible to enjoy protection and peace of mind without having to break the bank when it comes to premiums. You can get all sorts of insurance policies these days, and below are some of the most popular types of insurance currently available in the UK. Read more

Tags: Recent insurance articles, bank, life insurance, insurance types, loan, home insurance

Getting a mortgage with bad credit

Unfortunately, over recent years we have seen a steep rise in the level of consumer debt in the UK, and as a result of this many people have found themselves struggling to keep up with repayments. This has inevitably led to missed or late repayments, and for many individuals has resulted in a reduced credit score and a tarnished credit history. Your credit rating can have a huge impact on your ability to obtain any form of credit in the future, which includes mortgages, and those with a very bad credit history may experience real difficulties when it comes to getting an affordable mortgage – or any mortgage – from a lender. Read more

Tags: rate, bad credit mortgages, tarnished credit history, loan, Mortgages, high interest, interest rate

1 in 10 clueless about their debt

Britain is a nation “in the dark” about its finances, a new report has suggested.

A report published by CreditExpert has revealed that just one in four people can accurately say how much they have left to repay on their loans.

Furthermore, one in ten people are unsure as to their actually level of debt, the study revealed.

The research also highlighted that many Britons are not confident about applying for loans, with more than one in five believing they would be refused credit of £1,000.

Furthermore, four out of ten would not expect to be authorised to borrow £10,000 and 66 per cent of people believe they could not take out a loan of £30,000.

The research follows a further recent study, conducted by Alliance & Leicester which showed that Britons are trying to cut back on their spending and save money in order to improve their financial health as the cost of living rises.

Tags: britons, CreditExpert, debt, research, order

Nationwide tightens mortgage criteria

Nationwide, the UK’s second biggest mortgage lender, has increased the deposit needed by new borrowers to a minimum of ten per cent on all except two of its products. Read more

Tags: nationwide mortgages, bbc, director for mortgages, biggest mortgage lender, United Kingdom, Mortgages, loan

Bradford & Bingley: Arrears on the up

UK lender Bradford & Bingley has said that mortgage arrears are continuing to rise as more borrowers are facing difficulties in repaying their loans.

Britain’s ninth-biggest listed bank said that it expect increased payment strain and falling house prices to result in higher impairment provisions, according to Reuters.

Hours after meeting with Alistair Darling, the mortgage lender, which makes over 50 per cent of its home loans to buy-to-let landlords, said its margins were under pressure and it is starting to pass the higher costs on to customers.

Yet the bank also said that the buy-to-let area of its business is performing well, suggesting that it is homeowners who are being hit hardest by the credit crunch.

Those faced with arrears will be pleased with Abbey National’s announcement earlier this week that it will cut rates on its two-year tracker and flexible mortgages by 0.1 per cent.

“We will continue to review the cost of funding and will look to reflect further changes in our mortgage range going forward,” said a spokesman for the bank, adding that it hopes other lenders will follow suit and take action to stimulate the mortgage market.

Tags: range, house, funding, announcement, loan

Postgrads could be hit by credit crunch

Postgraduate students and those taking their second undergraduate degree may face financial problems due to the credit crunch as a number of lenders are withdrawing from the professional studies loan market, the National Union of Students (NUS) has warned.

There is very little state funding for postgraduate students and some of them take out loans to fund their studies, according to Directgov.

Speaking on students’ financial situations, the NUS said US bank Sallie Mae has already stopped providing new professional study loans and other banks may do the same.

Banks offering the equivalent of professional study loans in the UK may discontinue them if they want to reduce their exposure to risk.

Commenting on professional study loans, David Malcolm, head of social policy at NUS, said: “They are much bigger amounts of money and there is more opportunity to default on that. The types of students we are talking about are postgraduates and second undergraduate degree students.”

However, Mr Malcolm offered hope, saying that career development loans are likely to be protected as they are government backed and will not be as exposed to the global credit crunch.

Tags: financial problems, undergraduate, National Union, professional studies, loan, government

Future Mortgages slashes loan-to-value ratio by 20%

Specialist lender Future Mortgages plans to slash the maximum loan-to-value ratio by up to 20 per cent today for its prime and near-prime products.

Future Mortgages has reviewed its lending due to soaring demand for mortgages as well as daily price increases from competitors, resulting in the decision to tighten lending criteria.

The latest research from the Abbey Mortgage Index confirms that mortgage lenders can expect a high demand for five-year fixed rate mortgages, despite recent reports that the mortgage market is declining.

Additionally, the number of people who would choose any type of fixed mortgage product has risen from 35 per cent last month to 53 per cent this month. However tracker mortgages are less popular with only five per cent of respondents opting for them compared to 12 per cent last quarter.

Commenting on Future Mortgages’ decision, a spokesman said: “We see these actions as prudent and a strong indication of our desire to retain a market position in chosen sectors while simultaneously maintaining our servicing proposition in these challenging times.”

Tags: month, mortgage, loan, tracker mortgages, daily price increases, maximum, tracker, Abbey Mortgage

Up to five out of six UK consumers fear for their finances

Up to 30 per cent of British spenders do not think they can cope much longer when it comes to managing the pressures surrounding their finances, according to new research.

Findings from a survey conducted by moneysupermarket.com during the budget week reveal that only 84 per cent of those questioned said they had no financial worries.

Additional research showed that Brits owe more than £1.3 trillion on loans, credit cards and overdrafts.

Tim Moss, head of loans and debt at moneysupermarket.com, said he was surprised by the levels of financial worry among UK consumers.

“There is little doubt many Brits will find their annual road tax as high as the value of their car as from next year, creating a massive headache for people who are really struggling,” he continued.

Moneysupermarket.com added that those spenders who are worried about their spending habits should take action rather than burying their head in the sand.

The firm recently said that consumers are becoming increasingly aware of having a good credit rating with more and more checking their financial status.

Tags: GBP, com, loan, credit rating, budget, new research

Under 35s facing credit card and loan debt

A new study has found that people under the age of 35 in Yorkshire are having to spend £160 a month servicing their debts.

Skipton Building Society reports that after paying rent and mortgage costs, the single largest outgoing for people within this group is paying off credit card bills and loan repayments.

The firm’s research also revealed that 73 per cent of people under the age of 35 in Yorkshire have some form of debt, with the average person owing £8,477.

However, a further 11 per cent were found to owe more than £20,000.

Jennifer Holloway, head of media relations at Skipton, said that it is “definitely time for a wake up call” for many people, given that they may have to work longer and earn more to be able to retire comfortably.

“And even though it may seem daunting, it could be easy for those in the red to join those in the black,” she commented.

In related news, Abbey recently reported that millions of people were looking to take advantage of balance transfer deals and switch money owed on one credit card to another during the first three months of 2008.

Tags: abbey, 35s facing credit, month, credit card bills, North Yorkshire, personal finance

Only five% of first-time buyers used 100% plus mortgages

Despite being “very good” for first-time buyers, only five percent of them used the 100 per cent plus mortgages to get themselves onto the property ladder, one financial expert has claimed.

According to Firstrung these 100 per cent plus products were “niche products” which never became as popular as people made out.

Paul Holmes, chief executive officer of Firstrung, said that the media tried “to portray that people went out and had a hundred per cent mortgage on their property … they didn’t. They had a 95 per cent mortgage, and could take a loan up to 30 per cent or £30,000 – whichever was greatest”.

Firstrung said that the majority of first-time buyers who took 100 per cent-plus mortgage product took a 95 per cent mortgage and a ten per cent personal loan.

Mortgage lenders Northern Rock, Alliance & Leicester, Birmingham Midshires and Abbey have all withdrawn from the 100 per cent mortgage market.

These lenders have begun to require borrowers to supply the deposit on a new home themselves.

Tags: cent plus mortgages, ladder, loan, Birmingham, Paul Holmes, alliance, abbey, plus

Bridging finance has an ‘important role’ when credit is hard to get

Bridging loans can play an “important role” during tough financial times, one financial expert has claimed.

Business Moneyfacts said that bridging finance is “ideal” for any situation where funds are required quickly and for short periods.

Bridging loans can benefit property professionals looking to acquire property quickly at a time when the number of repossessions is increasing due to the amount of properties going to auction, claims the firm.

Lee Tillcock, editor of Business Moneyfacts said: “Investors buying at auction have often used bridging because they are required to complete within a few weeks of a successful bid when conventional mortgages are sometimes unworkable.”

He added that in a financial environment where credit is difficult to secure, the bridging option can provide a short term solution while that “ever-more-elusive long-term mortgage” is finalised.

Meanwhile, figures recently released by the Council of Mortgage Lenders show that in 27,100 homes were repossessed last year.

This is the highest figure since 1999 and a 21 per cent increase on the number in 2006.

Tags: Bridge loan, Council, term mortgage, finance, figure

Rates for secured loans are becoming as competitive as unsecured deals

Homeowners looking for a significant cash advance can now choose from secured loan deals which are even more competitive than the average unsecured loan rate, financial experts have claimed.

According to Moneyexpert.com, the average APR on a £15,000 unsecured loan is an estimated 8.44 per cent.

However, borrowers with the option of securing the loan against their property have been able to get interest rates as low as 5.9 per cent, almost 2.5 percentage points cheaper than the average unsecured loan rate on the market for balances of £15,000.

Sean Gardner, chief executive of MoneyExpert.com, said: “Historically secured loans were seen as something of a product of last resort.”

“But these days they are far more attractive to homeowners who are looking for a competitive rate of interest,” he added.

Findings from MoneyExpert.com reveal that demand has increased for secured loans in the past six months with an 85 per cent rise in the number of applications seen in the last quarter ending in January 2008.

Meanwhile, further research from finance experts have shown that 1.39 million have switched mortgage provider for a better deal in the past six months.

Tags: loan, Moneyexpert, Loans, finance experts, cent rise, mortgage provider, MoneyExpert.com reveal

Credit card balance transfers better value than personal loans

Consumers looking to take out a personal loan may want to consider a credit card balance transfer instead, claim financial experts.

According to research from everyinvestor.co.uk, a borrower requiring £10,000 could save over £1,000 over a four year term if they choose to transfer their credit card balance rather than applying for a loan.

Chris Gilchrist, editor with the consumer advisors, said that lenders have raised interest rates on personal loan rates sharply in the past six months.

“Credit card companies continue to offer lengthy zero per cent balance transfers and even though you may pay balance transfer fees, this still works out well below the interest you would pay with a personal loan,” he added.

Industry commentators have predicted the end of the zero per cent interest balance transfer for the past 18 months according to the experts.

However, credit card companies are expected to continue to offer the rate in a bid to attract more customers.

Meanwhile, new research from Fool.co.uk has revealed that up to one in eight credit card holders in the UK have had their credit limits cut.

Tags: loan, interest balance, year, industry commentators, debt, Business Finance, research, interest rate

BOE warns mortgage defaults to increase

Defaults on mortgage payments are expected to increase this year, according to the latest research from the Bank of England.

The Bank’s Credit Conditions survey revealed that borrowers and small-to-medium-enterprises are expected to find it increasingly difficult to source loans after the tightening of lenders’ belts due to the effects of the credit crunch.

The Council of Mortgage Lenders said that the findings increase the likelihood of a further cut in interest rates.

Bob Pannell, head of research at the CML, said: “This survey corroborates other evidence of worsening market sentiment. This may increase the chances of interest rate cuts sooner rather than later if inflation remains subdued.”

He recommended that consumers should re-evaluate their finances to avoid coming financially unstuck.

The number of borrowers who default on their payments is expected to the rise as a number of fixed rate mortgages expire over the next few months.

The Bank cut interest rates to 5.5 per cent last month, the first cut for two years.

Tags: economics, finance, belts, source, Financial crisis of 2007–2009, head, mortgage payments, loan

Joint mortgages with strangers are ‘risky’

Entering into a joint mortgage with someone you do not know is “extremely risky,” say mortgage experts.

Bestinvest has said home buyers could also find themselves “in all sorts of problems” if they enter into a mortgage with a friend who they fall out with.

Peter O’Donovan, mortgage manager at Bestinvest, said: “If you buy a house with someone and you don’t know their credit record, that’s even worse because you are jointly and solely liable for that mortgage. If the other person stops paying you have to continue.”

He added that there is no protection that people entering joint mortgages can take out to protect themselves against defaulting if the arrangement does not work.

According to research conducted by Scottish Widows in July 2007, joint mortgages are becoming popular among graduates who find that they offer the only way onto the property ladder.

Of those graduates surveyed 63 per cent purchased property with a partner.

Tags: manager at Bestinvest, record, loan, way, Joint

Tracker mortgages ‘coming into their own’

Tracker mortgages are now “really coming into their own,” according to a leading mortgage adviser.

Ray Boulger, senior technical director and spokesperson for John Charcol, has said that, “providing the starting point is good”, a tracker nearly always gets you better value than a fixed rate mortgage.

He said: “We’ve been recommending tracker mortgages for those people who want a variable mortgage for a long time.”

A tracker ensures a consumer’s interest rate on a mortgage moves in line with the Bank of England’s rate. This does not leave home owners “at the mercy of your lender”.

There are a “proportion of lenders” that do not move their standard variable rates and associated discount rates in line with the Bank’s rate.

Mr Boulger added that “availability is not a problem” for tracker deals.

While Nationwide, Abbey and Halifax have all lowered their rates, following the Bank of England’s reduction in its base rate by a quarter of a per cent, the Press Association reports that they are three of only eight of the 120 or so mortgage lenders in the UK to have done so.

Tags: mortgage lenders, tracker deals.While, john charcol, tracker, value, variable rates, loan, senior technical director and spokesperson

Consumers need examples of what they will have to pay back

Banks and credit card companies should provide a “practical example” of what a consumer needs to pay back, claims a debt counselling service.

Thomas Charles & Co has said companies should follow the examples set by mortgage lenders and unsecured loan lenders and show consumers what they will be paying back over a certain period of time.

“I think banks and credit card providers should be encouraged to do that off their own back. I think that if they don’t, the regulators will probably be just in asking them to do so,” said director James Falla.

He added that it would be a good idea to help the consumer as “interest rates are very confusing”.

According to Credit Action’s latest assessment of personal debt, the total UK personal debt at the end of October 2007 stood at £1,391 billion.

The growth rate increased to 9.7 per cent for the previous 12 months which equates to an increase of £122 billion.

Tags: Charles, cent, loan lenders, loan, personal debt, growth

Longer term mortgages popular with first-time buyers

Longer term fixed rate mortgages have proven “increasingly” popular in recent years, especially with first-time buyers, claims an industry expert.

Head of residential lending at Mortgage Express, Tim Anson, has said that newcomers to the market appreciate the “peace of mind” offered by fixed deals.

Purchasing a property through a fixed deal allows first-time buyers the chance to get used to managing a budget and meeting the costs of running their first home.

“For most people a mortgage is the biggest financial commitment they will ever undertake, and increasing numbers of borrowers have sought the certainty provided by fixed rate deals in recent years,” he said.

However, as interest rates are predicted to fall in 2008, fixed rate deals could look uncompetitive in the future Mr Anson warned.

Last week the Council of Mortgage Lenders reported that 42 per cent of borrowers would choose a fixed rate mortgage.

However over half of these would opt for a short term deal under five years long.

Tags: chance, Business Finance, fixed rate deals, newcomers, loan, head, Tim Anson, Head of residential lending

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

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

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

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

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

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

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

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

Tags: loan, time, sue anderson, council of mortgage lenders, time buyers."It, house, increase

Building Society issues reassurance on remortgages

The Newcastle Building Society has told mortgage holders not to panic after the City’s financial regulator, the Financial Services Authority, said it could be difficult for remortgages to go ahead “on favourable terms” next year.

Steven Marks, Newcastle Building Society’s lending expert, said: “From this week’s headlines, many people will be forgiven for thinking that they won’t be able to get a mortgage or competitive remortgage deal from their lender next year.”

Even though interest rates came down slightly this week, such a statement could leave borrowers feeling “unnecessarily uneasy”.

However he emphasised that interest rates are historically low.
The cut in the Bank of England’s base rate should also assist the outlook, Mr Marks added.

Other than Northern Rock, most mainstream lenders are still keen to do business and competitive rates should still be available next year he concluded.

Newcastle Building Society has just announced the launch of a full equity release brokerage system.

The expansion of the advisory service arrives six months after the FSA introduced regulations relating to these products.

Tags: Society’s lending expert, expert, year, equity release, remortgage, Newcastle Building Society

CML: FSA findings a ‘wake-up call’

The Council of Mortgage Lenders (CML) has responded to the Financial Services Authority’s (FSA) publication of case studies of good and bad practise in mortgage brokers’ treatment of consumers.

It welcomed the publication, saying that it would act to help improve the quality of overall service.

The CML will support any action against brokers who fall short of targets outlined by the FSA and brought to their attention.

It states that good brokers’ practise is undermined by those who fail to meet industry standards.

Director general of the CML, Michael Coogan, commented: “After three years of regulation, the FSA is right to expect its regulatory standards to be in place across the whole market. These findings are a wake-up call to those brokers who are behind the pace.”

He added that the FSA must ensure its expectations are explained with clarity, a stipulation especially important for small broking firms.

Banks, building societies and other lenders make up the membership of the CML, which supervises 98 per cent of all residential mortgage lending in the UK.

Tags: practise, pace, bad practise, uk, industry, loan, council of mortgage lenders, Mortgages

Popularity of equity release in the rise

According to a recent report the popularity of equity release schemes is on the up, and experts state that the quality and service in this area is also improving.

Equity release schemes have gained a bad reputation and have been at the centre of controversy, with one equity release provider recently being fined by the Financial Services Authority for giving inaccurate advice to consumers. However, despite its poor reputation equity release is becoming a hit with older homeowners.

According to Norwich Union these equity release schemes are particularly popular with homeowners that are close to retirement. In a survey of 1600 people between the ages of 50 and 56 one in ten stated that they would consider equity release programmes in the future. These schemes were not as popular with those that had already retired, with survey results showing that only one in twenty retired consumers would look at equity release.

One equity release worker stated that the information provided to consumers these days is far more detailed and comprehensive.

She said: ‘The market today is very different. The paperwork given to customers before they sign goes so much further. It really shows what they’re getting into.’

A Prudential equity release customer also said: ‘I was afraid of the financial bits, but my neighbour sat in on one of the meetings. It told me how much I could draw down and I’ve taken about a third of an agreed maximum.’

She added: ‘The compound interest rate is the nasty bit. The man from the Pru worked out that on average I’m likely to live another 27 years. He then told me how much I’d owe, based on the interest rate, if I borrowed varying amounts over various times.’

Alan Wright
26th November 2007

Tags: loan, equity, property, value, home, mortgage, release

‘Danger thresholds’ show borrowers most at risk

An industry expert has highlighted the fact that many people falling outside “defined thresholds” could be adversely affected by credit crunch.

Fool.co.uk urges mortgage borrowers to recognise the risks they could face from the wider impact of global credit problems by taking guidance from the Bank of England’s Financial Stability report.

It states that those with repayments of over 55 per cent of their total household income are most at risk, standing outside the defined thresholds.

David Kuo, head of personal finance at Fool.co.uk, advised: “Consumers should draw up a Statement of Affairs immediately to get a useful snapshot of their finances. The snapshot will tell, at a glance, whether you fall into one of the ‘at risk’ categories.

“Failing to draw up a Statement of Affairs in the current difficult financial climate is tantamount to driving a car without shock absorbers.”

The Financial Stability report speaks of a “tightening” in the money markets, pointing to the need for more focus on liquidity management and better stress testing among other things.

Tags: income, report, fact, Head of Personal Finance, loan, The, testing

Consumers advised to inflate earnings to get mortgage

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

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

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

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

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

Tom Smith
24th October 2007

Tags: increase, salary, income, earnings, repossession, huge

FSA investigating banks’ stability

Following the recent turmoil in the financial markets, which has spread from the sub-prime sector in the United States, the Financial Services Authority is to launch an investigation to review the stability of mortgage lenders. Read more

Tags: fsa, billions, banks, northern rock, clock

Increasing consumer credit leading to more debt

The increasing availability of consumer credit which has caused the recent boom in the UK economy is contributing to rising levels of debt.

That is according to R3 (the Association of Business Recovery Professionals), which has suggested that various financial services have been “tripping over themselves to lend money”, which in turn has resulted in the inadequate checking of the suitability of borrowers.

Vice president Nick O’Reilly said that IVAs and indebtedness are on the increase because “the level of personal consumer debt in the UK has grown significantly over the last four to five years – in fact the main boom in the economy has been fuelled by personal consumer spending“.

He added: “Now that the level of borrowing is so much bigger in terms of trillions, the level of people with debt problems is obviously higher than it used to be.

“It’s a much more competitive financial services market these days, and people are tripping over themselves to lend money. That must mean, by its nature, that their credit checks are less rigorous than they used to be.”

Tags: recent boom, competitive financial services, consumer spending, consumer, checking, loan, borrowers

Loans to family ‘may be counterproductive’

People who lend money to friends and family may only be a short-term fix for those in debt, according to one expert.

Stephen Rose, the director of the not-for-profit information provider Debt Advice Bureau, argues that issuing loans to people who are in debt may only mask an underlying financial issue.

“We have seen a minority of cases where people have wracked up debts and – usually a parent – has bailed them out and paid off their credit cards.”

“And in no short space of time debts are being wracked up again,” he adds.

As such, Mr Rose argues that if someone is tempted to loan money to a loved one they could instead work with the person to establish where their money is going.

The directors’ comments follow research from DebtSmart found that out of the 59 per cent of people who had leant money to a friend, just over one in four had been repaid.

Tags: Credit Cards, Financial services, loan money, money, advice, Mr Rose, comments follow research, loan

Barclays share prices fall

Rumours surrounding emergency loans allegedly taken out by Barclays Bank from the Bank of England have resulted in the bank’s shares taking a tumble. The UK banking giant recently saw its shares fall to their lowest level in two and a half years. In August rumours began when the bank is said to have taken two emergency overnight loans from the Bank of England. The bank has defended its actions, stating that the loans were due to technical difficulties, but with the crisis that hit Northern Rock still fresh in the minds of many it was inevitable that Barclay’s actions would eventually affect its share prices. Read more

Tags: finance, bank of england, head of global retail and commercial banking, worth, United Kingdom, recent additions, loan, point

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: interest, loan, rate, month, price, Economy of the United Kingdom

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: loan, bank, borrow, pay, rise, england

Discounted Mortgages – Compare Introductory Discount Mortgage Offers

With so many different types of mortgages available in the UK it can be difficult for homeowners or property purchasers to determine which is the best one for them.

Those looking to remortgage or those taking out a first mortgage can usually select from a range of special deals on mortgages from lenders that want to entice customers. Once of these is the discounted rate mortgage, which enables the borrower to enjoy lower monthly repayments compared to those on the lender’s standard variable interest rate. Read more

Tags: variable interest rate, remortgage, property, loan, Mortgages, borrower, discounted mortgages

Rate rise will hurt homeowners

The fallout from yesterday’s (May 10th) interest rate rise is being felt today, with many organisations warning that the increase could leave homeowners in the red.

The Bank of England announced that the base rate would rise by 0.25 per cent, taking it to 5.5 per cent – the highest it has been since April 2001.

Experts are warning that those with a mortgage are likely to suffer the most, especially as more and more people are taking out loans that stretch them to the absolute limit.

As house prices continue to grow and buyers take out mortgages which leave them financially stretched, Citizens Advice is warning that this latest interest rate rise may tip some homeowners over the edge.

“Today’s interest rate rise will put added pressure on some homeowners. Our evidence shows it only takes a very small change in people’s circumstances to tip them from manageable credit commitments into serious debt,” said Peter Tutton from the organisation.

“Citizens Advice is seeing a rapidly growing number of people falling behind with mortgage payments and in some case threatened with repossession.

“Housing debt is one of our fastest growing problems and it increased by 20 per cent in the last year,” he added.

Borrowers are being advised to talk to their lender if they are struggling to make payments, while those considering taking out a mortgage should check thoroughly that they can afford it.

Tags: edge, interest rate, interest rate rise, loan, Citizens Advice, stretch, red

Another interest rate rise

Interest rates are the highest they have been since April 2001 after the bank of England announced yet another rise.

The 0.25 per cent increase is the fourth rise since last August and is bad news for borrowers up and down the country.

Many experts had been predicting the Monetary Policy Committee’s (MPC’s) decision and some had even forecast a bigger increase of 0.5 per cent.

The rate rise was brought in to keep inflation in check and recent figures show that inflation is currently at record levels.

People with a mortgage, credit card or loan will be disappointed with the decision and will need to keep an eye on their finances to ensure that they can keep up repayments.

Someone with an £80,000 mortgage can expect to see their monthly payments increase by around £12, while those with a £200,000 mortgage will see payments rise by £30.

Experts are also warning that this is unlikely to be the last interest rate rise, with economists predicting more to come in the months ahead.

Tags: Financial services, rate rise, Credit card, business, loan, bigger increase, bank of england, mortgage

Bank of mum and dad calls in its debts

University graduates are still reliant on their parents to help them get onto the property ladder but the bank of mum and dad is getting stricter.

According to new research, 39 per cent of graduates rely on money from their parents to get a deposit on a new home.

However, more and more parents now expect their children to pay them back rather than simply offering the money as a gift.

Scottish Widows Bank says that in 1996 38 per cent of parents gave their graduate children the money for a deposit as a gift but this has fallen to just 32 per cent today.

The reduction in charity from parents may be a symptom of poorer finances for most people and this is supported by the fact that the number graduates needing a loan has also increased.

In 1996, nine per cent needed to turn to their parents for money, while today that figure stands at 18 per cent.

Another contributing factor is high rental costs which Scottish Widows says are forcing many graduates to turn to their parents for financial help.

“Rental rates are so high for some that it is very difficult to put enough money aside to save for a deposit meaning many graduates have to rely on their parents to fund that first step onto the property ladder,” said Richard Clark from the bank.

“House prices and affordability are huge barriers for first time buyers but they should be aware that there are other options available to them – both lenders and the government need to keep working on ways to solve this ever growing problem.”

Tags: house prices, Parent, poorer finances, University graduates, Business Finance, loan, charity, money

Consumers accustomed to taking on debt

Consumers have grown increasingly used to taking on debt in recent years, according to the head of a website which offers advice about individual voluntary arrangements (IVAs).

As the agreements become increasingly popular with borrowers who are struggling to make debt repayments, Phillip Beck of Freeivaadvice.co.uk said: “I think it is a problem that has built up over many years and that is that people have got used to taking on debt.

“The amount of consumer debt in the UK has steadily increased over the years and it is finally getting to the point where people have so much debt which they simply cannot repay.”

However Mr Beck, commenting ahead of new research which will examine the increasing number of county court judgements granted in the UK, also acknowledged that “lax lending policies” by some loan providers and lenders was also part of the problem.

According to the Department of Trade and Industry (DTI) some 12,228 people entered into IVAs with lenders in the third quarter of 2006, an increase of 117.9 per cent on the same period in the previous year.

Tags: court, consumer debt, Freeivaadvice, uk, loan, individual voluntary arrangements

Millions not claiming unfair charges

Millions of people who have been stung by unfair bank charges are yet to claim their money back.

That is according to Which? after it carried out research that found almost two thirds of people have not even tried to get their hands on the money which is rightfully theirs.

Which? asked 2,200 consumers if they had attempted to claim the money back and many said they had not, however, of those who did, a massive 85 per cent said that they were successful.

The consumer champion reckons that this figure would be closer to 100 per cent if people were more persistent after initially being denied a reimbursement by their bank.

“Claiming back unfair bank charges is a simple process that won’t take up hours of your time,” claimed Emma Bandey, personal finance campaigner for Which?

“If your bank does not co-operate, you should refer the case to the Financial Ombudsman Service (FOS) as so far the banks have chosen to settle all cases referred to FOS.”

The most popular reason for not claiming back the charges is fear of what the bank’s reaction may be.

Many consumers are concerned that their bank may close their account and demand full repayment of any overdraft or loan.

A large number of those who have claimed their money back have not been pleased with their bank’s attitude.

In total, 25 per cent of those asked said that their bank was unhelpful and unresponsive with many having to chase them for a response.

Tags: response, unfair bank charges, consumer, overdraft, Financial Services Authority, Financial Ombudsman Service, money back.That, loan

Rushed car loan choice can be costly

Motorists have been warned that making the wrong choice in regard to their car credit could leave them at a significant financial disadvantage.

A study by price comparison site uSwitch.com has revealed that around 187,000 of the cars sold in March will be purchased with the help of showroom finance.

Such practices will result in around £228 million being wasted on charges for the year, the company states, explaining that the average showroom loan offers 10.12 per cent APR, a staggering 4.22 per cent higher than the best regular loan on the market.

“A rushed decision or just taking the finance deal offered by the car dealer could turn out to be a long term financial burden,” explained Nick White, the director of financial services at uSwitch.com.

“Paying too much for car finance is really easy to avoid,” he added, before suggesting that a comparison website might be a good place to start.

Opting for the best loan available could save a motorist around £1,200 over the loan’s term when compared with showroom finance, the company said.

Tags: comparison website, Recreation and Sports, term, loan, uSwitch.com, director, site, apr

Working to clear card debt

The average Briton slaving his or her way through January, struggling to clear the Christmas debt hangover, gets meagre returns for their pains, Unbiased.co.uk has claimed.

If we worked for 31 days solidly, we could clear the interest on our credit card and loan debts, but not the debt itself, the financial advice service reveals.

Since average UK earnings total £23,556 per annum, a January pay cheque would be just enough to clear the £2,012 interest gathered on the average British consumer’s total personal debt.

But Unbiased.co.uk has declared February 1st ‘Debt Freedom Day’, hoping to inspire consumers to work on eliminating the debt itself in the coming year.

This date should serve as “a wake up call to those who carry personal debt”, Unbiased’s chief executive David Elms emphasised.

“The real headline will come when official figures show people controlling their spending behaviour and increasing their saving power,” Mr Elms added.

For every pound saved, Britons are still borrowing 49 pence to fund their lifestyles.

Average household debt in the UK at the start of 2007 stood at £8,765 excluding mortgages, according to Credit Action statistics.

Tags: Christmas debt hangover, power, January pay cheque, Freedom, loan, spending

Anti loan shark scheme welcomed

A new scheme to tackle loans sharks has been welcomed by the National Consumer Council (NCC).

The organisation is hopeful that by introducing the project, around 200,000 of the UK’s poorest people will receive help.

Hopes have been raised that some of the most vulnerable people will now be able to escape the vice-like grip of illegal lenders.

“Removing illegal lenders from these communities not only frees their victims from threats and intimidation, but can help people find ways to borrow more cheaply,” said Claire Whyley, deputy director of policy at NCC.

“It’s vital, though, that these new projects are supported by efforts to make more affordable credit widely accessible in poor communities.”

Large numbers of people turn to loan sharks because they have such a bad credit rating that they feel they will not be given a loan by a reputable lender.

However, loan sharks are not restricted by regulation and often charge extortionately high interest rates.

As a result, many borrowers find themselves in an even worse financial situation than before they borrowed the money.

Tags: rating, vice-like grip, scheme, loan, finance, regulation

Home credit lenders must make it easier to compare deals

Home credit lenders have recently been targeted by the Competition Commission in the UK, and the industry has been told that it needs to make things easier for consumers in the UK when it comes to comparing deals and repayments on finance offered by home credit companies. The commission also added that the industry needed to ensure that consumers that repaid the loan earlier than arranged received some form of rebate. However, the commission has decided not to enforce a price cap, as officials state that this could hit some consumers hard.

Research showed that the average sum borrowed by UK consumers in the form of home credit was £300, with loans starting from around £100. The home credit industry has nearly two and a half million customers in the UK, and the majority of these borrow under five hundred pounds in the form of home credit. The Competition Commission, however, has decided not to place any price cap as more vulnerable consumers that may need more could otherwise find themselves in difficulties.

After it came to light that a small number of home credit companies were controlling the market when it came to this type of finance, the commission was said to be ‘opening the market’ when it came to home credit. The commission is in the stages of doing this, and has stated that lenders in this industry will need to publish their data on a website, so that consumers can then easily compare terms and costs in order to get the best deals.

With regards to its decision not to enforce price caps, the chairman of the commission said that he thought that capping might have “…reduced the availability of home credit to the most vulnerable customers, specifically those with no access to alternative sources of credit. We also felt that price caps could prove to be extremely difficult to apply and enforce in this industry.”

Tags: lenders, deals, commission, uk, compare, comparison, competition

HSBC Becomes First UK Bank To End ‘Free’ Banking

20 years after HSBC and Barclays introduced the concept of free banking to the UK, HSBC have announced that it is now time to pull the plug on this popular product and re-introduce a charge for using its banking services.

At present, HSBC has announced that it will limit charging the fee to its online banking arm, First Direct.  Moreover, the fee charge of £10 per month will not be applied to all customers of First Direct.  The “lucky” First Direct customers who will find themselves subject to the £10 monthly fee will be those who fail to make deposits of at least £1,500 per month or those who do not maintain an average balance of £1,500 on their current accounts.

While it is true to say that the UK has remained one of a very few select countries to maintain free current account banking for those bank customers who do not go overdrawn, over time this has probably been one of the most popular products that major UK banks have offered.  Nevertheless, it seems, in this case, that the success of free current account banking in the UK has also been its eventual down-fall, with many leading UK banks having made grumbling noises over the past year or so that the because the UK has free current account banking, this no longer makes the banks competitive with their European and American competition, the majority of whom already charge for current account services.

To many of the 1.3 million customers of First Direct, however, this is going to be a bitter pill to swallow.  UK banks made record profits in 2005, so to now be told that the bank is no longer competitive with its overseas rivals merely because it has not been arbitrarily applying a monthly fee  £10 on certain financially disadvantaged customers may just sound a little like sour grapes.

Thankfully, other leading UK banks, such as Royal Bank of Scotland, Barclays, HBOS and Lloyds TSB, have decided not to follow the lead of HSBC at this time.  However, with most UK bank’s looking to recoup the estimated £1 billion in lost revenue following the Office of Fair Trading’s forced cut to penalties applied on late credit card payments, it would need optimism of the highest order to believe they won’t follow suit soon, a view clearly echoed by a spokeswomen for Royal Bank of Scotland, owners of Nat West, who, when asked RBS’s stance on the issue, was quoted as saying that: “There are no current plans, but you can never completely rule options out in the long term”.

In the meantime, the estimated 200,000 customers of First Direct who are likely to be directly affected by this latest move now have until February 2007, when the new charges will come into effect, to either get their accounts in order so that they do not fall foul of the new charges or to look for alternative free banking arrangements. 

Kindly, however, First Direct have given the 200,000 or so estimated customers it says will likely be effected by this move a ‘get out of jail’ free card: the bank will agree to waive the fee if the customer agrees to take out another First Direct product – such as a loan or insurance. 

Tags: charges, fees, Loans, bank, lloyds, Banking