First time buyers could benefit if banks were protected with insurance

For many first time buyers in the UK the dream of homeownership is one that has slipped from their grasp completely, with lenders either demanding huge deposits that first time buyers simply don’t have or refusing to offer a mortgage loan at all. Many first time buyers have been frozen out of the market by cautious banks who do not want to take on the risk of defaults with a high loan to value loan.

However, one major banking group has said that the number of loans granted to first time buyers with high loan to value ratios could increase hugely if insurance companies would offer banks cover that would protect them against defaults. The claim was made by officials at Lloyds Banking Group, who said that the number of first time buyers could double if this sort of insurance cover was made available.

An official from the Council of Mortgage Lenders, Michael Coogan, said recently that he had previously urged the housing minister, Grant Shapps, to look at making improvements by encouraging a ‘more active mortgage insurance market’ which would provide protection to lenders and make them more able to extend low deposit mortgage borrowing for first time buyers. The cover would be mortgage indemnity insurance and would allow the borrower to claim back part of the loss if a person defaults, is repossessed, and then the property is sold for less than the amount owed on it.

One official from Lloyds TSB said: “There’s been a lot of conversation recently about mortgage indemnity and whether it’s a way to manage the transference of risk. You could be missing an opportunity to double the first-time buyer market.”

Tags: tsb, mortgage borrowing, lloyds tsb, mortgage, lloyds, claim, value loan

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: risky, lloyds, Interest-only loan, tsb, Mortgage loan, finance

Don’t Get Ripped Off On Your Holiday This Year

It is possible that your holiday may cost you more money than you planned on spending this year. With hidden bank charges this could amount to an extra £300. Read more

Tags: exchange rates, tsb, holiday money, lloyds tsb, overdraft, currency exchange, US

What does the HBOS takeover mean?

Earlier this week Lloyds TSB, the high street banking giant, announced that it was taking over HBOS in a £12.2 billion rescue operation. The takeover has been rushed through, and officials have said that the government has all but ripped up the rule book with regards to competition so that the takeover could go ahead. Alistair Darling stated: ‘We have made a decision that we will waive the competition requirements in relation to these two banks. That is not going to get revisited,’ Read more

Tags: government, lloyds tsb, cost, one billion pounds, tsb, hbos

Lloyds reductions in charges may not be all that great

Consumers and campaigners were pleased when Lloyds TSB, one of the UK’s major high street banks, recently announced that it was cutting its charges for unauthorized overdraft use, bounced cheques, and returned direct debits.

However, the victor has quickly turned to concern, with campaigners pointing out that under the new charging structure many bank customers could actually find themselves even worse off than they are now.

Lloyds TSB announced that it would be cutting the charges for bounced cheques from £25 to £20. It also announced changes to charges for unauthorized overdraft use. Previously going over the overdraft limit meant a customer would be charged £30 with a maximum of three charges per month. However, this has now been changed to a monthly fee of £15 and then between £6 and £20 per day for a maximum of ten days.

Officials state that this could mean that someone that exceeds their overdraft limit by £100 could clock up £200 in charges. An official from Which? stated: ‘These charges appear excessive. If you go over by £100 in the course of a month you could end up with total fees of up to £200.’ Other major banks have also made changed to their charges following in the footsteps of Lloyds, but is seems that these charge reductions may not be as beneficial as they initially appear.

The Office of Fair Trading has recently announced that if banks do reduce their charges to the satisfaction of the OFT then the test case scheduled for next year may be cancelled. However, this will only happen if the reductions made by the banks are in the consumers’ best interests.

Tom Smith
20th October 2007

Tags: customer, lloyds, accounts, personal, fees, charges, limit

Lloyds TSB’s shameful behaviour over bank charge refunds

Lloyds TSB is the only bank so far that has managed to win two cases with regards to the refunding of bank charges – a row that has been going on for many months between consumers and banks.

In most cases banks have paid up, albeit reluctantly, after consumers made a claim for the return of unlawful and unfair banks charges for exceeding their overdraft limits and also for returned cheques and direct debits. However, in two cases the judge ruled in favour of Lloyds TSB in these cases.

However, Lloyds TSB has also been using its own tactics to try and get out of making payment according to a recent report, which has highlighted some of the tricks that the bank has been using in order to avoid having to return customers’ bank charges. The banking giant has issued staff with guidelines on how to deal with claims, after being accused of netting £300 million a year from overcharging customers. The training pack consists of sixteen pages of guidelines, which have been described as dirty tricks by some experts.

Amongst the guidelines issues to staff at Lloyds TSB are to reject first time claims even in cases where the consumer is in the right, not to offer a payout of more than £750 in any claim, and only to offer an immediate settlement to critically ill or dying customers. A special team has had to be set up by the banking giant in order to deal with the flood of claims it has received since the row over bank charges erupted last year.

One staff member dealing with complaints brought the training pack to the attention of a national newspaper, stating: ‘Cynical does not even begin to describe it. I was placed by a recruitment agency, working from 5pm until 1am for about £200 a day to work in this nondescript building on the outskirts of Andover. I was one of about 50 people just dealing with complaints about service charges – we were told the bank was receiving more than 500 a day. This training pack was given to me on my first morning and I was told I had to adhere to it as this was the company policy – no deviating. The booklet was telling us to reject customers asking for refunds, then to palm the more persistent ones off with nuisance money.’

Tom Smith
14th September 2007

Tags: charges, holders, charge, customers, tsb, bank, fees, lloyds

Yorkshire Bank faces tough decision

The Yorkshire Bank is facing a tough decision over its overdraft charges following an order made by a judge in Hull.

Over 40 cases were due to be heard last month by the judge, and these related to unfair charges that were applied to customers’ accounts as a result of exceeding their overdraft limit and for bounced cheques or returned direct debits. According to campaigners the cost of administration for this type of oversight is between £2 and £5 for the bank, but often customers were being charged up to £40 per fee.

Of the 44 cases that were due to be heard the majority were settled by the bank before being heard in court. However, seven of the cases were heard at Hull County Court with judge Iain Besford residing.

When hearing the cases the judge made a decision that means the bank will either have to settle all of the pending claims in full or will have to attend an open court and explain its charging structure in detail, explaining why customers are charged so much if it is not for profit.

The disclosure order that the judge agreed to means that the bank now has until the end of September to make its decision with regards to whether to settle the claims or whether to justify its charges in court.

Banks do not generally turn up to these court hearings, as most tend to settle the claims just prior to the case being heard in court. Lloyds TSB, however, has won two cases filed against it for repayment of bank charges.

Originally the judge had considered striking out the bank charge cases altogether following a decision by a Birmingham judge to rule in favour of Lloyds TSB earlier this year. However, having heard the cases he has now informed the bank that it must pay up or explain and justify its charges.

Tom Smith
13th July 2007

Tags: lloyds, tsb, county, yorkshire, hull, cases, bank, charges, win, court

Increasing numbers of players in small business loans market

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

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

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

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

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

Tags: small businesses, bank of england, lack, tsb, current climate, month

Base rate should remain at 5.5%

We are likely to see interest rates rise again this summer but borrowers can sit comfortably for the rest of this month at least.

The Bank of England Monetary Policy Committee (MPC) is due to announce a base rate decision on Thursday June 7th but industry figures are not predicting another rise.

Interest rates have increased four times since August 2006, taking them to 5.5 per cent, the highest level since April 2001.

Despite many experts seeing it as inevitable that the base rate will rise again before the end of the year, Lloyds TSB says that it does not expect another rise in June.

“We may well see a rate rise before the summer is out, but a move this month is highly unlikely. We’ve seen rates increased four times since August last year and the effects of these are only just starting to show through – inflation is coming off the boil, the housing market is cooling and signs of slower activity are appearing in the retail sector,” said Trevor Williams, chief economist at Lloyds TSB Corporate Markets.

“However, it’s still too early to judge the full impact of these cumulative increases, especially those that have taken place in the past nine months.

“The most likely outcome of this month’s meeting is that the MPC will opt to hold rates and buy time to gauge the impact of recent increases, before making another move,” he concluded.

The news will be welcomed by those with credit cards, loans and mortgages.

Tags: tsb, rise.Interest rates, June, Bank of England Monetary Policy Committee, Lloyds TSB Corporate Markets, market, nine months

Winter will see more claims

Homeowners are likely to make more insurance claims in the coming months as a result of the bad weather.

That is according to Lloyds TSB, which says it is expecting to see a 15 per cent increase in burst pipe claims during the first quarter of this year.

The insurance provider is highlighting the fact that something as seemingly minor as a burst pipe can prove to be both a major headache and a real financial burden.

Lloyds has revealed that the average claim for a burst pipe is around £2,500, while the most expensive the firm has ever seen was £156,000 for a particularly troublesome problem.

Homeowners are being warned to take action to help keep damage from a burst pipe to a minimum, with advice such as locating the stopcock, gas valve and ball valves, in case the worst happens.

Lloyds also advises people to leave their heating on a low heat if they are going away on holiday, as this will prevent pipes from freezing, while outdoor pipes should be well insulated during the winter months.

“So far this winter we’ve had relatively mild weather so many homeowners were caught unprepared for this cold snap,” said Lloyds TSB’s Phil Loney.

“A little bit of effort now could save you a lot of wasted time and stress caused by problems such as burst pipes or broken boilers.

“To give yourself peace of mind, make sure you have adequate home insurance that will cover you if the icy conditions do take their toll,” he added.

Residents are also advised to leave their insurance details with a trusted neighbour when travelling in case there is an incident while the house is empty.

Tags: weather, homeowners, Insurance, Valve, peace of mind, little bit, tsb, mind