Archive for August, 2010

What will happen with the base rate and mortgage rates?

Tuesday, August 31st, 2010

Since March of last year the base interest rate in the UK has been at an all time low of just 0.5 percent, which is the lowest it has ever been in the history of the Bank of England, which spans over three hundred years. However, with inflation getting out of hand it is highly likely that at some point in the near future the Monetary Policy Committee will have to consider increasing the base borrowing rate.

Whilst nobody has a firm idea of when any base rate increase may take place there has been speculation over how quickly and rapidly the rate may rise. Some believe that the rate will be increased this year in order to keep a lid on inflation, whereas others believe that it is more likely to be early of mid-2011 before any rate rises are implemented due to the continued fragile state of the economy.

One industry official has suggested that the base rate could increase surprisingly rapidly over the next couple of years, going as far as to say that the base rate could leap from its rock bottom level of 0.5 percent to as high as 8 percent within the next couple of years.

For homeowners with mortgages this could spell really bad news, as it could mean mortgage rates rising to 11 or 12 percent, which could add hundreds of pounds a month to the average mortgage. With some people still suffering financial problems because of the recent recession and job losses this could have a really negative impact, and could leave many people unable to afford their repayments, which could lead to rising repossession numbers.

With this in mind it may be worth homeowners looking at their options when it comes to their mortgages. Whilst nobody should rush into taking drastic action as a result of the rumours and speculation it is always advisable to have a good idea of the options available so that you can be prepared for when the base rate does start to increase.

For many the choice of a fixed rate mortgage may be a tempting one to protect them from huge increases in interest rates, but before making any changes or committing to any particular mortgage deal it is well worth seeking advice from a professional and experienced independent financial advisor to ensure that you get the best deal.

Tags: Mortgage loan, Interest, mortgage, bank of england, base rate

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Few banks lending to new customers

Tuesday, August 31st, 2010

The global financial crisis and the recession has led to the near collapse of the banking system in the UK, and were it not for the money from the public purse – which is made up of taxpayers’ money – many banks would have run into even more serious problems than they already have encountered.

During the financial crisis many of the country’s major banks had to be bailed out with the use of taxpayers’ money, but despite this recent research has shown that there are only a few banks that will now lend to new customers. The figures were revealed after one financial website carried out an undercover investigation via lenders’ websites, and last month it found that only four lenders were offering loans to new customers.

Around twenty six lenders’ websites were put under scrutiny as part of the investigation, and those carrying out the investigation determined that banks appeared to be lending to only carefully selected customers, and even then they were charging high premiums for the privilege. Interest rates on personal loans were found to be at their highest in ten years, even though the Bank of England base rate stands at just 0.5 percent, which is the lowest in the history of the central bank. The average rate on a loan of £5000 was 12.6 percent, which reflect how huge the margin between bank loan rates and the base rate has become.

An example highlighted by the officials that carried out the investigation was the Barclays site, which read: ‘You could be eligible for a Barclayloan Plus if you’ve held a Barclays current account for more than 12 months, paid at least £1,000 into your account each month, managed your account well and have a good credit history.’

Tags: Bank, Interest, finance, bank loan rates

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A third of Brits will lend to friends

Tuesday, August 31st, 2010

In the current financial climate there are many people that may be struggling to get any sort of finance such as an overdraft, loan, credit card, and the like, and for many of these people the only option left available is to turn to a family member or friend to borrow money if the need arises.

However, the concern for friends and family members when it comes to lending money is whether they will ever see it again, as the pressure for a person to repay someone that they are close to is obviously nowhere near as great as if they borrow the money that they need from a lender.

Recent research has shown that one in three Brits would be prepared to lend money to a friend that was in financial need, but many are convinced that they will never see the money again. Around 32 percent of those responding to the survey said that they would give their friends a loan, with the typical loan amount being around £40. However, many of them said that they did not think that they would see their money returned to them.

Around 35 percent of respondents to the survey said that they knew that they would have to keep reminding their friends if they wanted the money to be repaid, and a further 25 percent said that they would be too embarrassed to ask their friends for the money back and would therefore end up writing the debt off.

The survey also showed that 70 percent of those that had lent money to friends had to wait at least two weeks before they got the money back, and 4 percent had ended up waiting for more than a year to be repaid. Another 18 percent said that they would not see their money again. Around 7 percent of respondents said that they had decided that they would never lend money to friends.

Tags: finance, loan, debt, friends

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Panic could mean many fix their mortgage rates

Monday, August 30th, 2010

Recent predictions from industry officials have sparked concerns amongst many homeowners over their future repayments, with one official claiming that the base rate could rocket from its current all time low of just 0.5 percent to a shopping 8 percent over the next couple of years, which could push mortgage interest rates up to 11 or 12 percent.

For many homeowners this would put them in financial dire straits, adding hundreds of pounds a month to their mortgages and putting them at risk of losing their homes altogether if they cannot find the extra money to make these higher monthly repayments.

It is now thought that these claims and predictions over the base rate increasing could result in people flocking to fix their interest rate before the base rate does go up, although nobody knows when this will be. Some experts have said that the recent reports and predictions are simply scaremongering, and have warned consumers not to rush into taking measures that may prove unnecessary.

However, others are warning consumers to look into the options available to them, as although the base rate may not go up yet it will go up at some point, and consumers need to have a good idea of what their options are if and when this happens. For those that would struggle to maintain repayments on their mortgages if the cost went up each month this is particularly important.

One financial industry official said: ‘If borrowers know they would struggle if rates started to jump, it is important to look at ways of preventing mortgage payments shooting up.’

Tags: Mortgage loan, interest rates, finance, mortgage

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Mortgage restrictions affect first time buyer numbers

Monday, August 30th, 2010

It has been reported that restrictions in the mortgage market have resulted in a drop in first time buyer numbers. A report has been released by the property website Right Move, with the data showing that there has been a significant drop in the number people looking to purchase their own home this July compared to the same month last year.

The property company claims that the number of first time buyers looking to buy their own home this July fell to 22 percent and this compared to 31 percent in July of last year. The research indicated that there were a number of possible reasons for the sharp drop in first time buyers looking to get onto the property ladder over the past twelve months.

Right Move officials also warned that the number of first time buyers was at half the level that was required for a healthy housing market. This will come as a blow for the property market, which has been experiencing real difficulties since the onset of the global credit crisis and has only recently started to experience any degree of recovery.

The availability of mortgages is a major concern for many people, and with banks still being very cautious over mortgage lending many may be concerned that they will not be able to get a mortgage. Another problem is that many would be first time buyers cannot raise the deposit that lenders are demanding, and this could be made even worse by news that the Bank of England may be intervening to have mortgage loans capped thus restricting access even further.

Miles Shipside from Right Move said: “With the number of prospective buyers at the bottom of the chain being half of normal levels, the question sellers further up the chain will be asking is ‘who will be at the bottom of my chain?’”

Tags: first time buyer, finance, mortgage, Mortgage loan

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Buy to let mortgage market could remain difficult

Thursday, August 26th, 2010

During the boom years in the property sector buy to met mortgages became very popular, and many people invested in properties to rent out over the course of the property boom. However, since the global credit crisis and the near financial collapse seen over recent years the mortgage markets have changed radically, and buy to let is just one of the sectors that have been affected.

Getting a buy to let mortgage has been difficult for the past couple of years, and although the mortgage market is said to have improved over recent months officials believe that buy to mortgage access will remain restricted for some time to come. Buy to let mortgage lenders are also facing a drop in confidence levels amongst would be landlords.

Research was carried out by LSL Property Services, and in its report said that there are a number of factors that are contributing towards the state of the situation. Officials believe that the bleak conditions in relation to buy to let mortgages could continue until at least 2012.

Increased capital gains tax in the UK has been partly blamed for the situation, as this means greater financial losses for higher rate tax payers. This, in combination with house price falls seen recently, has given rise to speculation that the buy to met mortgage market could continue to experience difficulties.

The survey that was carried out that previously 48 percent of landlords thought that it was a good time to buy due to rising rents and house prices. However, this confidence is said to have been stopped in its tracks because of the situation with capital gains tax and the more recent fall in house prices.

Tags: landlords, finance, buy to let, mortgage

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Grieving families hounded over loans

Thursday, August 26th, 2010

It has been reported that some loan firms have been housing grieving families in the UK for repayment of the debts of their deceased loved ones. According to reports some families are not even being given the chance to sort out the estates of their loved ones before they find themselves being hounded by banks and loan companies.

Accusations have now been made that some banks and loan companies are acting greedily and selfishly by pestering the families of those that have died and who are already struggling to cope financially with their loved ones gone. Officials from the Consumer Credit Counselling Service have said that the number of calls being received in relation to these incidents has increased.

The CCCS said that it was difficult enough for people to cope with the loss of a loved one, but having to deal with their debts and with persistent lenders made the situation even worse for many. The charity said that this particularly affected those who had lost loved ones who were main income earners or whose incomes had been used to cover repayments on the debts.

Problems often arise because some people fail to realise that if they sign a joint loan agreement they are responsible for the repayments in the event that the joint applicant dies. This is something that applies to mortgage loans, loans, rental agreements, and other forms of finance agreements.

One solicitors firm, Silverman Sherliker, said: “It’s not appropriate for creditors to harass bereaved family members as all inquiries relating to a deceased affairs ought to be directed to the executors or personal representatives, who are often a firm of solicitors.”

The CCCS said: “Bereavement is difficult enough, but finding you have to deal with debt makes it that much harder. This is particularly so for those that have lost a partner or spouse whose income was used to maintain the repayments.”

Tags: loan, bereaved, banks, debt

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Boosting your chances of getting a mortgage

Tuesday, August 17th, 2010

Finding a suitable mortgage these days is not an easy task, and with so many lenders imposing restrictions when it comes to offering mortgage loans it is important to be prepared before you take the plunge. Without some sort of preparation and research you could end up wasting your time on mortgages that are unsuitable, that you cannot afford, or that you are not eligible for, so some forward preparation can go a long way.

One of the things you need to check is how much you are able to borrow, and it is advisable to do this before you even start searching for a property, as otherwise you could end up looking at properties that are out of your price range. This will also stand you in good stead if more than one person puts in an offer on the property you want, as the seller will have peace of mind that you can definitely borrow the amount needed.

Another important consideration is the type of mortgage product that you want, such as a fixed rate mortgage, a standard variable rate, a tracker mortgage, or one of the other mortgage products that are available. Many lenders offer a range of different mortgage products, and different ones will suit different needs. However, if you are unsure which is best for you it is always worth seeking financial advice from an independent mortgage advisor.

Your eligibility for a mortgage is another thing that you need to consider, and this includes checking your credit rating, as this may determine whether the lender is likely to take you on. You should check your credit rating as early as possible, and if it is poor it may be worth considering holding off getting a mortgage until you have time to improve it, as the difference in interest, and even the chances of getting a mortgage, can be greatly affected.

Comparing mortgages is vital when it comes to finding the right deal. You can do this yourself using resources such as the Internet, where you will find many lenders and deals. However, getting a mortgage can be a tricky affair, especially for first time buyers, so you may want to consider enlisting the help of an experienced and well connected independent financial advisor. You may have to pay a fee upfront, but can then be sure that the advisor will be working to get the best deal for you rather than one that makes him or her the most commission.

Tags: finance, Mortgage loan, mortgage products, independent financial advisor, mortgage

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Lending to businesses down due to banks

Tuesday, August 17th, 2010

Since the onset o the global financial crisis small and medium sized businesses have really struggled to get access to finance from banks, and this has caused a great deal of concern amongst many officials, including the government, with regards to how the economy can improve if businesses are not able to get the finance that they need.

It has been suggested in the past that the reason behind lower lending levels to businesses was a mixture of lending restrictions on the part of banks and weak demand from businesses, which were said to be wary about taking on finance in the current financial climate. However, one group of industry officials has said that weak demand is not the reason behind the low levels of lending to businesses, and that this is largely down to banks.

The claim was made by members of the Telegraph’s group for owner-managers, who have claimed that amongst banking frontline staff there have been inconsistent lending decisions, more security demands, higher charges on overdraft facilities, and a general lack of knowledge when it comes to business lending.

The owner of an estate agency said: “I almost believe them when they say there is no demand but it probably has a lot to do with the terms they want to lend on.”

Another business official explained how her business loan request was handled, stating: “It all started out well, with ‘can’t see it will be a problem’ kind of statements, which slowly deteriorated to silence; then not bothering to return my calls; to a ‘no’ decision; to treating me like something that had dropped off the end of their shoe. And absolutely no explanation of why or how their position had changed.”

Tags: Bank, loan, Business_Finance, finance, buainess

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Why you should repay your credit card debt as soon as possible

Monday, August 16th, 2010

Although having a credit card is considered convenient and easy by most people it is all too easy to accrue debt on your plastic, and in many cases – especially in the current financial and economic climate – consumers find it difficult to repay the debt. However, those that have a high outstanding balance on their credit cards need to be very careful about how much they are paying off on the balance, as failure to make a big enough repayment could result in the debt lasting for years or even decades, and this is on a relatively modest debt. It is important to remember that by making minimum repayments you will not be making a dent in your outstanding balance but will merely by keeping things on hold, leaving you in financial limbo.

There is another major downside to paying only the minimum repayment on your credit card balance each month aside from the length of time it will take to make the repayments, and this is the amount of interest that you will pay. The longer your debt drags on the more interest you will be paying to the lender, and by sticking to minimum repayments you will end up paying an astonishing amount of interest on a relatively small debt.

Of course, not everyone can afford to make huge repayments on their credit debt especially in the current climate, and this is where it may be worth considering a balance transfer credit card that offers either 0 percent interest on balance transfers or offers a low rate of interest for the life of the transferred balance. This will make it easier for those with credit card debt to repay their debt without having to pay interest, as these cards offer a generous interest free period or a really low rate of interest until the transferred balance in repaid.

For those that feel that they can pay the transferred debt off within a year or so then a 0 percent balance transfer card may be best, and there are some that now offer interest free period of well over a year. However, for those that need to be very careful with their repayments and believe that they need to have a far longer period within which to repay the transferred debt a life of balance transfer card could be the ideal option.

Tags: Credit card, debt, Interest, credit

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Consumers warned against fake debt offer calls

Monday, August 16th, 2010

Over the past few years more and more people have found themselves in a situation where they are struggling to keep on top of debt repayments, and for many the situations has become unmanageable. This has stemmed from the global financial crisis and the recession, which has affected the finances of many households across the UK.

For many the only solution has been to try and seek advice from debt specialists and agencies, which has proven very effective for some of those with unmanageable debts. However, it is important for consumers to ensure that they go to a reputable debt charity or agency, as some fraudsters have picked up on the interest in debt advice and are using it to scam people that are desperate and vulnerable.

Officials are now warning consumers in debt to be very careful, and this comes after it was revealed that there have been bogus calls in the East Kent area from people claiming to be from the Citizen’s Advice Bureau. Officials have warned that the callers have strong Asian accents, but because they know people’s names when they call they are more likely to take people in. There are now concerns that those desperate to rid themselves of their debt problems will be easily taken in by the fraudsters, and could end up giving out personal and sensitive details to them.

An official from Trading Standards said: “The advice is to be wary of anyone cold-calling and never to disclose any personal or bank details to them. If in any doubt at all, end the call by hanging up. If required, there is free confidential and independent advice on how to deal with debt problems on the National Debt Line on 0808 808 4000.”

Tags: fraud, debt, Citizen’s Advice Bureau, scam

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A third of home equity pensioners pay off debt

Thursday, August 12th, 2010

Over the years many older homeowners who have had equity in their homes have drawn on this equity and used the money for a variety of purposes, from making repairs and improvements to the home to treating themselves to a once in a lifetime trip overseas.

According to a recent report many pensioners who are drawing on their home equity are now using the money to repay debt. Figures show that around one third of retired pensioners that are taking equity from their properties are now using the money to repay their debts. The research was carried out by the University of Birmingham, and was on behalf of the charity Age UK.

The most common reason for taking equity from the home for retired pensioners was still to carry out repairs, improvements, and maintenance in the home, and around half of all those taking equity from their homes were using the money for these reasons. Key Retirement Solutions, the equity release specialists, have said that this year older people will spend around £550 million on home improvements.

Like many other people a rising number of pensioners have accrued more debt over recent years as a result of the financial crisis and the recession, and using their home equity has become an effective solution for many of these older homeowners to repay the debt and ease their financial problems.

One consumer said: “My elderly aunt had built up a fair amount of debt in terms of credit cards and loans over the years, and now she’s retired repayments were becoming a struggle. However, she did have cash tied up in her home so rather than struggling along each month we advised her to use the money that was in her home to clear the debts and then spend some time enjoying retirement.”

Tags: equity release, debt, credit, finance

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Further problems for interest only homeowners

Thursday, August 12th, 2010

Over a number of years prior to the global credit crisis many people buying homes were able to get interest only mortgages, and these mortgages allowed the buyer to repay only the interest on the mortgage over the repayment term, with the actual loan amount being repayable only at the end of the repayment term.

The reason why so many people opted for this type of mortgage was because the monthly repayments were far higher because borrowers were only making repayments on the interest rather than on both the capital and interest. However, the idea behind these mortgages was that borrowers had a sideline investment that they could use to pay the loan off at the end of the mortgage term, and this is something that many failed to do.

As a result of the high risk associated with interest only mortgages many lenders have now stopped offering them, and there are concerned that this could cause severe problems for current interest only mortgage customers who need to remortgage.

Officials have said that around one million homeowners who have interest only mortgages could be sitting on a mortgage time bomb because they may find that if they need to remortgage they will get moved to a repayment mortgage, which means that their monthly repayments will be far higher.

A spokesperson from Private Finance said: ‘Borrowers are under increasing pressure to switch to a repayment loan. But the monthly cost of a repayment mortgage is far higher than interest-only, so if lenders stop offering interest-only options, borrowers may be unable to remortgage. This could mean going onto their lender’s standard variable rate (SVR), rather than remortgaging to a fix or tracker, which could become unaffordable when interest rates start to rise.’

Tags: finance, remortgage, Interest-only loan, mortgage

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Good news for first time buyers when it comes to house prices

Thursday, August 5th, 2010

One industry expert has recently stated that the recent fall in house prices in parts of the UK will come as good news for first time buyers, many of whom have been disappointed that property prices have been rising again over recent months, putting home ownership even further out of their reach.

Paul Holmes from property company Firstrung said that the country’s first time buyers would welcome the fact that house prices had fallen again recently, but he added that there was still a long way to go for first time buyers in terms of the price of property and the amount that they could actually afford.

For many first time buyers getting a mortgage is already a difficult enough task but with the price of property still high in the UK compared to many other countries many simply could not get a mortgage for the amount that they required. For many the deposit was still a huge issue, with many lenders still demanding deposits of 25 percent or more.

During the month of July asking prices in the UK fell for the first time this year according to the property website Right Move, and this resulted from an influx of sellers onto the market compared to a smaller number of would be buyers due to the problems that many buyers are experiencing in getting a mortgage.

One first time buyer explained the difficulties that she had been facing in trying to get onto the property ladder in the current climate, stating: “Although house prices are said to have fallen recently, which is good news for people like me, the price of property in England is still way too high, and with the higher deposits that lenders want buying is still out of the question for me.”

Tags: mortgage, Mortgage loan, house prices, Property ladder, first time buyer

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Many people confused about mortgages and finance

Thursday, August 5th, 2010

These days the world of finance has become increasingly complicated, and a huge number of financial products and services means that whilst consumers certainly have far more choice they can also get very confused by the wide range of financial products and services that are available from different banks, lenders, and financial institutions.

In fact, a recent survey that was carried out has confirmed that the vast majority of adults in Britain are confused about a variety of financial products, which can be quite dangerous in the current financial climate when it pays to have some level of knowledge about different financial products and some level of understanding about how they work.

The study was performed by the University of Bristol and the insurance comparison site confused.com. As part of the study around six thousand consumers were polled, and the research found that a huge number of people were confused about various financial products suc

h as savings, mortgages, pensions, and more.

The study found that the least confusing financial product or service for consumers was credit cards, with 40 percent of respondents stating that they were not confused at all by credit cards. However, a massive 83 percent of respondents expressed confusion when it came to mortgages and pensions.

Banker bonuses created confusion for 84 percent of respondents, and 80 percent said that they were confused by changes to tax rates. When it came to unemployment rates 75 percent of those responding to the survey were confused. The survey even showed that 42 percent of people lay in bed at night pondering over this confusion.

An official from Confused.com said: “It’s not surprising that financial products and terms account for so much confusion in modern life. It’s easy to see how making decisions could lead to stress and worry.”

Tags: confused.com, finance, financial products, mortgages

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Should those in debt consider an IVA?

Sunday, August 1st, 2010

Many people have found themselves knee deep in debt over recent years, and this results partly from the global financial crisis and the recession, both of which have had a huge negative impact on the finances of many households. For many the financial problems that have hit them over the past couple of years have resulted in huge levels of debt, with many people having accrued debt such as credit cards, overdrafts, and loans.

Whilst some of those that have accrued these debts may now be finding it a little easier to manage their money and honour their financial commitments due to the end of the recession there are still many others who continue to struggle financially, and who are finding it difficult if not impossible to make payment on their financial commitments.

For many of those that have accrued a lot of debt and are finding it hard to keep up with their debt repayments it is vital to find a solution that will enable them to sort their financial problem out as quickly as possible before matters get worse. There are a number of options open to those that have high debt levels, and one of these is known as the IVA or Individual Voluntary Arrangement.

With an IVA those that have above a specified level of unsecured debt with a number of different lenders could be eligible to make set monthly payments based on their income and outgoings, and after a period of five years the remainder of the debt is written off.

An IVA can be a great solution for those that are struggling to pay their unsecured debts, and can really help to ease the financial burden for those that are truly struggling. However, those considering an IVA should bear in mind that it is considered to be a softer alternative to bankruptcy and therefore should not be taken lightly.

An IVA should not be seen as a means of escaping debt, as the long term effects on your credit file and the various side effects can make life difficult. However, it can prove extremely effective for those that truly cannot make their debt repayments.

This interested in opting for an IVA can contact one of a number of debt charities or advice groups, who will be able to go through the criteria and can quickly determine eligibility for an IVA.

Tags: individual voluntary arrangement, credit, debt, iva

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