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Whilst we aim to ensure that the details in the following blog entries are correct at the time of writing. However , please be advised that any references to legislation and taxation may become out of date.

 The BBC reports today that consumer group Which? is accusing banks and building societies of putting the squeeze on homeowners who have standard variable rate mortgages.


Which? warns that thousands will be pushed into financial difficulty when interest rates go up.


More than 40% of mortgage borrowers are now on standard variable rates, which kick in after cheap introductory mortgage deals expire. The highest are around 6%, double the cost of the best value mortgages.


"They're just milking people," one homeowner from Peterborough, Mark Fellowes, complained to BBC News.

He says the interest rate on his Egg mortgage dropped by just 1.5% when the Bank of England cut official rates by 4.5% after the financial crisis."I was very puzzled initially and then you just get angry," he says.


The Which? research reveals that 95% of lenders failed to pass on cuts to standard variable rate customers in full when the Bank of England reduced interest rates.


Since then 20% of of lenders have actually put their rates up, while the Bank's rate has stayed at a rock bottom 0.5%.


The Council of Mortgage Lenders argues that the standard variable rate, or SVR, is dependent on the cost of attracting deposits from savers, rather than the Bank of England.

But its director general, Michael Coogan, admitted to BBC News that lenders have been widening their profit margins after losing heavily during the crisis.

"I think what we have is the banks and the building societies trying to restabilise the system which was in shock in 2008," he explained."They are trying to recapitalise their organisations, deal with past losses, deal with the risk of future losses, and at the same time keep their customers as happy as possible through the economic cycle."


An increasing number of families with large loans are trapped on their lender's standard variable rate because other banks and building societies don't want their business.

These financially-stretched households could suffer badly if the Bank England starts to push interest rates higher.


Lenders will look to push up standard variable rates by more than any base rate increase and that's where vulnerable borrowers really stand to lose.

Mark Fellowes' lender, Egg, said: "We strive to maintain good rates for all of our customers based on how mortgages are funded.

"Funding is based on wholesale market rates, specifically Libor, which are frequently at a premium to Bank of England base rates."


Mr Fellowes has managed to moved to another lender, choosing a mortgage which does track the Bank of England's rate.


He is saving £120 a month.

Posted: 22/06/2011 11:26:15 by Mark Williams | with 0 comments

Brits are twice more likely to insure their pets or mobile phones than their income, according to research.


However a clear north-south divide exists with Scots faring far better than the rest of the UK when it comes to when it comes to protecting themselves and their families, the Consumer Protection report revealed.


It found that Scots are the most likely to have life or critical illness (CI) insurance than any other part of the UK, with over half (54%) owning life insurance, compared to the UK average of just 44%.


However, the South and South East of the country has the lowest take-up of life insurance across the UK with just 41% of adults having taken out a product.

Northern Ireland also preformed well with 48% owning life insurance, 12% (CI) and 10% income protection (IP).


But Wales was the worst region for CI and IP take-up (just 10% and 5% respectively) and above only the south east for life (41%).


The report noted a ‘worrying trend' when comparing these figures to those of pet insurance, with more people likely to insure their pets (15%) before their income (7%).


This trend continued when looking at the number of individuals who have mobile phone insurance standing at 13%, again almost double those who are insuring their income across the UK.


Whilst the research shows a low take-up of life insurance, critical illness and income protection products in general across the UK, including north of the border, it is interesting to see individuals in Scotland seem to be more inclined to protect themselves and their families than other regions in the UK.


If we single out life insurance, the awareness among individuals is far higher than critical illness and income protection, partly due to the product being offered when individuals purchase a home. And if we look at the vast difference of take up of life insurance in Scotland compared to other parts of the UK, especially the South and South East, we can put much of this down to the fact that more Scots own their own home compared to say, London where more people will be renting.


However it cannot be underestimated how important it is for people to have protection in place to protect their rent if the unexpected were to happen.  

Posted: 03/06/2011 13:19:29 by Mark Williams | with 0 comments

A mere 4% of people in the UK have income insurance, showing a dangerous lack of concern for the unpredictable economy.

The YouGov plc survey, highlighted that, despite the recession, people are still overestimating their job security and have no plan B should they end up unemployed due to illness or redundancies.

The survey has presented some surprising statistics but this one, showing a major lack of caution, has got to be one of the more worrying ones.

Individuals appear to be unprepared for their future and have no sensible plan in place to react to events that are out of their control.

The results also revealed that a quarter of the respondents said they would not last longer than a month on their current savings.

This sadly shows complete lack of forward planning and the ever present assumption that the State will help to a sufficient level – when in fact the level to which they will help, would roughly pay the food bill of an average household, and that’s it….not council tax, utilities, mortgage costs, car costs etc

The survey, carried out in January of this year, also found that 63% of respondents thought they could either not afford income insurance, could not see the value in it or have never even considered it.

There is clearly a lack of education related to income insurance and confusion with other products in the market.

This is completely different to single premium PPI, which has become a regularly complained about product in the insurance industry. PPI is sold to help cover payments on specific loans and credit cards in the event of unemployment or sickness.

Income insurance allows people to protect their actual income and offering wider protection should regular income stop suddenly. This helps cover any outgoings and is a standalone product that does not need to be purchased alongside a credit agreement.

Posted: 02/06/2011 13:42:05 by Mark Williams | with 0 comments

 Interest rates will rise this August, with a number of further increases taking the base rate to 2.75% by the end of next year, the British Chambers of Commerce (BCC) has predicted.

 In its quarterly forecast, the BCC has again reiterated its belief that the base rate should be held until the last three months of 2011 at the earliest, but believes it will be increased in the third quarter.

 "We are expecting the Bank of England rate to start increasing in August 2011. Although we would prefer to see interest rates held until the fourth quarter, we believe British businesses will be able to absorb small increases," said David Kern, chief economist at the BCC.

 However, Mr Kerns has urged the Monetary Policy Committee - which sets interest rates for the Bank of England each month - not to be too aggressive in its tightening.

 The group expects interest rates to increase from August 2011, but at a faster pace than previously envisaged, with the Bank of England's base rate reaching 1% by the end of 2011, and 2.75% by the end of 2012.

Think about this – is your income going to increase an additional 2.25% by the end of next year to accommodate this change in your mortgage costs that a Base Rate Rise will bring ?

 If you are one of the many people who are on your lender’s variable rate, you need to start to consider the impact on your budget of a 2.25% rise in your mortgage rate will have now , not then - why? - because when rates do rise, lenders will be taking advantage of those who need to change to a fixed rate having already increased their costs.

Fact - lenders have increased their fixed rate mortgage costs 15% in the last 18 months (and that is with the Base Rate not moving)


Posted: 01/06/2011 09:50:03 by Mark Williams | with 0 comments