Personal Finance News
High interest rate on current accounts up for grabs
Posted 2008-06-8
Lloyds TSB announced today a new six per cent current account following increasing competition between leading banks.Customers who open a Plus account before July 13th will receive six per cent AER (5.84 per cent gross variable) on balances as high as £2,500.To qualify for the account customers need to deposit at least £1,000 a month and after 12 months the bank will offer a competitive four per cent AER.Those without the £1,000 a month required to qualify will have to make do with a standard current account, which offers 0.1 per cent AER.Catherine McGrath, director of current accounts, Lloyds TSB, said: "While many of our competitors are cutting the interest they pay to customers on their current accounts, were bucking the trend offering one of the best deals on the market.""By upping the interest we pay on our Plus accounts everyone will be able to make the most of their current account balance."Alliance & Leicesters Premier Direct current account and Abbeys Preferred In Credit Option account offer more interest than Lloyds new Plus account, but they both expect a minimum monthly deposit to qualify....
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Not having mortgage life insurance is a “risky strategy”
Posted 2008-06-5
An expert has warned that not taking out life insurance with a mortgage is a "risky strategy".Plan Insure states that that due to the credit crunch fewer people are willing to part with the extra money it costs each month to have a life insurance plan in place."It doesnt surprise me that, because of the difficulties people are facing, this problem has become more severe. But it is a risky strategy, for all sorts of reasons," Simon Firmin, life and pensions adviser for the company, says.He adds that life cover is "vital" as without it people will struggle to cope with potential difficulties.Mr Firmin continued to say that there is also an increasing number of borrowers opting for basic life cover rather than full protection.Recent research from My Mortgage Direct found that only one in five borrowers are signing up for life assurance along with their new mortgage deal, with many citing financial difficulties as the reason they have not taken out cover.In related news, the Times has reported that an increasing number of homeowners are opting to take mortgage holidays as they are having trouble making their repayments....
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Bank of England keeps base rate steady
Posted 2008-06-5
The Bank of England opted to freeze its base interest rate at five per cent yesterday.Economists had not been expecting a cut, despite the need to boost the economy and stop the restrictions on mortgage lending, due to the recent jump in inflation.Henk Potts, equity strategist at Barclays Stockbrokers, said: "The Monetary Policy Committee finds itself in the middle of a difficult balancing act, involving rising inflation on one side and slowing economic growth on the other. "There is no doubt that UK economic growth is moderating."In a further blow to homeowners or those looking to take out a mortgage, the interest rate announcement came as Halifax revealed house prices have fallen by 2.4 per cent in May.The average house price is now £184,111.It was the second biggest fall on record, with house prices declining by 2.5 per cent in March this year....
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Clever consumers” regularly check credit reports
Posted 2008-06-4
Savvy consumers check their credit reports regularly, according to one expert.James Jones, the consumer education manager at Experian, said that as loans are becoming increasingly difficult to get hold of, consumers need to take steps to maximise their chance of having an application accepted.He added that lenders often rely on credit histories to help decide whether or not they accept somebodys application, which is why he advises that people should check their information is up-to-date.Mr Jones added that lenders are also using credit histories to help determine what rates of interest they should charge people."Clever consumers are checking their credit reports to make sure that all the information is correct," he concluded.Recent research from CreditExpert.co.uk highlighted that many would-be borrowers are not confident that they would be given a loan.Some 23 per cent of those polled said they would expect to be turned down for a loan of £1,000, while 42 per cent were unsure they could secure £10,000 worth of credit....
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Expert: Always worth searching for a better mortgage deal
Posted 2008-06-4
It is always worth comparing mortgage deals to find a more competitive rate, according to one expert.Your Mortgage has stated that despite the tightening of the mortgage market in the past six months it is still worth hunting for a good deal.Pauline McCallion, editor of the online resource, said that, as the cost of living is currently increasing, "it makes sense to try and cut costs where you can".However, she added that there are limitations on the market at the moment, with some lenders only accepting applications from certain types of customer and a number of building societies just lending to their members.The British Bankers Association recently reported that the number of people switching mortgage deals increased by 24 per cent to 74,722 in April this year.In related news, the Financial Services Authority claims that 1.4 million people are due to come off fixed-rate deals this year and could be searching for another mortgage. ...
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Brits ‘unsure about their debt levels’
Posted 2008-06-3
One in ten Britons are unsure about their level of debt, according to new research.A study by CreditExpert.co.uk has revealed that, although 96 per cent of respondents initially claimed to be familiar their finances, further probing proved that they were not.It was also noted that only one in four people know how much they have left to pay back on their loans, while a fifth admit to only planning their finances every six months.Jim Hodgkins, managing director for CreditExpert.co.uk, said that it was "alarming" people knew so little about the state of their finances, adding: "Keeping track of your commitments and planning for the future are always important."Other findings which emerged from the research included that people are not confident about applying for loans, with 23 per cent of those questioned expecting to be turned down for a loan of £1,000 and 42 per cent believing they would be refused £10,000.In related news, MoneyExpert.com has revealed that some 38 per cent of people with debts are concerned about their ability to pay back their loans....
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First-time buyers ‘unable to get on the property ladder’
Posted 2008-06-3
First-time buyers are being squeezed out of the housing market and are unable to afford homes in their local area, it has emerged.A report from Hometrack asserts that 28.3 per cent of would-be homeowners are unable to afford a property in their locality. First-time buyers in London and the south-west are in the worst position, with 41 per cent and 40 per cent respectively being unable to get on the ladder.The company attributes these problems to growing house prices in previous years and rising costs in other areas such as food and utilities which have seen the average mortgage cost for first-time buyers grow by 12 per cent over the past year.People who want to a buy a property are now spending an average of 34.5 per cent of their salaries on mortgage repayments.Richard Donnell, director of research at Hometrack, said that while mortgage rates for first-time buyers have increased, changes to the availability of mortgages has had the greatest impact on their ability to buy.In related news, the Bank of England has revealed that mortgage approvals for April fell to a 15-year low....
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Borrowers ‘taking more mortgage holidays’
Posted 2008-06-3
Homeowners are increasingly hoping to take a mortgage holiday to relieve their financial pressures, it has emerged.The Times reports that a number of major lenders have noted a rise in borrowers taking such a break, which enables them to skip payments for up to a year.Sue Anderson, of the Council of Mortgage Lenders, told the newspaper that this is a clear sign people are struggling with their day-to-day expenses.Bradford and Bingley added that an increasing number of borrowers have fallen into arrears and are restructuring their finances to cope with this.According to the publication, debt charities have also noted this emerging trend, with Chris Tapp of Credit Action saying that they expect it to continue over the coming months.This follows news from Citigroup that 250,000 homeowners are in negative equity, with the figure forecast to reach one million by the end of 2009....
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Credit ‘becomes increasingly expensive’
Posted 2008-06-2
Credit is reportedly becoming more expensive, which could be bad news for anybody relying on their credit cards to pay for day-to-living costs.Research conducted by Moneyfacts.co.uk highlights that since the beginning of the year there have been numerous increases to the rates and charges that people pay for using their credit cards.It notes that in the past five months alone there have been 22 purchase rate increases, 15 cash rate increases and more than 30 increases to fees such as balance transfer fees and cash withdrawal fees.The financial website asserts that credit card providers are tightening their criteria, making it difficult for anyone with a less than perfect credit rating to get a competitive deal."However, for those with an exemplary credit record there are still good deals to be had," it adds.The company advises that when looking to apply for new plastic consumers should think about how they use the card and opt for one which is suitable for their needs.Recent research from the Fair Investment Company highlighted that people are increasingly opting for credit cards which offer financial incentives rather than ones which look attractive or make donations to charity....
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One in three Brits ‘concerned about debts’
Posted 2008-06-2
A recent poll highlights that more than one in three Brits are concerned about their level of debt.Moneyexpert.coms survey shows that 38 per cent of respondents are worried that they will not be able to pay their loans and credit card bills, a rise of five percent compared to three months ago.It also emerged that eight per cent of those with debt are "very concerned" about their financial situation.Of those questioned during the survey, 23 per cent admitted to taking on more debt in the past three months, to help them cope with rising fuel and food prices.Speaking about the results, Sean Gardner, director of the financial website, said: "These latest figures add up to a collective cry for help as Britains enormous debt mountain looms larger than ever."He added that anybody struggling to repay their loans or bills should seek immediate help to avoid getting into more difficulty.Meanwhile, the Financial Services Authority has advised people to stay on top of their mortgage payments and is launching a new campaign to help people stabilise their finances. ...