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Archive for May, 2011

Bank survey reveals sad plight of would be borrowers

Tuesday, May 31st, 2011

A survey carried out for the High Street Bank, Halifax, reveals today just how disillusioned a generation of workers in the UK are, and how they view the prospect of purchasing homeowner insurance as an ever dwindling dream.

Generation of tenants

The report shows that a whole generation is becoming reconciled to the fact that they may never be able to afford a home of their own, as banks make the qualifying criteria for getting a mortgage more difficult. The report shows that although the vast majority of 20 to 40 year olds want to follow in their parents footsteps and possess a home of their own they are quickly coming to realise that they are trapped in a financial straightjacket.

Huge survey, huge deposits, huge disappointment

The report is more worrying because of the number of people who took part. This was no bite size sample, over 8,000 were questioned and 9 out of 10 still aspired to have their names on a mortgage deed, however, the stress of actually applying for a home loan and the damaging effect on one’s credit rating when being turned down was turning more and more people away from pursuing their dream.

Of course the main factor quoted was the huge deposits most banks are demanding before they will hand out a mortgage, the report shows that many of those questioned had tried to save the cash but realised it was beyond their reach. It seems as though we now have a generation who through no fault of their own will be buying home contents insurance on a house they rent rather than one they own. It is not only a worry for them; it should be a worry for the banks.

Impact could be far reaching

If the UK suddenly becomes a nation of tenants then the banks will be bidding goodbye to a source of revenue that has kept them wealthy for a long time, mortgages have been the lifeblood of the Halifax and other banks for a long time. To this end the Halifax has declared to take action on the report by the National Centre for Social Research immediately.

New approach from the Halifax

A spokesman for the bank said it would have new measures in place by midsummer to give prospective mortgage applicants a comprehensive insight into its lending requirements before they start the process. It will involve prospective buyers being given a promise of the amount the bank will lend to them. The process won’t show on their credit report, and if their application is rejected, the reason why, with tips on how to become more successful in the future will be given.

Tags: banks, First Time Buyers, halifax, home owner insurance, mortgages
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Stagnating Britain does not know which way to turn

Thursday, May 26th, 2011

The revised figures published by the Office of National Statistics (ONS) yesterday for the first quarter of 2011 revealed little change, they did though show that homeowners across the UK may well still be buying essentials such as fuel, energy and home insurance but they are not buying much of anything else and unfortunately the same applies to the business sector.

Consumer spending and business development both drop

The report shows that although the economy is not officially back in recession it very nearly is, the growth of just 0.05 in the first quarter of 2011 combined with the 0.05 drop in the last quarter of 2010 shows that that the economy has stood still for 6 months. This could not hide the fact that household spending in the UK dropped by 0.06 in that period and is at its lowest for 2 years.

Business investment over the same period fell by an amazing 7% but this was explained away by the fact that the last quarter of last year was particularly good because a number of high profile businessmen bought executive jets before the change in VAT. No doubt with their bank bonus!

Interest rates. Will they, won’t they?

The disappointing figures led to speculation that interest rates would now stay the same for the rest of the year. However, on the same day another think tank, the Organisation for Economic Cooperation and Development (OECD) said that, although chancellor George Osborne’s austerity budget was on the right lines he may have to dilute them otherwise he will need the Bank of England (BoE) to up interest rates sooner rather than later to stop inflation running away with the economy.

General public have no time for debate

The OECD predicted UK growth over the next two years would be somewhat below that of the predictions of the Office of Budget responsibility (OBR) and the economy would need a timely stimulus. All this of course will bypass the general public who at the moment are spending more time looking for bargains such as cheap home insurance and fuel at less than £1.40 a litre, rather than listening to politicians point scoring over the financial mess they are overseeing.

Tags: Bank of England, Consumer spending, Home Insurance, Homeowners, money, Office of National Statistics
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Empty homes register massively under estimated

Tuesday, May 24th, 2011

For the four million people waiting to organise affordable home insurance on a house of their own, the fact that a Government backed agency has revealed that the number of empty homes available in the country has been massively under estimated will only heighten the disappointment of their long wait.

Agency discovers thousands of homes not listed

The Empty Homes Agency has unearthed a massive register shortfall of long term empty properties, brought about by the Government cuts to local authority budgets and the lean times experienced by social housing groups involved in regeneration projects. The agency say that at least 12,000 homes due for demolition in regeneration areas are still intact as the projects have foundered due to lack of funds, this figure only involves an investigation into just 20 local authorities and may well be the tip of the iceberg. Because of their planned demolition the empty homes don’t appear on any register.

National situation unacceptable

In a country where there are estimated to be over 4 million people on housing waiting lists, any homes that are just lying empty and neglected is nothing but a waste, the fact that even before this new batch of secret empty homes was discovered the UK had approximately 700,000 homes without inhabitants is seen by many as a national scandal.

Private landlords hard to trace

Official figures suggest that around 300,000 of the homes are owned by private individuals who have left them unoccupied for a long time and perhaps are no longer covered by any type of home insurance policy. It is this situation that the Empty Homes Agency was created to address, it is a completely different situation trying to persuade a private owner to renovate his home to that of a Town or City Council.

Incentives to bring about change

However, the Government has announced a raft of measures designed to address the situation including the New Homes Bonus which rewards social housing landlords for returning unused properties back to the market. A figure of about £7,000 per home is available to authorities that do this and it is thought that many councils will consider passing the sum on to private landlords in a bid to make the homes available for those desperate to find a place to live.

Tags: empty homes, Home Insurance, regeneration projects, The Empty Homes Agency
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Disappointing inflation figures set the scene for interest hike

Thursday, May 19th, 2011

After last month’s pleasantly surprising drop in the UK Consumer Price Index (CPI) to 4%, homeowners were once more given cause for concern about a rise in interest rates when the figures for April showed an increase of 0.05% to 4.5%. The figure was just as surprising as the March ones really but altogether more unpleasant.

Worrying times

The prospect of a hike in interest rates has once more been raised and consumers already paying over the odds for fuel, home insurance products and energy will be more than a little concerned.

Economists rewriting their scripts

The drop in last month’s figures coupled with the gloomy recovery predictions from Mervyn King, the Governor of the Bank of England (BoE) had led pundits to believe that the record low Base Rate of interest would remain the same for the rest of this year. They are now revising their forecasts once again with economists appearing in front of TV screens seemingly every day, voicing their opinions.

Been wrong before

November is now reckoned to be the time when interest rates will start to go up but city forecasters have been wrong before and just for an example of how wrong they can be the long term forecast for interest rates in May 2011 by a leading economist in August 2009 was actually 3.5%. That is some way out, and remember in August 2009 we already had rates of 0.05%.

5% the tipping point

Of course if inflation is at 4.5% now, then the predicted increases in energy costs in the autumn may well take them over what many see as the pivotal figure of 5%. Inflation over 5% would really point to the BoE as having lost its grip on the economy and would probably result in an interest rate increase.

Getting house in order now may pay dividends

How many homeowners will try and organise their finances around an interest rate hike is anyone’s guess, but the time may be right for consumers to get a new home insurance quotation if their policy is due for renewal and the same could apply in regard to their energy and home loan providers. Making sure one can manage the essential bills over a period of a few years can take a great deal of stress from the financial management of any household.

Tags: Home Insurance, Homeowners, Interest rates, Saving Money, UK Consumer Price Index
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Savers get the chance to find a new home for their money

Tuesday, May 17th, 2011

Homeowners looking to find an inflation proof home for their savings now have the chance to find such a place, courtesy of the Government financed National Savings and Investments (NS&I) department.

Tax exemption will allow savers to redress the balance

Savers who have seen their nest eggs slowly nibbled away by rising prices in the shops, at the forecourts, and even in their homes via increased charges for products such as energy and home insurance can now invest £15,000 into a five year savings bond that will guarantee them interest based on the Retail Prices Index (currently hovering at 5.3%) plus an average of 0.5% over the full term and the best thing of all is that the interest is tax exempt.

New bond the first for almost a year

The new bond issue from the NS&I comes after a 10 month period in which it stopped offering inflation proof bonds to new customers due to what it described as excessive demand. The March budget did make way for the NS&I to increase its bond selling by £2 billion and that is exactly what it is now doing. The bonds can be cashed in before the term if inflation falls, although everyone must hold on to them for at least a year. With interest levels ranging from RPI+ 0.25% after year 1 to RPI+ 0.86% after year 5 the Government department best known for its sale of Premium Bonds is expecting to be inundated with customers in the coming weeks.

Sweet revenge for those who were let down

Savers, particularly those who feel they have been let down by banks and building societies in respect of loan repayment rates when they looked to take out affordable home insurance on affordable homes, will no doubt take great pleasure in transferring their money from the High Street mortgage providers and into the Government coffers. The banks and building societies are not all happy about a Government Department muscling in on their domain and are now complaining about unfair competition. One gets the feeling the complaints may well fall on deaf ears.

Don’t delay

The new bonds will be especially attractive to top rate or even middle rate tax payers due to the tax exemption and prospective buyers will have to be quick off the mark.

Tags: Interest rates, money home insurance, savers, tax exemption
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Precious metals high on thieves shopping lists

Thursday, May 12th, 2011

The ever increasing price of precious metals across the world is having a profound effect on crime figures in the UK. Many cases of copper and lead thefts from railway lines and public buildings have hit the headlines over the last few months, now homeowners are being warned to ensure their home owner insurance policies are up to date and fully comprehensive as the thieves target private homes in their quest for easy pickings.

Soaring precious metal prices

The price of gold and silver is at record highs and thieves have not been slow to realise how they can benefit. Watches and other jewellery items are comparatively easy for the burglar to carry away and last month’s British Crime Survey revealed that burglaries across the UK had risen by almost 100,000 compared to the previous 12 months.

High value technology items also targeted

Gold is proving particularly tempting for the thief because of its high value at the moment and homeowners should bear this in mind when getting a home insurance quotation. A lot of families collectively own quite a large amount of jewellery and the hike in prices means that policy cover arranged just a couple of years ago may now be massively undervalued. In the same period, the introduction of a new tier of smart phones and computer tablets costing considerable amounts of cash also means many homes could now be under insured.

Law change required to stop the thieves

The problem for homeowners and police forces is the ease in which the criminals can get rid of their ill gotten gains. Selling gold online or on the high street for cash has never been easier, and police officers believe this is encouraging thieves to increase their activities. They are now putting the activities of scrap metal companies under the microscope and believe that the way to discourage the crime wave may be to stop scrap metal transactions being made in cash. It will not be easy and in the meantime homeowners should increase their home security levels and ensure their home insurance providers are giving them the cover they require.

Tags: crime, gold, Home Insurance, precious metals, Theft
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Halifax reports big drop in house prices

Tuesday, May 10th, 2011

With the UK’s largest mortgage provider suggesting that house prices are beginning to drop significantly in price again, prospective buyers looking to purchase cheap home insurance on a property for the very first time may just see a glimmer of hope on the horizon.

Difference in figures surprising

With the Halifax Bank reporting that their House Price Index dropped a surprising 1.2% in April, compared to March figures, the likelihood of bargains a plenty are out there for those that can manage to get a loan. It should be noted, however, that the figures vary quite considerably from those supplied by the UK’s largest Building Society, the Nationwide, who last week said that there index suggested a fall of just 0.2%. Considering that both major players in the market base their figures on housing values placed on new mortgage approvals it is confusing as to why there should be a big difference.

That doesn’t change the overall picture though, and that is, house prices are still falling and although many prospective buyers would love to get a home insurance quotation on such properties, it is just not happening. The uncertainty of interest rates remaining at their record low level, the price hikes in the shops and garages and the uncertainty surrounding jobs, particularly in the public sector still seems to be having a profound effect on the general public. The situation is not helped of course by the fact that banks still seem very reluctant to lend unless a big deposit is secured.

Value dropped by one fifth

The Halifax confirmed that the latest drop means that the average price of a dwelling in the UK has now dropped 20% from the peak values of August 2007, a sobering thought for all those who bought at that time and also for anyone thinking about entering the realms of house purchase at the time.

Green shoots of recovery?

The Halifax did point out, however, that not everything pointed to further decline. The Royal Institute of Chartered surveyors (RICS) have reported a shrinking of unsold properties on Estate Agents books. The Halifax asserts that this is a sign that house prices could actually soon start to rise.

Time to make a move?

More reason then for those first time buyers with at least some savings to start chasing the new low deposit loan requirements introduced by some loan providers at the beginning of this month and get out there and find a bargain

Tags: First Time Buyers, halifax banking, Home Insurance, mortgages
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Save to buy account ready for launch

Thursday, May 5th, 2011

For many first time buyers looking to get that important first step onto the property ladder, this first week of May 2011 may well prove to be a landmark. Home insurance providers can expect a little more business to be heading their way shortly if other mortgage providers follow the lead of the UK’s biggest building society and start offering home loans only requiring a 5% deposit.

Sounds good despite the small print

The news that the Nationwide Building Society will be offering a home loan only requiring a 5% deposit will indeed be sweet music to the ears of many frustrated prospective homeowners.

Of course it is not straightforward, these things never seem to be, but if a first time buyer opens a save to buy savings account with a £50 deposit and pays in a minimum of £50 per month, then after a period of at least 6 months the saver can apply for the 95% Loan to Value (LTV) mortgage. The savings account offers an interest rate of 2.5% gross per annum although the AER is variable. This applies to balances up to £20,000.

Cash back reward

If the saver does indeed take out a mortgage with the Nationwide through the offer they also qualify for up to a £1,000 cash back reward. Basically the new account will allow new customers the chance to take advantage of a scheme that was only open to existing customers looking to move home.

Good news for ancillary industries as well

The move is bound to cause a stir in the market, and if the banks decide to chase after the custom then it could be good news not only for prospective home buyers, but for people desperate to sell their homes, estate agents desperate to make any kind of sale and of course for home insurance companies waiting to provide policies on new homes.

It could boost the building industry and give a shot in the arm to the Government, who will be anxious to bring about an end to the bad press the current housing shortage is creating. The account will be launched on May 6th and the rest of the loan sector will be watching closely at the uptake.

Tags: First Time Buyers, Home Insurance, loans, mortgages
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Interest rate committee set to meet again

Tuesday, May 3rd, 2011

Homeowners across the UK will once more be nervously awaiting news from the Bank of England’s (BoE) Finance Committee as they meet later this week to discuss interest rate levels.

Inflated prices hitting the consumer

With food prices in the supermarkets steadily rising, fuel prices rocketing and the cost of home insurance and car insurance spiralling upwards, the last thing anyone with a mortgage wants just now is an interest rate rise. It does seem that the latest news from fiscal experts should keep the rate at 0.5% for this month at least.

Expert forecasting dramatic cut in income

The top economic adviser for influential city finance firm Deloittes, Roger Bootle, is predicting that 2011 will prove to the most restrictive year on respective incomes for over 100 years. He predicts that inflation will rise to over 5% and that tax increases and job cuts will effectively mean that each household in the UK will experience a fall of around 2% in income. He says that on average every family in the country will be around £800 worse off.

Rate rise could damage economy

According to Bootle, wages will fall, house prices will fall and unsurprisingly so will consumer confidence. He predicts unemployment, household costs such as home contents insurance, food and fuel will continue to rise throughout the year leaving us all out of pocket. He believes that some in the City have been too optimistic about the economic recovery and that the poor growth figures suggest we are not out of the woods yet. He also believes a rise in interest rates would risk even more damage to the fragility of the economy. It is no secret that Bootle also has allies within the Government, Chancellor George Osborne and Business Secretary and Vince Cable are known not to favour any interest rate increase just yet.

The hawks may retract their claws

His words come as the BoE committee get ready to discuss the bank’s policy on interest rates. The last few months has seen three members of the committee, Andrew Sentence, Martin Weale, and Spencer Dale all call for a hike in rates to fend off the danger of high inflation, however, the surprising drop in the consumer price index last month coupled with the warning shots across their bows by Bootle, may even convince them that the homeowners can ill afford yet another rising bill.

Tags: cheap home insurance, Home Insurance, Interest rates
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