Archive for April, 2011

First time buyers being ousted by buy to let

Thursday, April 28th, 2011

It has been claimed that a rising number of buy to let buyers are coming onto the market and that this is resulting in an even greater number of first time buyers being ousted from the market. There have been signs of improvement in the property market of late, but it appears that those benefitting the most are investors who are buying to let.

According to reports banks are far more keen to lend to buy to let investors compared to first time buyers for a number of reasons. Buy to let investors often have a lot of experience in the market, they have proven credit history and records, and they usually have a meaty deposit to put down, all of which helps to reduce the risk to banks. Many first time buyers, on the other hand, have little in the way of deposits, are purchasing property for the first time, and sometimes have little in the way of credit history. All of this equates to a higher risk for the banks.

The high demand for rented property, which has soared over recent months, has added to the interest in buy to let mortgages, with many people preferring to plough their money into property investment where they can make a good return on their cash rather than putting it into savings where they get little or nothing in returns in the current climate.

One official said: ‘Lenders are making no secret of the fact that they would rather allocate the limited funds they do have to the lower risk option of buy-to-let loans, with deposits of 25-40%, than first-time buyers loans with 90% loan to values. As a result, the buy-to-let sector is recovering at a remarkable rate, as investors are drawn back by the need for a long-term, low-risk investment for their cash.’

Tags: council of mortgage lenders, Business Finance, first time buyers, fact, business, time

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Men have higher debt levels than women

Saturday, April 23rd, 2011

There is little doubt that many people of all ages and both sexes are struggling with huge levels of debt these days, with many finding it difficult to keep on top of their financial commitments or even make basic everyday purchases because of their difficult financial circumstances. However, despite the current financial climate there are many people that are still not concerned about their debts according to a recent report.

It is reported that people do not tend to start worrying about their personal debt levels until they reach around £9700 or above, even though those with less debt may still be struggling. The average level of debt is around £8400 but many people will wait until it is far higher than this – around£10,000 higher – before they decide to take action and seek advice about how to handle their debt.

Research also showed that it was men who had higher personal debt levels than women, with an average 24 percent more personal debt amongst men compared to women. This comes despite the fact that many men assume that women simply spend spend spend on clothes and shoes using their credit cards and loans!

One industry official involved in the research said: “It is worrying to see that while people become concerned about their debt at £9767 it takes a further £10,000 to trigger a need to seek debt advice. For most people paid advice, such as a fee-charging debt management plan, is a last resort and consumers should explore do-it-yourself solutions and fee-free debt advice from some of the many debt charities such as the Consumer Credit Counselling Service, Money Advice Trust or Citizens Advice Bureau.”

Tags: debts, Consumer Credit Counselling Service, worrying, plan, financial, higher personal debt, advice

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Don’t waste money on unnecessary two for one deals

Saturday, April 23rd, 2011

For many people that have debts and money worries one way to try and reduce outgoings is to look for bargains in supermarkets when doing the shopping. Many supermarkets are riding out the stiff competition that they face from their rivals by offering a huge number of buy one get one free or even buy one get two free deals on their products.

However, whilst these deals may sound really great, and in some cases can benefit people such as when buying frozen produce and items with a long shelf life, there are also many people that fall for the offer and purchase something that they did not want and did not need simply because they realised it was on offer. Often these offers are on items with relatively short shelf lives, and the people that spend their money on them end up not only wasting money on items that they would ordinarily not have purchased but also end up creating a mountain of wasted food because they are unable to consume the free products within the time that they have before they go off.

A recent report has claimed that Brits are creating a mountain of wasted fresh produce that is worth £13.7 billion a year as a result of these promotions. The average household is said to be wasting around £520 a year by taking up these offers and then throwing away the produce because they do not get around to eating it.

The Local Government Association has released the figures and said that the problem is being fuelled by these special two for one or three for one deals that the supermarkets are always promoting. Officials now want supermarkets to look more carefully at the way in which they promote perishable products in order to help reduce the wasted food mountain.

One official said: ‘With more than five million tonnes of edible food thrown out each year, way too much food is being brought into homes in the first place. Retailers need to take a large slice of responsibility for that. Buy one, get one free deals which give consumers a few days to munch through 16 clementines are not about providing value for money. They are about transferring waste out of retail operations and into the family home. Retailers should scrap multi-buy deals which encourage people to take more than they need and replace them with discounts on individual products which will help reduce excess consumption and increase customer choice.’

Tags: fresh produce, tonnes, something, result, number

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Younger generation struggle to get a home whilst older generation has two

Friday, April 22nd, 2011

As most people are well aware trying to get anywhere near the property ladder these days has become nigh on impossible for some people. Today’s younger generation – people in their twenties and thirties – are now finding it so difficult to get onto the property ladder that many have resigned themselves to living with family or renting a home, resulting the demand for rented property soaring. However, many of the older generation are at the other end of the scale, basking in property wealth.

According to recent reports one in seven couples that are in their fifties and early sixties are the proud owners of two properties whereas their kids and grandkids are struggling to even get one property in the current climate. The older couples with second homes have around £250,000 tied up in the second property not including any mortgage that they have on the property. This does not include the value of their main first home.

Younger people, on the other hand, are paying a fortune simply to rent a home, and with the banks demanding huge deposits many people hold out little hope of ever being able to enjoy owning one property never mind two. Many of the older people that have two properties have one that is abroad or in the countryside and another that is their main residence. Many will have purchased their property at a time before the property price boom and therefore will have paid only a fraction of the amount that it would cost for the same property now.

For many people who are in their twenties and thirties the only way they will get their hands on their own property in the near future is if they are left a property by parents or grandparents.

Tags: Today, sixties, older generation, demand, twenties, struggle, hope

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Lenders lose High Court ruling over PPI

Thursday, April 21st, 2011

This week saw lenders lose their High Court battle over PPI compensation, which means that banks will have to contact and pay compensation to millions of people who claim to have been mis-sold the controversial Payment Protection Insurance cover with loans and other forms of finance.

The result means that many more people will now make claims over the sale of this insurance, and it could end up costing lenders in excess of £4.5 billion to pay out the compensation. Banks are already sitting on many claims and complaints relating to PPI and many others will come flooding in. The decision has come as a blow for the banking industry but is a victory for consumer campaign groups.

Anyone that believes that they were mis-sold the insurance through being pressured into taking it out, being sold cover without being informed, or being sold cover when they were not even eligible to claim on it, could now find themselves in a position here they can get compensated and full refunds on the cover. Millions of claims have already been made and having ended up with the Financial Ombudsman, where most were decide in favour of the consumer.

After the ruling the British Bankers’ Association responded by stating: ‘We are disappointed with today’s judgment and now need to consider the details of it very carefully as well as next steps, including whether it would be appropriate to apply for permission to appeal. Any complaints that are directly affected by the judicial review and therefore cannot be decided will continue to be placed on hold until the next steps have been decided.’

Tags: financial ombudsman, excess, Court, result, week

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Homes remain unsold due to high asking prices

Wednesday, April 20th, 2011

It has been claimed that many homes are remaining unsold and stagnating on the housing market simply because they have been priced unrealistically by sellers given the current property market. Many sellers refuse to believe that their properties are not worth as much as they thought they were and are trying their luck with higher asking prices anyway.

However, in the current climate buyers are already struggling to get a mortgage or are exercising extreme caution with regards to purchasing a home due to their uncertain financial future. This has resulted in many of the overpriced homes on the market remaining unsold and the number of unsold properties that estate agents have on their books has increased over the past year.

Estate agents have reported improvements in some areas and have said that the market has been relatively stable over the past few months. However, unless buyers start being more realistic about the price tags that they attach to their properties when trying to sell them their properties could be sitting unsold for a very long time indeed after which point they would end up reducing the price anyway having possibly already lost out on a sale because of the previously high price.

An official from the National Association of Estate Agents stated: ‘We are very pleased to see that the market has remained relatively stable despite the continued economic pressures that are making life very difficult for homeowners and those looking to enter the property market. The significant growth in demand for homes reported by our agents suggests that house-hunters are searching for a good deal on property before the traditional spike in activity over the Easter holidays. That said, the picture is still very varied across the country and significant economic barriers remain.’

Tags: long time, good deal, current property market, books, Many sellers, luck

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Are you at risk of defaulting on your mortgage?

Wednesday, April 20th, 2011

A number of reports recently have suggested that there are many homeowners across the UK who are at risk of defaulting on their mortgage repayments. It is already difficult for many homeowners to keep on top of their mortgage repayments namely because of the soaring cost of living coupled with job losses and frozen pay. With the cost of everything from food and petrol to insurance and energy bills having rocketed many have found that they are struggling to keep up with other financial commitments.

There are fears that if the base interest rate increases those that are on the verge of struggling with their finances will be tipped over the financial edge, leaving them without any means to make payments on their mortgage and leading to possible repossession proceedings. Whilst interest rates are currently at an all time low of just 0.5 percent, where they have been for two years, there are concerns that the Monetary Policy Committee will have to increase the base rate soon in order to deal with soaring inflation.

With this in mind it is advisable for those that believe that they will struggle to get advice as soon as they can rather than waiting for something to happen that will tip them over the financial edge. It is always wise to be prepared in terms of finances, especially given that your house could be at risk if you fall behind on mortgage repayments. This means that households who believe that even if they are not struggling now they could be if the base rate increases should start looking at ways to improve their finances in advance.

There is advice available for those that are struggling with their finances or who believe that they could be struggling with the slightest change in payments such as mortgage, rent, bills, etc. Consumers are able to get free advice from debt charities about their finances and can get themselves prepared for any adverse changes to their financial circumstances by talking to an expert before the rates increase.

A spokesperson from the Consumer Credit Counselling Service stated: “So many households are just managing to make ends meet, that even a small increase in the cost of their mortgage may push them over the edge. As far as possible, families need to think how they could pay such increases and seek help at the earliest opportunity if they feel that they cannot cope.”

Tags: expert, Inflation, homeowners, Monetary Policy Committee, mortgage, Service, UK

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Rent-A-Room could help with the mortgage bills

Tuesday, April 12th, 2011

There are many people in the current climate that are struggling to pay their mortgage bills and monthly rent on their homes. For many the soaring cost of living coupled with wage freezes and benefit cuts has already impacted on their ability to meet these payments each month and if the base rate increases over the coming months things could become even more difficult financially. 

Many of the people who are struggling are actually living in a property where there is a spare room, which is often filled with junk and forgotten about. However, many of these people could find that they are able to make use of the room and earn a substantial amount of money to pay towards their rent or mortgage each month as part of the Rent-A-Room scheme.

As part of the scheme, which was launched in 1992 by the government, homeowners and renters are encouraged to rent out their spare room to a lodger, and also allow them to use the shared facilities such as bathroom and kitchen. Under the scheme those taking in the lodger can earn up to £4250 a year in rental income without paying tax on it, and some industry groups are trying to get this increased to as much as £9000.

The average rent being taken in by those renting out a room to a lodger is now £4467, with the figure in London even higher at £6626. This can go a long way towards helping with the rent and mortgage even if the threshold does remain unchanged.

One official said: ‘Lodgers can get a much better address for their money while homeowners can use the income to take the pressure off their own soaring costs.’

Tags: junk, impacted, Rent, government, helping, address, ability

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New service available for those looking for money advice

Monday, April 11th, 2011

A new service has recently been launched to help consumers in the UK who are looking for advice relating to various areas of finances, ranging from debt and pensions advice to savings and mortgage advice. The service is a free and impartial one that is open to anyone that needs advice and assistance regardless of their financial circumstances.

The new service is called the Money Advice Service and has been launched through the government as an upgrade to its Consumer Financial Education Body, which was launched last year. The service will aim to offer impartial advice relating to a wide range of financial issues that can affect consumers, especially in the current climate, and will be welcomed by the many who have struggled to get financial advice relating to their debts because of the huge demand for these services.

There are a number of ways in which consumers will be able to access the new service should they wish to get advice. They can do this by going online to get the advice that they need, they can make a call to get advice, or they can even see someone in person if they prefer to do so. In addition to offering valuable advice this service will also provide consumers with access to a wide range of tools and resources that will help people to deal with easily with their financial issues.

An official from the Money Advice Service stated: “The Money Advice Service is here to make people’s lives easier and better. We’re not here to sell people anything and we won’t charge anyone – we are here to help people take decisions about their money and plan for a better future for themselves and their families.”

Tags: climate, charge, assistance, future, New, consumers, Social Issues

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Now could be a good time to invest in property

Saturday, April 2nd, 2011

There are many people out there that are wondering how they can make money on their heard earned savings given the fact that savings accounts are offering little to nothing by way of returns. Since the base interest rate fell to just 0.5 percent two years ago many homeowners have welcomed the lower repayments that have come from the base rate drop. However, the news for savers has not been so good, with interest rates on savings plummeting.

For those with life savings to invest there are a number of options available, and some officials believe that now could be a good time to invest money in property. There are a couple of reasons for this. At present property prices are more affordable than they have been over recent years. Whilst some sellers are putting properties up at higher prices they are failing to secure sales because many would be buyers cannot get mortgage finance. This makes it more likely that sellers will drop their price for those that are willing to buy and especially for cash buyers who are ready to make their move.

A second and very significant reason for investing in property is the sky high demand for rented property amongst those that are unable to get mortgage finance or do not wish to take on a mortgage at present. This means that those planning to invest in property and then rent it out could make a nice profit as many people are keen to rent a home privately, with some even placing sealed bids and gazumping one another in terms of how much they are willing to pay each month for the privilege of renting the property.

There are a number of things that you need to think about when choosing a property for investment. For example, it is important to have your property is an area where you will get a lot of interest from would be tenants and where there are essential facilities and amenities nearby depending on your target group. For example, if you want to rent to students make sure that the property is close to a university or college.

Another reason to consider the location is that house prices vary widely from one area to another, as has been shown in a number of recent reports. This will have a significant impact on your initial investment.

Tags: present, news, cannot, essential facilities, time, base interest rate, finance

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Low base rate doesn’t stop defaults on mortgages

Friday, April 1st, 2011

According to recent reports the level of defaults on mortgages loans has increased during the first three months of this year, even though the base interest rate stands at just 0.5 percent, where it has been for the past two years. Since March 2008 the base interest rate has been at just 0.5 percent, with the decision to lower it in order to try and improve affordability, cut repossessions, and boost the economy.

Since then it has stayed at this low level, and for some homeowners this has seen significant amounts of money slashed from their monthly mortgage repayments. However, although repayments for many homeowners with variable rate mortgages have come down because of the lower interest rates the cost of living has soared and many have become used to using the spare cash to pay rising bills and additional debts that they have accrued since the interest rate fell.

When the base rate increases again, which it is expected to over the coming months, those that have found another essential use for the money that they saved on their repayments when they base rate fell will struggle to rise the money to meet increased repayments. This will lead to more and more people defaulting on their mortgage repayments unless they take action early on to ensure that they can cope with a rate rise.

If the level of defaults on mortgage repayments does rise it could mean a further increase in the number of repossessions in the UK, which became a huge issue after the onset of the global financial crisis and the recession. Banks are expecting default levels over the next three months to increase to their highest level in a year.

Tags: base interest rate, base, monthly mortgage repayments, low base rate, Default (finance)

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