Half the Population of the UK Don’t Have Funds Set Aside for Retirement

The BBC recently revealed that about half of all the people living in the UK aged 20 to 60 have not been putting aside any funds for their retirement years. This does not mean that they do not have any savings for such purpose, but they haven’t been paying into a pension fund. Read more

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Price of oil and food could remain high for some years

Consumers have been given a stark warning over the past couple of weeks, with officials stating that the cost of food and oil in the UK could remain high for years, which means that household finances will continue to remain strained. The warning came in a report from the government, with officials from the Treasury warning that shortage of supplies couples with growth in both population and world economy could result in many years of higher oil and food prices. Read more

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Buy-to-let sector remains upbeat

The optimism in the buy-to-let sector has not been deterred by predictions of a moderating property market, according to industry experts.

Research from the Association of Residential Letting Agents (ARLA) has revealed that only one in ten of landlords are considering selling their property.

A further 40 per cent of investors are looking to expand their property portfolios over the next year.

Ian Potter, head of operations at ARLA, said: “This is good news for the whole of the private rented sector and for the housing market, particularly as it comes from surveys carried out well after the credit crunch had begun to bite.”

The findings also show that 90 per cent of buy-to-let landlords also have no intention of selling up in the last quarter of 2007 within the next 17 years.

Meanwhile, house prices in the UK increased by just one per cent in the final quarter of 2007, according to research released today by the Nationwide building society.

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Obligatory safe may not bring down premiums

Buying a safe may ensure that providers will cover you but it will not necessarily lower your premiums, an industry expert has said today.

Anthony Neary at The Safe Shop, explained that while some insurers will insist the customer owns a safe before they can get cover, other factors are more likely to help bring down your premium.

He said: “Door locks and window locks will bring your premium down if you’ve got those fitted but safes are a bit different.

“Certain customers are told that they must buy a safe otherwise they’re not going to give them cover for whatever items they’ve got there.”

Meanwhile, the British Crime Survey recently revealed that 300,555 offences of burglary were recorded in homes in England and Wales from 2005 to 2006.

This number represents a seven per cent decrease from the previous year, with criminal damage offences also down by four per cent.

The Home Office reports that most burglaries are conducted by opportunist thieves, with two in every ten burglaries not involving force.

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Don’t DIY before checking your insurance

Brits are being advised to check their home insurance before undertaking home repairs or DIY projects.

New figures released today show that three quarters of a million people have inflicted £350 million of damage to their homes attempting to recreate improvements they have seen on home makeover TV shows.

While many household accidents – such as cracking a bath or smashing the glass in doors – are usually covered by standard buildings and contents policies, extensive remodelling can put DIY enthusiasts at risk of causing damage they are not covered for.

Damage such as drilling through pipes or falling through a ceiling are rarely covered in standard policies, according to Halifax Home Insurance.

“It all looks so simple on TV, making it easy to forget that the work on makeover shows is being carried out by highly trained and skilled professionals. But if you don’t know what you’re doing we’d advise anyone planning any major improvements that DIY should really stand for Don’t Involve Yourself,” said Vicky Emmott, Halifax Home Insurance.

“Indeed trying to tackle certain areas that you are not qualified for, such as electrics or plumbing could invalidate your home insurance and leave you liable for the cost of any subsequent damage. It’s far better to employ a reputable tradesman than to risk damaging your home by going it alone.”

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Mortgage holders in for a ‘rate shock’

Mortgage provider Nationwide has warned homeowners coming off of two year fixed rate deals this autumn that they could be in for a nasty shock as their monthly repayments jump up by £200.

Two years ago, the average fixed rate for a homeowner loan was just 4.56 per cent, but 250,000 homeowners will be seeing their mortgage revert to standard variable rate, which now is an average of 7.65 per cent, more than three per cent what they are currently paying.

Although Nationwide is urging customers to negotiate a remortgage as soon as possible and preferably before their existing deal expires, the average fixed rate is also a lot higher today than it was in 2005. In fact, the increase from 4.56 per cent to 6.41 per cent will still cost customers £110 a month on a £100,000 loan.

“For some borrowers it will come as quite a fright to see their mortgage payments increase dramatically,” said Matthew Carter, director of mortgages at Nationwide. To absorb some of this shock, borrowers need to consider remortgaging as soon as their deal ends, or beforehand if their lender allows it.”

He also noted that there has been growing interest in the bank’s 25 year fixed rate mortgage since the last Bank of England base rate rise.

According to a recent survey by Abbey Mortgages however, less than one in four Britons would consider taking out a 25 year fixed rate homeowner loan.

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Lifetime balance transfers

One big advantage that a lifetime balance transfer has over a consolidation loan is that it offers far greater flexibility when it comes to payments, a leading bank said today.

With credit card users paying hundreds of millions of pounds worth of penalties last year, looking to avoid such fees ought to be a big priority among British consumers.

“You know exactly what you are going to pay and it is a guaranteed balance,”
Donald MacLeod, head of credit cards at Sainsbury’s Bank, said.

“[It] is probably one of the most straightforward ways of using a credit card: you transfer the balance [and] you know what you’re going to get,” he added.

“One of the big benefits of the lifetime balance offer compared to loans is that there are no penalties so you’ve got complete flexibility of payment – so as long you give a payment you can pay as much as you want or as little as you want, whereas with a consolidation loan your payments are set in stone from the start.”

Mr MacLeod also said that, far from encouraging debt, the flexibility of payment offered by balance transfers made them a good way of restructuring existing debt.

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NatWest launches online multi-currency system

The launch of NatWest’s new ibanking product has been successful, the offshore banking provider said today.

An internal survey of 500 customers showed seven-in-ten saying that the product made them more confident about banking online.

ibanking is a multi-currency banking product which is conducted online. Customers can therefore access their account and transfer funds from anywhere in the world, and view their details through entering their customer number, PIN and password.

Head of NatWest International Personal Banking Julian Gouge said: “We recognise that online security is a key concern in today’s society and the ibanking system gives customers the reassurance they need when making transactions and controlling their finances.

“Whether you are enjoying yourself on holiday in Jamaica or working in Japan, ibanking allows you to make payments and manage your finances within seconds at any time of the day or night.”

Offshore banking products for customers are provided by many other high street banks in Britain, including Lloyds TSB and HSBC.

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Student debt rises again

Student debt levels are being ramped up still further, a worrying new survey claims today.

Run in conjunction with high street bank Lloyds TSB, the Push annual survey says that those who started at university last year can expect to owe nearly £17,500 by the time they leave.

Even more worrying is the report’s claim that this year’s freshers face a £20,000 bill for studying.

Furthermore, while the national average student debt lies at £13,000, the £20,000 barrier has already been breached at nine elite campuses.

Catherine McGrath at Lloyds TSB said: “Students face higher levels of debt than ever before and with the added pressures of escalating house prices and increased competition for graduate jobs, it’s essential that they find ways to keep their student debt to a minimum.”

Johnny Rich at Push added: “This increase is not just another rise. Some students are facing real financial hardship. Even so, the advantages of having a degree still vastly outweigh the costs.”

The Push survey was the largest ever conducted on the subject of student finance.

Face-to-face interviews were conducted by its pollsters with over 2,000 students at 130 faculties around the UK.

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Abbey first time buyers turn to family

First-time buyers (FTBs) are increasingly turning to brokers rather than friends and family for mortgage advice, Abbey said today.

According to research from the lender released today, 23 per cent of homeowners consulted those close to them while buying their first home – compared with 13 per cent who asked a broker for advice.

However, 28 per cent of the first-time buyers of today – those in the 25-34 age group – said that they used a broker: the largest proportion across the demographics. This could signify an increasing dependence on professional rather than personal mortgage advice.

By way of comparison, just two per cent of OAPs consulted a broker over their first property purchase.

Managing director at Abbey Ricky Okey said that the research was “promising”, because it showed “a shifting attitude of young first-time buyers who are waking up to the benefits of seeking advice from intermediaries.

“Brokers can build on this changing attitude to become a positive driving force in the first-time buyer market.”

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House of Lords report slams internet security

The internet was branded as a “playground for criminals”, in a hard hitting House of Lords report published today.

Science and Technology Committee members from the chamber also branded the world wide web as being like the “wild west”, and recommended a kite mark system for trustworthy web service providers.

The world’s largest online payments service PayPal reacted to the report by releasing its own ten-point plan for customers to improve their own security.

PayPal recommended that suspicious emails purporting to be from users’ banks be subjected to special scrutiny.

Consumers were to look out for an urgent tone, a generic greeting and links to non-secure websites – those not prefaced by ‘https’, with ’s’ standing for security – on such emails.

Cristina Hoole at the payments service said: “The security of people who use the internet and shop online must become a top priority, not just for the Government but also software vendors, if the ongoing threat of e-crime is to be culled.

“Online companies have an obligation to consumers to help them stay safe online, so they do not become the unwitting victims of e-crime. PayPal does a number of things to help its customers stay safe online, and at the heart of our own activity is consumer education.”

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Customers advised to check on dormant bank accounts

Customers can easily lose track of their bank accounts just by being “a little bit disorganised”, a financial expert said today.

The comments, from money education charity Credit Action, came after Halifax announced that it would be attempting to re-unite customers with money that they held in inactive, or ‘dormant’ bank accounts.

A bank account is automatically classified as “dormant” if it remains unused over a 15-year period.

Deputy director at Credit Action Chris Tapp said that dormants accounts were generally created “when there’s a change of circumstance: if somebody moves home, particularly if they move abroad. In the confusion of those changing circumstances, people just forget – it’s almost as simple as that.”

He also suggested that the fact that “banking has become so much more complicated”, with many holding multiple accounts, as a reason behind the dormancies.

The Unclaimed Assets Register, maintained by creditors Experian, tracks dormant bank accounts, estimating that a total of £15.3 billion is held in them.

A Treasury Select Committee also recommended this week that money sitting in such accounts should be reinvested in good causes.

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Free banking under threat, says BBA

Banks in the UK might introduce wide-ranging extra charges on current accounts, the British Bankers Association (BBA) said today.

The BBA said that the charges, likely to be fiercely contested by consumer groups, will bring the UK into line with regulations in the US, Australia and Europe.

Charges would include fees being levied to write cheques, to pay bills by direct debit and even to use cash machines.

According to a BBA, spokesman, the new fees would “follow patterns abroad where banks charge for transactions such as ATM use, direct debits and standing orders, in addition to an annual fee.”

The statement could be seen as a reaction to the bitter battle banks are currently locked in with customers and the Office of Fair Trading (OFT), over what is seen as their “unfair” charging procedures.

The Financial Services Authority (FSA) is currently investigating banks’ overdraft charges, and will release their findings in the autumn.

Tags: Banking, fsa, financial, standing, Fair Trading, today, overdraft, bitter battle banks

Card companies spark debt fears with repayment reductions

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

Cards providers have heavily advertised the reductions recently.

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

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

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

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

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

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Co-op: green products not necessarily more popular

So-called “green” financial services are not bought if the quality of the product is unacceptable, the Co-operative Bank said today.

A spokesperson for the bank said that the consumer “does not want to sacrifice anything in terms of the product just for the green credentials. People will not pay more – they will not pay more on their mortgage, they will not pay more on their credit cards – they won’t take a lesser product just because it is green.”

The bank stressed that green policies were generally “mainstream products” with “added on green features”, rather than standalone services.

Contrary to many customer preconceptions, the spokesman stressed that ethical policies were not much more expensive than “normal” ones.

When asked whether a green service purchaser would be more likely to go into debt is a result, the spokesperson replied that he did not think it was an issue.

The statements from the Co-op chimes in with research from unbiased.co.uk, showing that around 50 percent of those polled say that they are not prepared to pay more tax to tackle climate change.

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Single parents struggle to save for kids

Single parents are finding it difficult to manage their banking, meaning that few are able to put money aside for their children.

According to Engage Mutual Assurance, only one in six lone parents make regular payments into a savings account for their children.

A study carried out by the firm found that married couples are much more likely to save for their child’s future, with 42 per cent making regular payments compared to just 17 per cent of single parents.

This is despite increased child benefit and child tax credit which were announced during the last Budget.

“Rising childcare and education costs, along with increases in the cost of living, mean that today’s parents are feeling growing financial pressures in bringing up children,” said Engage spokesman Karl Elliott.

“For lone parents, living on a single income, these pressures may be especially hard to deal with.

“However, parents should not despair of saving for their children’s future. Tax exempt child savings plans and Child Trust Funds provide simple and affordable means to saving for children,” he added.

Parents are advised to put at least some money aside on a regular basis to help pay for their child’s education and perhaps give them a starting point as they try to make their way onto the property ladder.

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‘Review home insurance after wedding’

The British Insurance Brokers’ Association (Biba) has today revealed that re-thinking home insurance after a wedding is vital.

According to Biba, couples are putting many items at risk by not ensuring that they are properly covered and that newlyweds should consider getting in touch with an independent financial advisor.

Wedding presents are becoming more and more valuable and friends and family lavish gifts on their loved ones – making it all the more vital to ensure items have home insurance policies.

Graeme Trudgill, manager of technical services at Biba, said: “The key thing here is to make sure that all your items are covered.

“Before you got married, you probably had £20,000 worth of stuff and one toaster. But after you get married you receive lots of wedding presents, jewellery, and seven toasters, so it’s very likely that you’ll just need to review what cover you have.”

His comment come as research from Direct Line Home Insurance has revealed that same-sex couples have paid out more than £62 million on civil partnership ceremonies in the UK since they became available in December 2005.

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