31/05/2007 by Dave.

Millions of people within the UK would be prepared to take out homeowner loans to improve their homes, new research has revealed.

According to a survey by moneysupermarket.com almost half (45 per cent) of all respondents believe home improvements to be a sound investment because they add value to the house price, while 40 per cent of people take out homeowner loans to carry out work on their property.

“It’s no surprise we have a bevy of budding property developers out there,” said Louise Cuming, head of mortgages at moneysupermarket.com.

“With house prices having escalated dramatically over the past five years, along with the cost of stamp duty and mortgage fees, many people are turning to home improvement instead,” she added.

The research also revealed that nearly eight million (42 per cent) homeowners would like to carry out more home improvements on their property, and a further nine per cent that have previously made adjustments are already planning to do more in their spare time.

Ms Cuming concluded however by warning people to be prudent about how they spend their money around the house: “It seems a large number of people are getting into debt to develop.

“When it comes to larger renovations, people need to consider their monthly budget when deciding whether to take out a loan or to remortgage,” she added.

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30/05/2007 by Dave.

Housebuyers across the country are increasingly taking prudent steps to reduce the risk of mortgaging to their financial limits as the possibility of the 5th interest rate rise in under a year looms large. Indeed, new research from Yorkshire Bank suggests that the Bank of England’s measures for reining back rising house prices and curbing inflation are beginning to gain traction as 24% of buyers admit they are looking to avoid taking out a maximum mortgage.

With minimal reserves to fall back on, even first-time buyers desperate to get a foot on the property ladder, are beginning to demonstrate greater caution. The research found almost a third (31%) intend to avoid stretching their finances from the outset for fear a further rate rise might tip them over the edge of affordability. 77% of those surveyed anticipate further rate rises over the next 12 months.

Despite 70% expecting house prices to continue rising over the next 12 months, just 17% would still be prepared to offer the full asking price immediately.

Perhaps surprisingly, only 3% said they were considering changing to a cheaper mortgage to save money. Among first time buyers hoping to get onto the property ladder, 26% say they would prefer a fixed rate mortgage to give some payment certainty in the next few years.

Despite feeling the squeeze currently, with Bank of England Base Rate at a 6-year high, the research shows that homeowners are prepared to make cutbacks in other areas of their life in order to afford their home. Some 24% felt that owning their home is so important to them that they will sacrifice holidays, their social life and nice cars to fund it. The data showed that this was particularly true for would-be first time buyers eager to get onto the property ladder - 36% being prepared to adapt their lifestyle to make that elusive first home a reality.

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28/05/2007 by Dave.

It may only seem like yesterday, but June 3rd will mark the 20th anniversary of the launch of the first ever debit card - the Barclays ‘Connect Card’. The new cards caught on immediately such that within just 9 months the bank had issued its millionth card.

Today, approximately 68 million debit cards are in circulation in the UK with 143 purchases per second amounting to 6.8 billion transactions every year.

Debit cards now outnumber credit cards with 85% of adults possessing one compared to 66% who have a credit or charge card.

Twenty years on and cards have moved on with an imminent move into the world of prepaid debit cards as well as ‘wave and pay’ technology. Prepaid allows customers to load a positive balance on to a card before going shopping or on holiday, while wave and pay allows consumers to make small purchases by simply waving their credit or debit cards in front of terminals.

According to the bank’s own data the average customer makes 210 debit card transactions a year, spending just under £10,000 on their card. The biggest spenders appear to be the people of Battersea who in 2006 spent an average of £15,840 on their cards. In contrast, the lowest spenders are from Small Heath in Birmingham, who on average use their cards 92 times a year, spending less than £5,000.

Women use their cards 25% more frequently than men but men spend 33% more than women when they use their card, spending £52 compared to £39.

Every year consumers are using their cards more and more often. The most popular place to use a debit card is the supermarket where one in three of all debit card transactions happens, followed by the petrol station with one in nine and department stores with one in nineteen. Collectively the three account for over 50% of debit card transactions. However, the supermarket can expect a challenge over the coming years as the fastest area of growth is, and will be, from internet purchases.

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26/05/2007 by Dave.

Bridging loans are becoming increasingly important to Britain’s homebuyers, particularly those purchasing a house within a property hotspot.

Research from Bridging Loan Finance indicates that demand for bridging loans doubled between October 2006 and March this year. This has been attributed in part to the strength of the property market during this period.

In many areas, properties have been snapped up at a remarkable pace and keen buyers have been expected to come up with the money with no delay. Bridging loans, in these cases, often prove exceptionally useful.

Damian Youell, owner of Bridging Loan Finance, believes that bridging loans are also being used to stop house repossessions when mortgage accounts fall into arrears. “The funds are released so fast that proceedings can be stopped in their tracks very quickly,” he added.

With more and more people buying properties at auction, demand for bridging loans can perhaps be expected to accelerate. When buying a house in this way, the money is often required within days, making a bridging loan an ideal means of raising finance.

The British Bankers’ Association has found that the total value of bridging loans in 2006 reached £1 billion.

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22/05/2007 by Dave.

The government has announced that the introduction of Home Information Packs (Hips) will by delayed until August, amid charges that they have “botched” implementation.

The packs were to be brought in on June 1st, but communities secretary Ruth Kelly told the House of Commons yesterday that Hips will now come into force on August 1st and will only apply to homes with four bedrooms or more.

She explained the delay was due to the lack of qualified energy assessors for Energy Performance Certificates (EPCs) - with only 520 of the necessary 2,000 accredited.

However, pressure to delay Hips also came as following judicial review proceedings by the Royal Institution of Chartered Surveyors (Rics), Honourable Mr Justice Collins took the preliminary view that EPCs should be excluded from Hips “for the time being”.

Shadow housing minister Michael Gove described the delay to Hips as a “desperate last-minute retreat”.

“Ministers must acknowledge they have botched this,” he said.

Commenting on the delay, Council of Mortgage Lenders director general Michael Coogan said: “The hasty announcement marks the latest in a series of climb-downs and opportunistic amendments. This cannot be an appropriate way to make policy.

“We support energy improvement measures. But, in our view, Hips are not a prerequisite for delivering the green agenda. With the fundamental lack of confidence that now exists in them, we urge the government to ditch the gold-plating and concentrate on better ways of delivering its objectives.”

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18/05/2007 by Dave.

Almost half of homeowners are choosing to take insurance from their mortgage lender, according to new research.

A poll by the Post Office reveals that 4.7 million homeowners get home and life insurance from their mortgage lender and could be losing a combined £599 million a year.

Of the 46 per cent of mortgage holders who buy insurance from a lender, 12 per cent do so because they think it is compulsory and four per cent thought their mortgage would be at risk if they did not buy insurance too.

The lion’s share (63 per cent) bought insurance from a lender for convenience’s sake.

Post Office head of insurance Phil Ashkuri said: “Convenient doesn’t always mean cheap. Many homeowners don’t realise taking out buildings and contents insurance with their mortgage lender is generally not the best value deal. And it’s not compulsory for securing their mortgage.

“Our advice is shop around as there are better home insurance deals out there from standalone providers.”

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17/05/2007 by Dave.

Millions of Brits can be expected to turn to debt consolidation loans in the near future as credit card spending continues to rise.

Research from life assistance firm CPP indicates that Brits spend an average of £157,530 on plastic during the course of a lifetime.

Individuals fork out a staggering £3,540 on clothes, shopping, entertainment, bills and holidays every single year, the new report suggests.

More worrying, perhaps, is that fact that 28 per cent of people are now using credit cards for everyday purchases, including lunch and petrol.

Small purchases of this nature are considered particularly dangerous, as they tend to mount up without the card owner recognising the repercussions.

Experts continue to warn that inattentive card spending can exacerbate existing debts if users fail to monitor outgoings closely.

Research from Mintel, however, indicates that spending of this nature is continuing apace, with consumers in Britain spending around £10 billion on wine and champagne in 2006 alone.

Debt consolidation loans can prove exceptionally useful for those with unmanageable debts, by combining existing obligations into a single payment.

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16/05/2007 by Dave.

Millions of UK consumers are getting themselves into deep financial hardship by making simple money mistakes that can be easily avoided.

According to research by credit report provider CreditExpert, one in 10 adults have considered declaring themselves bankrupt or taking out an Individual Voluntary Arrangement to help clear their debts. The company said many of those had made basic financial mistakes that compounded their initial overspending.

For example, 10% had taken out a credit card to pay off another credit card, while a further one in 10 had missed payments on credit cards, store cards or mortgages. Other common errors included taking out a lengthy consolidation loan with a high interest rate to clear existing debts.

At the start of Credit Awareness Week, which is designed to encourage consumers to get a better grasp of their financial affairs, the company added that a quarter of Brits admit to finding it hard to control their finances.

Recent Government figures showed personal insolvencies hit 30,075 in the three months to the end of March, up 24% on the same period a year ago.

These were made up of 6,842 bankruptcies, up 10% on a year ago, and 13,233 IVAs, a sharp 48% increase on the corresponding quarter in 2006. The recent rise in interest rates is expected to push more people towards debt problems.

CreditExpert managing director Jim Hodgkins, said: ‘The number of people who admit to making basic financial mistakes and even considering ‘quick fix’ solutions like taking out an IVA is worrying.

‘What this research seems to expose is a serious lack of understanding of the long-term consequences of these actions and how it can affect your credit-rating – ultimately impacting your financial future.’

According to the company’s research eight out of 10 adults admit to overspending, with stress, arguments with partners or simply feeling low being the prime drivers.

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14/05/2007 by Dave.

Forty-two per cent of Brits are interested in buying abroad, according to new research.

A poll by Bank of Scotland reveals the growing market for those wishing to finance a move abroad.

Britons are split over a future destination to buy property, with English-speaking countries such as Australia, New Zealand, the US and Canada proving most popular.

Currently four per cent of people already own foreign property - 43 per cent of which hailing from London and the south east.

New figures from GE Home Lending sales of Florida properties to UK residents has doubled this year, as the weak dollar make sterling go further.

“The Florida market is still performing strongly for UK investors looking for a home abroad. We have seen strong growth in this market through our British Mortgages Abroad products, which are up 100 per cent on the first quarter of 2006,” said Gerry Bell, head of marketing of GE’s British Mortgages Abroad

“Clearly the US economy is going through change, with a slow down in house price inflation of 6.5 per cent across the country, however, Florida is still performing relatively strongly with house price inflation at 9.5 per cent.”

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12/05/2007 by Dave.

Millions of people in the UK are pushing themselves into debt as a result of impatient spending habits.According to research from Prudential, 3.4 million people have stumbled into difficulties by spending money they do not yet have. These “money illusionists” are particularly liable to spend pay rises and bonuses - long before they actually materialise.

Some 17 per cent of British adults are prone to this pre-emptive spending and, as a direct result, nine per cent have found themselves with average debts of £1,414 during the last five years.

Particularly worrying is the fact that many Britons have spent money on the basis of an inaccurate prediction about a bonus. In many cases, bonuses turn out to be much less rewarding than was originally hoped.

Prudential’s business insurance director, Angus Maciver, said: “As Britain’s consumer debt levels continue to grow it is vital that people make provision for good times and bad and we strongly encourage consumers to take financial advice and ensure that they have sufficient protection to enable them to weather any loss of income, as well as enjoying any increase.”

Nearly a quarter (23 per cent) of Britons have used a bonus or pay rise to pay off debts.Ironically then, inaccurately predicting the value of a bonus or pay rise often leaves individuals with debts that are even less manageable.

Debt consolidation may prove a more constructive strategy for many, as it allows debts to be managed before the true extent of the pay rise becomes clear.

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