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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
Posted in First Time Buyers, Home Insurance, Saving Money | No Comments »

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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Now is the time to check your heating system works

Tuesday, April 26th, 2011

At a time when many households in the country prepare to switch off their central heating systems as the early spring sunshine warms up their homes, few will consider maintaining the radiators and pipe work, but they should. Many people only think about their heating when it goes wrong and by then it is often too late. A cold house or even worse a leaking radiator that leads to a household insurance claim can be avoided by a little forethought and planning.

There are many simple things you can do to solve the problems with a central heating system before arranging an engineer visit or purchasing a new unit.

System running hot and cold

The most common problem is that your radiator is hot at the bottom but cold at the top. It means that air is trapped in the system preventing the efficient circulation of the hot water, so you need to bleed the radiator. You need a radiator-bleeding key which you can buy at DIY store. There are sophisticated automatic bleeding keys which cost around £10. I bought a manual bleeding key at a DIY shop for £1.99 which works perfectly. It is very easy to bleed a radiator and if you are not sure there are many how-to videos posted on YouTube and other DIY websites. You only need to bleed it once a year or so. This simple operation can save you a couple of hundreds on your energy bills.

Leaky valves can be sorted out

The other common problem is radiator leakage. Sometimes, especially in winter when the heating system is in constant use the pipes just wobble and the nuts and screws loosen which may cause a small leakage. In some cases the leakage might be temporary and stop in a couple of days – it happened to one of my radiators. If not you need to get a spanner and tighten the gland-nut and the cap-nut. If it still does not stop the leak then you can try applying PTFE tape down into the valve spindle, which can be done without draining the system. Again, you can find many video instructions on the internet.

When all else fails make sure you are covered

If the above methods fail then it may be time to call an engineer. It is worth watching out for leaks and checking radiator temperatures from time to time. It is also worth bearing in mind that central heating systems are made to last a long time and should do so. Many homes still house radiators and pipes that were installed in the 70s and 80s– and they are still in perfect working order.

It is always a good idea to make sure your home insurance broker includes heating cover in your policy as it can often be an emergency situation when the home loses all heating options, and that is why the system should be sorted out now.

Tags: heating system, Home Insurance, household insurance
Posted in Advice for Tenants, Home Insurance | No Comments »

Banks shocked by High Court findings

Thursday, April 21st, 2011

Homeowners across the UK will have cause to look carefully at any past loans or purchases they have acquired, as a High Court ruling on Payment Protection Insurance (PPI) made retrospective claims on the mis-selling of such policies a possibility for many consumers.

How it should work

PPI is unlike most other insurance products but millions of policies have been sold over the last few years. Unlike a conventional home insurance policy PPI was often sold to customers signing up for loans without them grasping the fact that they were really purchasing a product. PPI basically covers a person’s loan/purchase repayments if they become sick or unemployed. It will cover the cost of repayments if the purchaser suddenly finds themselves out of work or incapable of work due to an illness.

Sold to the wrong people?

There is no doubt that like any good insurance products it can be very welcome in times of an emergency. The big problem with PPI is how it was sold! Banks and other loan companies have been accused of selling the PPI product to people who really had no call for them but did not really appreciate the fact.

Banks argument rejected

In a ruling today the High Court rejected an argument put forward by the British Bankers Association (BBA) that the recent rules update by the Financial Services Authority and the Financial Ombudsman Service were unfair because they were retrospective. Importantly, the rules also stipulate how the banks should deal with past cases of potential mis-selling of PPI, a decision which could cost banks billions of pounds.

The right of appeal

The banks have 21 days in which to appeal against the reviews findings and it is for sure that is exactly what they will do. In the meantime homeowners who think they have been mis-sold PPI in the past should look for any saved documentation of the loans taken out. There is a chance they did indeed sign for PPI without knowing it, in which case they may have a claim.

Compensation could amount to billions

As experts reckon the average claim could easily be £1000, and the total run into billions, some homeowners may get enough cash returned to sort home insurance costs and possibly other insurance costs out for the next year.

Tags: high court, Home Insurance, house insurance
Posted in Advice for Tenants, Home Insurance | No Comments »

Copper thefts now spread across to the USA

Tuesday, April 19th, 2011

It appears that when the price of products bought on the global market go up in value then the crimes that people are willing to commit to get hold of the products also goes global.

Homeowners targeted by thieves

The price of scrap metal and copper in particular has soared over the last 12 months leading to homeowners in several parts of the country making claims on their household insurance policies as burglars have stripped their homes of copper piping and wiring while they have been away. Apparently the same thing is now happening in the United States of America (USA).

Police forces in the UK have been inundated with reports of copper stolen from buildings of every description. At first the thieves concentrated on big buildings such as churches, schools and other public buildings as well as the wiring alongside the UK’s railway network. However, as the price of copper has gone up the thieves have turned their attention to ordinary run of the mill homes.

USA homes suffering same fate

A gang of thieves recently arrested in Reynoldsburg, Ohio, had been plying their trade in several states before being brought to book. In common with homeowners in the UK, American families are contacting local tradesman and sometimes emergency services to homes that have seen plumbing pipes, air conditioning wiring and hot water tanks ripped from their foundations.

Cost is much more than the gain

Of course the monetary gain for the thieves is nothing compared to the loss encountered by the families violated by the crimes. The damage caused by water leaking into a home where electric cables have been exposed can be catastrophic and home insurance companies are now handling claims everyday from such scenarios. The claims on both sides of the Atlantic will run into hundreds of thousands of pounds.

Neighbourhood watch encouraged

Police in the UK have requested householders to be vigilant about their security when they are at home, but be extra careful when they vacate their property for any length of time. They are asking the public to help each other out this Easter by keeping an eye on neighbouring properties when they know people are on holiday. Homeowners are reminded that it doesn’t take much time for an undisturbed thief to find a way into most houses, but a light or an alarm can usually persuade the criminal to go elsewhere.

Tags: copper theft, Home Insurance
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Steady increase in the price of home insurance

Thursday, April 14th, 2011

In news that will cause little surprise to hard pressed homeowners anywhere in the UK, a recent survey has confirmed their assumptions. Homeowners looking for the best home insurance deals will find their project a little more difficult this year as a leading insurance company provides evidence that policy premiums have increased in the first quarter of 2011.

Increase across the board

The increase applies to both building and contents insurance, with buildings cover increasing less than that of contents cover. The complicated system used by the provider, involved working out the average of the three lowest quotes provided to each separate researcher working on the survey. When the figures were collated the cost of a buildings insurance policy averaged out at £147.29 and contents cover came in at £76.39, increases of 2.7% and 5.5% respectively.

Experts impressed

Experts in the industry said the figures were far better than they expected and certainly far better than the increases consumers are experiencing when looking for car insurance. One industry insider said that considering the amount of claims most insurers had experienced during one of the harshest winters for 50 years, the increases were more than acceptable, they were very good. Apparently the industry had been hit for £900 million in December alone.

The increases although appearing slight over the first quarter of a year don’t hold up so well when compared to the price of the same policy in March 2010. The difference then becomes more marked, buildings having increased by 13.6% and contents by 11.9%.

Good value for peace of mind

Burst pipes and other winter emergencies also have an effect.

Another statistic revealed by the survey was that the average claim for winter damage was over £2,000, and when this is taken into account then perhaps a figure of less than £80 for the peace of mind of knowing you are covered by home owner insurance is worth it. Worryingly though, Government figures suggest that almost a third of the population don’t bother with household insurance at all. Surely this works out to be a false economy in many circumstances, especially as flood events seem to be more and more common throughout the UK.

Fraudsters add cost to everyone

Another worrying aspect of the cost of insurance is that insurers reckon fraudulent claims increase the price of premiums for everyone by over £40 per annum, a situation that simply must be stopped.

Tags: Home Insurance, home insurance prices
Posted in Advice for Tenants, Home Insurance | No Comments »

Homeowners wait on inflation figures

Tuesday, April 12th, 2011

Homeowners already faced with mounting expenditure on home expenses ranging from household insurance to food and drink, will be nervously awaiting news on the inflation rate for March, which is due to be released by the Office for National Statistics (ONS) around lunchtime today.

Status quo predicted

Experts are predicting that figures will be very much in line with those of February, which showed the Consumer Price Index to be 4.4 %. If so, homeowners can be sure that the highest level of inflation since the bottom of the recession in 2008 will put even more pressure on the Bank of England (BoE) to raise interest rates next month.

Mortgage increase could be tipping point for many

Spring 2011 really is proving to be a tough time for the majority of households in the UK. If the BoE do raise rates next month then the mortgage providers are sure to follow. The result could easily tip many precarious family incomes over the edge.

Already faced with record high fuel bills, a hike in their mortgage payments could prove disastrous for some family budgets. Unfortunately interest rates are not the only black cloud on the horizon, rumours abound that utility companies are set to announce massive price hikes this summer that will put all other price increases in the shade. Talk of bills going up by over 10% is common place and it sounds like the rumour mill is just the utility company’s way of preparing the ground for the announcement.

Bank reform paid for by the public

On top of this, City insiders are predicting that the Independent Commission report on Banking will give banks the green light to extract from customers on the retail banking side of the business extra charges to fund the changes demanded by the Commission. Estimates of around £100 a month more on a £120,000 mortgage are being bandied about by observers.

Is there a silver lining to the black cloud?

So is there any good news around for the hard pressed homeowner? Well perhaps there is a little good news out there. First of all consumers can often find the internet can be very helpful in cutting bills. The proliferation of comparison sites on the web means that with a little bit of time and effort homeowners can find items such as cheap home insurance and cheap groceries, both of which will be a good help to any budget.

Secondly the abysmal retail sales figures for March could also actually help consumers. It sends a signal to the Government and BoE that the general public really is feeling the pinch and that any increase in interest rates may send many businesses to the wall. There are still many in the Finance Committee of the BoE who want to keep interest rates on hold until inflation hits 5%. Many will hope that they win the day when it comes to the next vote.

Tags: Home Insurance, inflation figures
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Firstbuy will appeal to potential homeowners

Thursday, March 31st, 2011

When Chancellor George Osborne sat down at the end of his budget speech a week ago, first time buyers looking to get on the first rung of the property ladder had some cause for cautious optimism. Within seconds of his first utterance of the new “Firstbuy” scheme, prospective home buyers were probably already dreaming of doing things that come naturally to so many of us. Things like organising household insurance, home loans and mortgage insurance. Lucky them!

Manageable deposit

The “Firstbuy” scheme promises to allow first time buyers a much easier route to owning their home. Instead of the average £25,000 deposit required to secure a mortgage at the moment, the scheme will demand just a 5% deposit, which will bring the £25,000 down to around £6,000-£7,000 a more manageable figure altogether. The scheme does have several qualification criteria wrapped around it though.

Equity loan will bridge the gap

First of all the “Firstbuy” option will only apply to new builds on specifically named projects. The scheme will allow the homebuyers to put down a 5% deposit and take out a loan to value mortgage for another 75% of the property cost. The remaining 20% will be loaned to the couple in a way not yet actually specified but will probably be a joint equity loan cobbled together by the builder and the Government. The equity loan will be interest free for the first 5 years and after that will gradually start to attract interest repayments.

The loan will have to be paid back when the house is eventually sold and it will not be a precise figure, but the same percentage of the sale price that the property owners borrowed to make the purchase. So if the homeowners took out a 20% equity loan they will pay back 20% of the sale price. This means of course, that if they make a profit on the sale then the Government/builder will get a slice of the profit too.

Experts split, but hopefuls won’t be

Experts are split over the benefits of the new scheme with some pointing out it is not actually as good as Labours “Homebuy” scheme launched 3 years ago. Whatever the experts think it is a safe bet that there will be plenty of takers for the scheme when it is launched later this year. Unfortunately the £210,000 million earmarked for “Firstbuy” will probably help only about 10,000 homebuyers. Many will be pleased to grasp the opportunity of looking at home insurance comparison sites for the first time but I can assure them the pleasure will soon dim!

Tags: first home, First Time Buyers, Firstbuy, George Osborne, Home Insurance
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Adam Posen the right questions

Tuesday, March 29th, 2011

As homeowners across the UK try and digest what the latest budget offering from George Osborne will do to their domestic economy situation, one man who could have an even greater effect on their finances has better news to offer.

Stable base rate

As homeowners nervously calculate their monthly outgoings, from home insurance to home delivered fast food, the one constant they have had over the last two years has been a steady mortgage rate. It has been, for many people the difference between hanging on to their home and applying to join a Council house waiting list. The lowest ever bank rate since its inception in 1694 of 0.05 has kept the lid on the recession, it has been the difference in keeping home repossessions down to much lower figures than they were in other downturns over the last generation.

Inflationary pressures

The rate is now under more pressure than at any time in those two years. Inflation is now racing ahead at over 4% and with the promise of even dearer fuel and energy charges still in the aptly named pipeline, the hawks in the Bank of England Finance Committee are circling and screeching ever more loudly for an increase in the base rate.

Any increase in the base rate would be seized upon by bankers and mortgage providers alike. Within minutes of an increase being announced mortgage rates will be on the way up and no-one can help the poor old homeowner then.

Cometh the hour…

Well perhaps one man can. Adam Posen is a member of the Bank of England Finance Committee and he is far from convinced that a rise in interest rates is necessary. Indeed he sees several reasons why they should stay as they are and fortunately for many he is not shy about making them public. Posen believes that once the effect of fuel and energy prices have worked there way through the system, inflation will fall below the stated target of 2% by next year.

Time will tell

He says that the wait and see approach adopted by the majority of the committee will show that an increase in wages and wage demands which would really put pressure on the inflation pedal will not materialise. He believes the job cuts coming through will weaken Trade Unions enough to quell actions from the shop floor to back up wage demands. If the banker is right then homeowners across the country can breathe just a little easier and still afford to look around for good home insurance offers and perhaps even splash out on the occasional take away meal.

Tags: banks, Base Rate, Home Insurance, property market
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