Money UK

Fixed Rate Popularity

snowman — Wed, 14 Jun 2006 13:32:00 +0000

Fixed-rate mortgages had a good showing during April, during which period they made up 71 per cent of all approvals, according to the latest figured from the CML(Council of Mortgage Lending). This is a rise of two per cent compared to the previous month, and a whole seventeen per cent up on the same period last year, showing that fixed rate mortgages are continuing to find favour with borrowers.

This growth in popularity is down to the security fixed rate deals provide against the murmerings of an interest rate hike being on the cards for some point in 2006, combined with a market that very competitive at present.

Fixed rate deals are beginning to see their rates slowly rise, as lenders are seemingly preparing for the expected base rate rise, having only a few months back been slashing rates after the base rate cuts of last August, and the then widespread belief that further cuts were on the cards.

The popularity in this type of mortgage is well founded, as over the past eight months since that last rate cut, fixed rate mortgages have proved to be the better performers in the market. Continued take up is expected, as consumers like the security that the fixed rate offers, and the forecast of a rate rise is adding to this.

Mortgage Basics

snowman — Thu, 29 Jul 2004 09:36:00 +0000

A mortgage is a loan which is secured against a property. There are so many mortgage deals available that it is important that you look around for the best rates and the deal which is most suited to you.

Types of mortgage

Variable - This means the interest rate goes up and down in line with the Bank Base Rate.

Discount - This means there is a reduction on the variable rate for a certain period of time.

Tracker - A base rate tracker mortgage tracks the BOE's base rate and changes in accordance, with a constant differential, set by the lender.

Fixed rate - This means that the interest rate is fixed for a set period.

Capped rate - Self explanatory. The interest rate is variable but cannot go above a pre-arranged limit.

Cashback - This means that you will get a lump sum in cash upon completion of the deal.

Flexible Mortgages

Flexible mortgages allow you to overpay, underpay, borrow back overpayments and take payment holidays. Interest is calculated daily on a flexible mortgage and there are no redemption penalties.

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Mitsubishi to Manufacture Electric Cars in 2010

snowman — Wed, 11 May 2005 10:46:00 +0000

Mitsubishi Motors, the scandal-plagued car manufacturer, will sell electric cars in 2010, aiming to showcase its technological dexterity in an attempt to fix its tattered brand image, the Japanese automaker stated today.

Struggling to regain customer confidence after repeated cover-ups of car deficiencies, the Tokyo-based company showed off a tiny test vehicle equipped with motors embedded in the rear wheels that run on lithium-ion batteries.

Tetsuro Aikawa, who supervises product development and environmental research, told reporters at the company's headquarters "For a company with small sales like ours, this is a way we can assert a meaningful presence."

Since the car manufacturer acknowledged five years ago it had been methodically hiding car deficiencies from authorities the selling of Mitsubishi cars have suffered greatly.

Its global production in March dropped 11 percent from the same month a year ago - the 11th straight month of on-year declines.

Aikawa said the planned mini-electric car, which will be available for test fleets next year, has a cruising range of 93 miles (150 kilometers) on one single charge and can be re-energized in a regular home.

With housewives being the primary target for Mitsubishi Motors Corp. so that they drive to pick up their children from school, go grocery shopping and won't need to travel long distances. Aikawa also added that they expect the targeted customer to enjoy the fact that they own a environmentally friendly car that never needs to be filled up at a petrol station.

Officials said the electric car will cost marginally more than a comparable petrol-engine vehicle but they hope to keep prices low through government aid available for buyers of ecological cars. Although the price isn't decided, it may sell for under 2 million yen (US$19,000; euro15,000; £10,000), according to Mitsubishi Motors.

As for the car being sold overseas the company remains undecided.

Money: Higher Rates Hit UK Retail Sales

snowman — Tue, 10 May 2005 14:10:00 +0000

British retail sales tumbled at a record rate in April, according to a survey from industry body British Retail Consortium, and analysts said stocks exposed to confidence about the housing market were particularly susceptible to a fall in expenditure.

But they warned against full-scale panic, highlighting the fact that the timing of Easter, unseasonable weather and general election worries may have inflated the April decline.

An analyst at retail consultant Planet Retail, Bryan Roberts, said "It's not Armageddon by any stretch, but tough conditions will make it harder for ailing retailers."

Sales fell 4.7 percent in April stripping out the effects of new and closed stores, the survey showed.

Britain's long-running consumer boom has been the driving force behind the economy for over the last decade, but a succession of interest rate rises, a cooling housing market and increases in gas and electricity costs have taken a toll on demand.

April's drop is the biggest since the industry group's records began 10 years ago and came after a modest rise in March.

But sales fell by a less dramatic 0.9 percent over the three-month period from February to April.

Nick Bubb of Broker Evolution Securities said "The medium-term outlook is pretty grim, but the sector won't fall in a straight line, and we sense that the current gloom on sector prospects now is a bit overdone."

April's slump follows recent warnings that consumer demand has been declining by UK retailers from fashion clothing chain Next to home improvement group Kingfisher.

Retailers' experiences show the recession has accelerated since December. The UK retail sector has underperformed the wider London stock market by around 11 percent since January this year.

Electrical goods and furniture sales, items most closely linked to the fortunes of the housing market, were hit the hardest, the BRC survey showed.

And analysts said stores selling these items were potentially more vulnerable than others to curbs in spending.

Crackdown On Irresponsible Lenders Say Lib Dems

snowman — Tue, 15 Feb 2005 15:30:00 +0000

The Liberal Democrat Treasury spokesman, Vince Cable, will push for a crackdown on irresponsible lenders this week as he launches a plan to tackle consumers' trillion-pound debt mountain.

Whilst Gordon Brown puts the finishing touches to his Budget, Cable will confront him to challenge the powerful banking sector or risk jeopardising economic stability.

'The government must improve banking regulation so that debt levels do not spiral out of control and consumers are clear on how much they have borrowed,' Cable said. 'Much of this problem has been caused by the government's complacency.'

The trillion pounds' worth of debt that consumers have generated through mortgages and credit cards are worth as much as an entire year's gross domestic product (GDP).

If lending is not brought under control, The Lib Dems believe that further rises in interest rates, or an external shock such as a further oil price spike, could result in a sharp slowdown as nervous borrowers opt to pay down some of their debts. With his 'action plan' being launched on Wednesday, Cable will also call for better financial education.

Barclays also fell victim to Cable’s onslaught as he accused them of failing to deliver value for money last week. With Barclays announcing record profits of £4.6 billion, Cable pointed out that their 'reward savers' accounts pays an interest rate 1.5 per cent lower than the Bank of England base rate. He urged the Office of Fair Trading to take a tougher approach to regulating banks.

Tesco Employs The Polish Workforce

snowman — Mon, 14 Feb 2005 10:51:00 +0000

Tesco, Britain's largest commercial employer, is bringing workers from Poland to work in its stores and drive lorries because it cannot fill vacancies.

The retailer, which holds an eighth of this country’s over all expenditure, confirmed that it had launched a trial at the start of the month with 70 staff shipped over from its stores in Poland.

A spokesman for the supermarket chain said 'We are not the only business to suffer from skills shortages. Unemployment is so low now that in some areas we are having difficulty filling vacancies - so we decided to carry out this trial.’

On union concerns about using foreign workers in British stores he added: 'It is not a huge number when you consider we employ about 250,000 people. We won't make any decisions until we see how this goes.'

Some Polish workers are driving delivery lorries to Tesco's stores across the UK, others are working at distribution centres and some are on the shop floor itself.

The national officer for retail union Usdaw, Pauline Foulkes, said 'a clear case' has been presented to Tesco that they should 'always seek to fill vacancies from the local workforce' and 'should only recruit from Poland as an absolutely last resort'.

Tesco created 16,000 jobs last year, partly as a result of its expansion of convenience-size stores. Usdaw and Tesco emphasised that the Polish workers who are working here are employed on the same terms and conditions as their UK employees.

Loan Rates Favour The Homebuyer In The Mortgage Market

snowman — Thu, 03 Feb 2005 11:20:27 +0000

Mortgage deals are looking attractive following a quiet period at the end of last year. But advisers are warning borrowers to watch out for hefty fees, which may make the deals less competitive.

Borrowers who switch out an expensive variable rate mortgage, typically 6.75 per cent, will almost always be quids in by picking up one of the bargain fixed-rate or discounted offers flooding the market, so long as they are not tied in to their lender’s loan by a hefty early redemption penalty.

Simon Tyler of London broker Chase de Vere Mortgage Management says: ‘The expected price war has started in earnest and both fixed and discounted deals have been cut by many lenders. This time last year the base rate was 0.75 percentage points lower at 4 per cent, yet fixed-rate mortgages were priced at about the same level as they are today, which shows what good value they are relative to the base rate and how hungry lenders are for business.’

Ray Boulger of London broker Charcol says discounted variable and tracker rates are unlikely to get any better than they are now in terms of the margin between the interest rate and base rates, but he predicts fixed rates will get even cheaper. He says: ‘If you are thinking about a tracker or a discounted variable rate, there is no point waiting.’

Childcare Rates Soar

snowman — Tue, 01 Feb 2005 10:44:36 +0000

The cost of most types of childcare underwent a rapid growth spurt last year, rising by an inflation-busting 5 per cent for nurseries and childminders.

The survey, by childcare charity the Daycare Trust, found that parents using nurseries in London and the south east suffered the worst rises. The weekly cost of a nursery for a child under two in central London rose by 17 per cent to £197 a week. In Scotland and Wales, parents pay about £120 a week.

Parents in the West Midlands pay the lowest nursery bills at just £114 a week and parents in the north west pay the lowest childminder costs at £106 a week. The most expensive region for childminders is the south east, at £157 a week.

The good news for families employing nannies is that pay rates have stabilised and are even falling in some areas. In London, a live-in nanny’s wages fell 5 per cent from £308 to £292 a week, according to the latest figures from payroll service Nannytax.

Employing a nanny in central London is still painfully expensive, however. A daily nanny earns £27,000 a year in the city, on top of which parents must pay £2,850 in employer’s National Insurance. This means one working parent must earn a gross salary of £41,755 just to meet the nanny’s wages.

Shell To Make History With $18bn Profit

snowman — Mon, 31 Jan 2005 13:44:59 +0000

Oil giant Royal Dutch / Shell will this week unveil the largest profit in UK corporate history. Income after tax will climb to around $17.5 billion, and is likely to exceed the takings of its arch rival BP, which reports the following week.

Despite last year being the Anglo-Dutch group’s ‘annus horribilis’, thanks to the reserve downgrades scandal, it is expected to report its best-ever results. These will exceed previous corporate highwater marks reached by banking group HSBC, which made £7.7bn last year.

The pre-tax profit figure will be even larger – up to $32bn – but analysts do not focus on this because oil companies treat taxes paid in the countries in which they operate differently, so comparison is difficult.

But some forecasters believe Shell’s after-tax number could exceed $18bn, and that the company will promise to hand back cash to shareholders via a share buy-back or special dividend worth between $2bn and $5bn.

Shell’s profits are expected to be about $1bn ahead of BP’s. BP chairman Lord Browne stirred controversy last week when he said the group’s cash-flow was ‘staggering’.

The performance comes on the back of last year’s sustained period of high oil prices, thanks to a surge in demand from China, instability in the Middle East and supply disruption and capacity shortages.
But consumer groups are unlikely to slate oil companies for profiteering as a price war has erupted on garage forecourts after supermarket groups Morrisons and Tesco slashed petrol prices. The oil majors have followed suit.

Analysts are expecting Shell’s net income to be $4bn to $5.5bn in the fourth quarter, and between $16.4bn and $17.9 for this year.

This is despite production volumes falling in the fourth quarter, although refinancing margins were strong.
Meanwhile, investors are anticipating further news on the reserves question. In the autumn the company said it might have to add another 900 million barrels of oil to the 4.47 billion it took out of its proven reserves last year.

Analysts are expecting it will have to confirm this figure, derived from an audit of 55 per cent of total Shell reserves, and are likely to have to add to it, following inspection of the remaining 45 per cent. Sanford Bernstein analyst Neil McMahon believes there will be an increase in the figure. ‘If it is from their big fields they would find the same problems. I would have thought there was more to come.’

A further 142 million barrels of oil will have to be taken out of proven reserves because of a downgrade in Canadian bitumen reserves.

Inheritance Tax Timebomb

snowman — Mon, 24 Jan 2005 15:32:47 +0000

Millions of homeowners face a tax timebomb unless the government changes inheritance tax laws, according to research for a large broadsheet newspaper.

Within 20 years one in three homeowners will have tax deducted at 40 per cent from their estate when they die, according to the study by the Halifax, Britain’s biggest mortgage lender.

The number of homeowners potentially liable to inheritance tax is likely to rise from 2.4 million now to 4 million by 2015 and 6 million in 20 years.

The tax has spread as house price inflation has far outpaced the rate at which has tax-free inheritance threshold – currently £263,000 – is set. The Royal Institution of Chartered Surveyors (RICS) and the Council of Mortgage Lenders are urging the government to link the threshold to house price inflation. If this had been done since 1993, it would now be £359,000.

Although middle England is starting to protest at the effect of inheritance tax (IHT), there are few signs that the government is listening, ‘I don’t think they will change their stance on this – given the budgetary pressures they are under,’ said Milan Khatri, head of economics at the RICS. ‘The government is using the easiest route possible to increase the tax take without putting up tax rates.’

John Whiting, of PricewaterhouseCoopers, formerly president of the Chartered Institute of Taxation, said: ‘IHT isn’t doing what it was originally designed to do – get at the wealthy and redistribute. It is increasingly affecting Mr, Mrs and Ms Average.’ He would like to see a review of the tax take place, rather than letting it increase its scope ‘by accident’.

People dying in Gerrards Cross, Bucks – the town with the most expensive houses in Britain – would lave an IHT bill of £145,000 on today’s average property prices if they died now.

But there are 85 other towns where the average property price is above the threshold.
Paying the bills can create practical problems for children and others who inherit. The worst arise when the house is the only asset and must be sold to pay the tax. Although IHT bills can be paid in instalments over 10 years, the full bill must be paid immediately if the asset is sold.

Housing Jitters For Bank Of England

snowman — Wed, 12 Jan 2005 23:07:46 +0000

Bank of England policymakers are expected to leave interest rates at 4.75 per cent for the fifth successive month tomorrow as they watch the housing market downturn gather pace.

Interest rate doves on the nine-member Monetary Policy Committee surprised the City by mooting the idea of a rate cut at their December meeting for the first time since summer 2003; but analysts believe Bank governor Mervyn King will urge them to wait for more evidence.

‘Rates aren’t going to come down any time soon: they’ve wrestled to get the housing market and consumer borrowing under control and, having done that, they’re not going to rush to cut rates,’ says Ross Walker, UK economist at Royal Bank of Scotland. He added that a strong round of pay deals in the spring could fuel inflation and lead to one more rate rise.

John Butler, chief UK economist at HSBC, who is still forecasting at least one further increase in borrowing costs by the end of the year, said the MPC would be watching to see whether homeowners have begun to cut back on spending as they watch the price of their homes wobble.

‘I think it’s not too early to say that the housing market’s turned, and the turnaround in the summer was reminiscent of the early 1990s: the question is, does that mean we’re going to see a hard landing?’ he says.

At his last quarterly inflation briefing on the state of the economy, King pointed to evidence that the link between consumer spending and house prices had been broken, and a CBI survey suggesting retail sales were resilient in November seemed to support his point last week.

Latest housing market statistics underlined the case for the MPC to hold fire. Halifax says prices increased by 1.1 per cent in December, while Nationwide showed them falling by 0.2 per cent.

The Post Office Plans An Onslaught On BT

snowman — Wed, 19 Jan 2005 16:26:32 +0000

If you think that the Post Office is just a place to buy stamps or pick up a form to renew your passports, you haven’t been in there in a while.

From the array of financial services now on offer you could be forgiven for thinking that the Post Office has turned into a bank, and with the launch of its new telephone landline service last week, it is assuming the role of a utility provider too.

It is only a little over two decades since the Post Office lost control of the bulk of the supply of phone services in Britain, when Margaret Thatcher split telecoms off from the high street and mail side of the business in 1981, and subsequently privatized the newly named British Telecom. Now the Post Office has returned to the telecoms market with its Homephone service, which it says it hopes will take a million of BT’s 21 million customers over the next three years, by undercutting its charges by up to 20 per cent.

As the controversy rages over branch closures – and there are more on the way – the Post Office, which is seen as being at the forefront in providing financial services for the ‘unbanked’, is pulling out all the stops to find a new role. Spokesman Jonathan Kinsella says: ‘The end of direct payments for pensions and benefits has seen a 40 per cent reduction in business, and we are having to find ways to come to terms with this. It has meant closing smaller and uneconomic outlets in order to provide a means for others to survive. In future we will see fewer branches doing more things.’

Recession Imminent If Rates Aren’t Cut

snowman — Tue, 18 Jan 2005 10:40:16 +0000

This will be ‘the year the luck runs out’ for homeowners, consumers and the Chancellor, leading economist Roger Bootle warns, predicting that the Bank of England will have to slash interest rates to stave off a recession.

In his quarterly economic health-check for accountant Deloitte and Touche, Bootle warns that as the housing market downturn accelerates, economic growth will slow to 2 per cent this year, from well over 3 per cent in 2004.

‘There are two big stimuli that are going to give out: the housing market, and government spending,’ he says. Gordon Brown’s cash splurge on schools and hospitals has helped to prop up the economy over recent years, but in last summer’s Spending Review the Treasury announced an easing in the pace of spending growth.

‘Even if you assume that there are no tax rises, the change is going to be devastating,’ says Bootle, who expects the Chancellor to exacerbate the slowdown next year by pushing up taxes.

He also believes unemployment could start to creep upwards as a knock-on effect of the rapid slowdown in the housing market, with layoffs in the construction sector, followed by other firms dependent on a buoyant housing market, such as retailers, hotels and restaurants.

With slowing government spending, falling house prices and rising unemployment, Bootle says the only cause for hope is the Bank of England will have room to cut interest rates rapidly. ‘I wouldn’t say that a recession is likely, but I wouldn’t dismiss it: you’ve got several key dangers, and they’re interactive, so the Bank has a major role here. You’ve got to hope that they could fend it off.’

Tax Increase Expected For Online Betting

snowman — Mon, 17 Jan 2005 15:15:53 +0000

Gordon Brown is to clamp down on internet betting exchanges and will demand that they pay more duty to Customs and Excise.

The Treasury will make its move after a National Audit report has revealed that out of £2.67 billion wagered on exchanges, a paltry £7.3 million was paid to Customs and Excise last year. This compares with £376m paid by bookmakers on bets worth close to £30bn.

Online exchanges allow punters to be the bookmaker and set odds on any event. They take commission on whoever wins each bet. But bookies have been up in arms because those who offer bets on exchanges give far more generous odds because of not paying any duty.

A Whitehall insider said the Treasury will move within months to close the loophole. A well-placed industry source added ‘The duty and the commission that exchanges make just doesn’t add up. It’s all pointing to the Treasury acting to stop this.’

Tough Christmas For High Street Retailers

snowman — Mon, 10 Jan 2005 10:30:55 +0000

Retailers will admit this week that Christmas was one of the toughest for years as the British Retail Consortium (BRC) publishes its monthly sales snap-shot.

Only the last few hours of trading and a brisk start to the seasonal sales rescued December from a sharp decline on the previous Christmas. The BRC is expected to report a relatively modest decline of no more that 2 per cent.

It is the latest glum news for retailers. With Sainsbury’s and Dixons reporting this week, the picture is unlikely to brighten. Both companies’ chief executives have been managing expectations downwards during the last two months.

Only Burberry, reporting on Wednesday, is a reasonably certain bright spot. Luxury goods analysts said that although fashion has been tricky, the designer spin-offs such as watches, fragrance and accessories performed well.

The overall tone was set last week as several iconic retailers were forced by a warning from the Financial Services Authority to report poorer than expected trading – and therefore anticipated profits – days earlier than they had planned. M&S was the biggest, reporting like-for-like sales down 6 per cent in the third quarter, and fulfilling predictions that clearing stock would cost dear.

FSA Supplies Insurance Protection

snowman — Wed, 12 Jan 2005 13:21:23 +0000

People buying insurance through brokers will have the protection of the Financial Services Authority from the 14th January.

When the FSA takes over regulation that day, an estimated 36,000 insurance brokers will be bought into the regime and required , for instance, to provide ‘key facts’ information to buyers, including highlighting policy exclusions. The extended remit of the FSA will then include the sale, arranging and advice give on general insurance and protection insurance. Car dealers selling extended warranties will be regulated through the FSA – but, controversially, travel agents selling holiday insurance will be excluded.

21 Years of the FTSE 100 Index

snowman — Tue, 04 Jan 2005 09:40:22 +0000

With the new year barely a few days old, the FTSE 100 index was celebrating its 21st birthday. Born on the 3rd January 1984, many of the original elements look familiar. The biggest company is still BP and 44 of the original constituents survive, in some form or another, in today’s index. But its coming of age also highlights some of the dramatic changes in the stock market over the past two decades: the transformative effect of mergers and acquisitions, the growing internationalisation of the stock market, the importance of privatisations and the shift our economy from a manufacturing to a service-orientated one.

When it was launched the total value of its constituents was just over £100 billion and BP was worth £7.4bn; 21 years on, BP alone is worth £110bn and the market value of the 100 companies has risen over tenfold to £1,085bn.

The Nikkei Stock Average Basics

snowman — Fri, 10 Dec 2004 16:45:01 +0000

Initially founded in 1876, the Nikkei is the most watched stock market index in Japan. It is perceived to be the primary source for business information with its flagship newspaper, The Nihon Keizai Shimbun, being one of the world’s largest-selling business daily.

It incorporates the Dow Jones calculation method to establish current stock prices, which it has been using since September 7, 1950. Originally the Tokyo Stock Exchange (TSE) calculated the Tokyo Stock Exchange Adjusted Average Stock Price from May 16, 1949 until that period so the measurement of this market goes over 55 years.

The Nikkei Stock Average currently has 225 components which are among the most actively traded issues on the first tier of the TSE.

FTSEurofirst 300 Index Basics

snowman — Thu, 09 Dec 2004 16:13:31 +0000

The FTSEurofirst Index Series welcomed the initiation of the FTSEurofirst 300 Index on the 29th September this year. This index is based upon the FTSE Global Classification System and covers 93.3% of the FTSE Developed Europe Index. It consists of the 300 most highly capitalized blue chip companies throughout Europe.

This index started out as the FTSE Eurotop 300 and was based in the FTSE European Series. There are a number of sub-indices held within the index including the two new sets of FTSEEurofirst Supersector (the pan-European and Eurozones).

FTSEurofirst 300 Index News

snowman — Wed, 01 Dec 2004 10:52:16 +0000

The latest information on the movers and shakers in the FTSEurofirst 300 Index.

FTSE 100 Index News

snowman — Tue, 23 Nov 2004 13:03:18 +0000

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.

Mortgage News

snowman — Mon, 29 Nov 2004 14:38:02 +0000

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.

Life Insurance News

snowman — Mon, 29 Nov 2004 13:44:53 +0000

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."

Car Insurance News

snowman — Mon, 29 Nov 2004 13:57:02 +0000

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.

Car Insurance Basics

snowman — Mon, 06 Sep 2004 11:11:57 +0000

Motor insurance is required by law if your vehicle is going to be parked or driven used on the nations roads. The very basic level of insurance is third-party cover which insures you for damage done to somebody else or their vehicle.

Fully comprehensive insurance is available at greater costs, which covers yourself and any passengers in your vehicle.

The industry is very competitive, resulting in lower prices and great deals, but is is important that you get as many quotes as possible to ensure you get the best value deal.

Car insurance companies usually offer a "no-claim bonus" which leads to cheaper premiums. This is calculated by the number of years that you have been insured but have not made a claim.

It is important to check the amount of excess you will be required to pay. Insurance policies have their minimum claim amount set to different levels, depending on the small print. There may be certain things you cannot claim for, so make sure you check.