Mortgage News

The lowest levels of approved home loans in the last five years were recorded in October, according to figures released by the Bank of England. This news can only confirm that the housing market is indeed cooling and have lead to analysts predicting that interest rates have reached their peak.

Since May there has been a steady fall in the number of approved mortgages but there was a sharp drop in October, falling to only 83,000 – not since January 2000 has it been lower, the Bank of England stated. The approvals for October were valued at £21.1 billion as apposed to £21.6 for September.

It was for the forth month in succession that net mortgage lending fell to £7.519 in October – only in March 2003 has it been at a lower level.

With consumer credit growth dipping for the third month in a row, it can be said that the Bank of England’s five increases in interest rates have hit spending on the high street. Consumers also borrowed less in October with only £1.5 billion compared to £1.6 billion in September. These softer figures could signal an uninspiring trading period during the run up to Christmas and could damage retailers’ profit margins significantly.

It is anticipated that the Bank of England will leave interests rates at 4.75% as we are about to enter the next year due to the slowdown in consumer credit and mortgages. It has been suggested by the British Bankers' Association, the Building Societies' Association and Council of Mortgage Lenders that there is a slowdown in new home lending.

The Global Insight economist Howard Archer believes: "The steady stream of markedly softer housing price and activity data are likely to fuel the Bank of England's concern that an 'abrupt' housing market correction could occur. Consequently, interest rates seem certain to remain unchanged not only next week, but well into 2005."

George Buckley of Deutsche Bank stated that the mortgage data had confirmed that new lending to individual applications has been on the decline. He continued by adding that this fall had gained momentum by the descending number of first-time buyers, the lowest it has been in 30 years.

With the total of net lending to individuals falling to £9.068 billion from the previous months £9.19 billion, this was the lowest reading for lending secured on homes and consumer credit since November 2002.

Car Insurance News

Egg has just released information that indicates that one in four motorists have no protection policy for their no claims discount on their car insurance. The figure that is estimated for repairs alone is £336 million per annum.

The expenditure of 6.2 million people for repairs is believed to be 1.68 billion rather than lose their fee reduction, over the last five years.

The internet bank also predicts that over the next year a further 1.24 million drivers will follow suit.

However, there are positives from this movement. The last five years have seen 1.15 million motorists premiums rise by more than a fifth, the survey discovered.

Andy Deller, director of banking and insurance at Egg, said "Some motorists look to reduce the overall cost of their car insurance by not protecting their no-claims discounts,"

"This is often a false economy and can be risky as some one million people will end up paying for repairs to their cars rather than claim on their insurance and lose their discounts over the next 12 months."

However, there are other ways to make savings on car insurance.

Mr Deller continued: "Motorists looking to reduce their car insurance premiums should not cut the quality of their cover or lose their no claims discounts, but instead shop around to ensure they have competitive quotes.

"We estimate that motorists are currently paying £3.6 billion a year too much for their car insurance. This equates to about £120 per motorist."

It was also found that young motorists were most likely not to protect their no claims bonuses. In the age range of 25 to 34 it showed that 36% of drivers did not protect themselves as apposed to 18% of motorists aged 55 to 64.

Life Insurance News

Consumers have been warned by the Financial Services Authority (FSA) to be cautious about whole-of-life insurance policies having received an increase in complaints from customers who were mis-sold policies.

A total of 5442 complaints were made to financial ombudsman Walter Merricks, with the majority of disputes resulting in compensation for the consumers who were mis-sold policies last year.

Unit-linked policies proved to be the main source of dissatisfaction, a niche product which was created during the mid-1980s and sold in the following decade by aggressive insurance sales forces.

It was billed as the solution for protecting families in early life, whilst offering protection against inheritance tax in the later stages of living.

Those companies that have withdrawn from the market include; Norwich Union, Standard Life, Aegon UK and Legal & General.

David Cresswell, Ombudsman spokesman, said: "There are a range of problems with these policies, and we are worried about the way they are being specifically targeted at the elderly through day-time TV.

"Worries about funeral expenses start to prey on their minds. This can lead to them signing up for premiums which they may not be able to afford on very limited incomes.

"We get complaints that people pay these things for years until they have paid in far more than they could ever get out, but have to keep on paying or they get nothing back.

"In many ways, these are a risk investment, and it may not be appropriate for elderly people with little money to be embarking on this kind of risk. As always, our concern is that they fully understand what they are signing up for."

FTSE 100 Index News

The London stock market was lifted by the performances of their airlines today after easyJet, the no-frills carrier, released record profits whilst oil prices started to decline.

With heavy losses from the last two sessions, the FTSE 100 Index recovered to push ahead 19.4 points at 4753.5 by mid-morning.

With a three-day losing streak, British Airways luck changed with the announcement that crude oil prices were retreating back from the $50 a barrel mark due to their soaring fuel bills. Investors would have been pleased to hear shares in BA rose 1.25p to 218.75p as well as their second-tier rival easyJet posting record profits for the year at the top end of market expectation.

With passenger numbers being 20% higher than 12 months ago, easyJet’s shares rose 9.5p to 192.75p, an increase of 5%.

With the announcement that Instinet brokerage maybe sold, media group Reuters gained 6p to 397.5p whilst financial stocks gained further ground today with Prudential rising 5.5p to 419.75p and Royal & Sun Alliance 0.5p stronger at 77..25p.

With a number of key European cities falling to raise sufficient demand, hotel group InterContinental posted a lower turnover than expected for their third quarter and consequently saw a fall in their share prices of 19.5p to 660p.

The other highlights in the FTSE 100 Index, Stanley Leisure’s merger with a Malaysian firm in the hope of developing a network of Las Vegas-style casino sites saw their shares rise up 23.25p to 446.25p.

ScS Upholstery gained 4% with a 15p increase to 366.5p with a surge in orders since October and radio group GWR slipped down with a loss of 7p a share to 235p due to the confirmation of disappointing advertising sales in the last two months.