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Fri 27th Jul, 2007
Posted in Bad Credit, Consumer Credit, Banking, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Buy to let, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Rental property, Fraud at 12:05 pm by admin
The devastation caused by mortgage fraud is becoming a major problem in the UK. It costs lending companies and homeowners millions of pounds each year. However, most of it cannot be prosecuted, because many of the fraudsters are from foreign countries that do not collaborate with UK enforcement authorities.
Mortgage fraud takes many forms, including stealing property using various methods of deception, obtaining a money transfer by deception, signing mortgages, and selling third party homes.
Victims are left with no hope of proving that they were not involved in the scam and are accused of hide the proceeds of the scam. Most victims hope that they are protected by banks and loan lenders, but sadly this is not always the case. Many people have been left with 40 year mortgages in their name and what appears to be a history of bad debts and defaults on secured loans.
The Department of Productivity, Energy and Industry (DPEI) closed a buy-to-let scam, in 1995, which promised to help investors make money in the property market. Three companies linked to the scam ended up at the High Court, following confidential investigations by the DPEI.
These companies took “substantial sums of money” and promised that they would help clients to build a portfolio worth £1 million a year.
In 2005, DPEI Minister Gerry Sutcliffe said: “These companies knew that their clients, who had all invested substantial amounts of money, couldn’t make anything like the returns that were promised. The schemes were completely misleading and set up with the sole aim of parting people from their money.”
Consumers are warned to avoid any investment scheme that promises too much, or very little risk. They are also warned to avoid anything that asks for personal information before explaining the company’s intent.
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Posted in Bad Credit, Consumer Credit, Homeowner Loans, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, House repossession at 12:00 pm by admin
With the property price boom and the rising interest rates it has become harder for first-time buyers to get a foothold on the property ladder, and for those who do they may not be getting the home of their dreams, or the high quality of life they would like. A new survey by Halifax that involved 549 British towns has revealed some of the areas the offer the best value properties such as Buckinghamshire, Lincolnshire or Suffolk. According to the survey Chesham in Buckinghamshire offers the best value flats, Sleaford in Lincolnshire has the best value semi-detached properties and Stowmarket in Suffolk is best for terraces.
The research done by Halifax aimed to identify the best value-for-money locations for first-time buyers as well as movers. The properties listed in the survey were ranked according to house prices and the Halifax “quality of life” index, which includes indicators such as the labour market, environment, education and health. Although the prices in the top locations were not exactly the cheapest in the country, they did rank low in terms of the quality of life that was offered in those areas.
According to the findings, those who are looking for a flat right away should look into Chesham, as the average selling price of a flat in the town was just over 145,000 pounds, and the town has been ranked the sixth best place to live in the country. Other towns that were ranked in terms of value for money were Basingstoke, Bracknell and Aylesbury, which come in 12th, 13th and 15th in terms of quality of life.
Thankfully mortgage rates remain the same throughout the country, so finding an affordable home loan does not depend on the right location. However, there are still ‘pockets’ of bad debt in Britain, and many low-cost properties are available in these areas due to the number of repossessions. Whilst this can be a boon for a buyer looking to get more for their money, bad debt can be bad for society as a whole.
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Thu 26th Jul, 2007
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Secured loans at 12:27 pm by admin
Chancellor Alistair Darling announced recently that the Treasury would reorganise the mortgage market as part of its wider efforts to make housing more affordable. The government wish to make changes to the mortgage industry by making it easier for homeowners to obtain longer-term mortgages. The chancellor wishes to increase the supply of long-term fixed rate home loans by allowing more people to take out 25-year term mortgages, which will offer better value for money.
There have been recent concerns as many lenders are encouraging borrowers to take out short-term mortgages, which is causing homeowners to become stretched and end up struggling to meet their monthly loan repayments. Mr. Darling stated that there has been a big expansion in fixed rate mortgages over the last few years, however they have all been short term, for a period of two or three years and he would like to see them extended for longer-term fixed rates.
The Treasury would also like to stabilise house prices and make mortgages more affordable. However, in order to obtain this goal there will have to be more houses built to meet the demand of the current market. Currently the government has committed to build 200,000 homes a year over the past ten years. Economists believe that the shortage of available properties and the high demands have caused the house prices to inflate to unaffordable levels and the chancellor would like to even out the demand and reduce the costs of property, allowing more first-time buyers to get a foothold onto the property ladder.
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Posted in Consumer Credit, Personal loans, Banking, UK Finance, interest rates, mortgages, Savings, Homeowners, Financial products, Borrowing, Secured loans, Debt management at 12:23 pm by admin
After the latest Bank of England rate rise, many banks seem to be having a savings rate war with some internet savings accounts paying up to 6.3% or 0.55% above the new bank rate. Some banks that have passed on the 0.25% interest rate rise include ICICI Bank UK, Sainsbury’s Bank and Icesave, offering rates as high as 6.3%. Sainsbury’s internet bank has raised its rate to 6.25% from 6% and is free from any conditions and pays all savers the same rate. However savers will have to wait nearly a month for the rate rise to come into effect on August 1. The UK savings account that is offered by Icelandic bank Landsbanki, has raised its rate to 6.2% from 5.95%, however demands a minimum balance of £250. Landsbanki also has a guarantee to be at least 0.25% above the bank rate until October 2009 and will apply the current rate hike on July 13.
With more banks offering competitive interest rates on savings accounts, the news of more interest rate increases in the future may not be such bad news, especially for those who have taken advantage of these accounts that are offering the highest rate of interest on savings accounts. If you are searching for a savings account that will offer you the highest rate, you may try your luck at searching online for internet savings accounts as they are currently offering the highest rates of interest. For many borrowers, overextended with mortgages and secured loans, the news of recent interest rate hikes have come as dreaded news, however for those with savings, the interest rate increases will come as good news.
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Wed 25th Jul, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Homeowners, House buying, Property, Financial news, Housing news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Fraud at 1:29 pm by admin
Many UK borrowers are putting their financial future, and possibly risking jail time, by creating fake payslips. This will let them borrow bigger mortgages and loans, reduce their interest payments, and lower fees.
The Institute of Payroll Professionals (IPP), is seeing an increasing number of websites which now offer ‘duplicate’ payslips, without taking time to check whether the customers information is valid.
These websites cannot legally verify the details provided by consumers looking to buy fake pay slips as the only official parties who would prove salary information - the payroll departments of their employer and the HMRC - are bound by the Data Protection Act,” the IPP website confirms.
This will increase debt and insolvencies as more homeowners are struggling to make payments they cannot afford. Analysts are worried that, if this becomes a wide spread practice, that it will create a false image of the economy as more and more people apply for bankruptcy and IVAs.
Richard Fiddis, Managing Director, at the global information solutions company Experian, said:
“Insolvencies rose by two-thirds in the second quarter of this year, while IVAs, which make up almost half the total, soared by over 150 per cent.”
“One of the most striking differences between those opting for bankruptcy and those for an IVA is illustrated by socio-economic analysis,” continues Fiddis. “Experian’s Mosaic consumer segmentation system shows that people in the ‘Happy Families’ group, comprising largely young families, are more than 60% more likely to be tempted by an IVA.”
These numbers will increase as people continue to ‘fake’ mortgage and personal loan applications.
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Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing, Secured loans at 1:24 pm by admin
With five interest rate increases in less than a year, many borrowers are now turning to other mortgage options besides the commonly chosen fixed-rate mortgage. For years the fixed-rate mortgage has been the popular choice amongst borrowers, as it offered the security of knowing what your monthly repayments would be. However, with the base rate increases from the Bank of England borrowers are discovering that it is near to impossible to find a fixed-rate mortgage that is offering a good deal. The prices of fixed rates have gone up since May as the money markets have factored in two further interest rate rises in the past three months, causing lenders to increase their rates. Because of the lack of decent fixed-rate deals, borrowers are starting to search the market for other borrowing options, such as a tracker mortgage.
With the base rate set to rise yet again, tracker mortgages may be the best option for borrowers. Figures show that there has been a subsequent drop in the number of borrowers who were taking out fixed-rate loans in June. Around sixty-one percent of borrowers opted for a fixed-rate mortgage in June, which is down from seventy-three percent in May. Experts predict that although there have been two further increase over the past three months, a tracker mortgage may be a cheaper option over the next two years. There are banks and building societies that offer 0.32% below the base rate with a £999 fee until September 2009. With the current base rate, a borrower will pay £19,666 on a £130,000 home loan.
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Tue 24th Jul, 2007
Posted in Bad Credit, Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Homeowners, House buying, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management at 3:30 pm by admin
A report released from the Financial Services Authority has criticised brokers for failing to protect their customers by ensuring that borrowers are able to afford the mortgage they are given or even whether they are suitable for the product sold.
The report went on to state that there is a significant amount of borrowers who were advised by brokers to remortgage without the brokers being able to demonstrate that a remortgage deal was beneficial to the customer, as the customer could face early repayment charges.
Brokers were not the only ones who were criticised in the report, loan lenders were criticised as well. The Financial Services Authority found that none of the lenders that were studied met the responsible lending requirements that were set out in their own policies. Lenders were also found to have failed to monitor the application of their policies, which resulted in the approval of potentially unaffordable mortgages. This especially fell true for lenders who were offering sub-prime mortgages.
Sub-prime or bad credit mortgages are targeted towards borrowers who have a poor credit history. Although the borrower may be approved for a bad credit loan, they end up paying higher interest rates when compared to the mainstream market due to the high risk the lenders are taking. The study into sub-prime home loan practices began two years ago after complaints of poor sales practices.
With more people wanting to get a foothold on the property ladder, sub-prime mortgages have slowly been growing in the UK. Borrowers are advised to be cautious when looking into sub-prime home loans as they risk paying a higher interest rate, and with the rates due to increase again within the next few months, borrowers will end up facing financial hardship.
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Mon 23rd Jul, 2007
Posted in Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, interest rates, Consumer debt, Financial products, Unsecured loans, Borrowing, Personal debt, Secured loans, Debt management at 1:35 pm by admin
Applying for secured loans for debt consolidation is a growing trend among many UK households. The secured loan reduces the consumer’s ability to incur more debt, reduces the interest paid on current debts, and wraps all debts up into one payment. This develops a mindset that encourages adults to pay down their loans, and control their spending habits.
The trend is partially fed by changes in the regulations that give bailiffs more power to come into the home and ‘take’ any items they feel can be sold to pay the debt. The courts have also been given the power to force the sale of a home to pay an unsecured debt.
Banks are also selling debts to foreign debt collectors who are not governed by UK rules. These companies employ several unscrupulous tactics to collect the debt. In some cases, there have been reports that they engage in illegal activities, especially debt collection companies from Russia.
Secured loans do not increase the risk of losing a home. They are arranged at interest rates which can be as much as 20 per cent lower than what is charged for an unsecured loan.
The change in law has made unsecured loans less attractive as a debt consolidation loan, or as part of a debt management program.
Another factor that is causing concern is the number of debt collection companies that are operating as loan sharks. The Office of Fair Trading has fined several debt consolidation and debt management companies over the last two years for breaching regulations, and even engaging in illegal practices.
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Posted in Consumer Credit, Personal loans, UK Finance, Credit Card, Consumer debt, Unsecured loans, Financial news, Borrowing, Personal debt, Debt management at 1:30 pm by admin
The British Bankers’ Association has warned that a growing number of unsecured lending has been carried out by non-bankers, who do not offer consumers the same protection as they received under the Banking Code, and they now want all companies offering loans to adopt responsible lending practices.
Typically a bank is required to study a customer’s circumstances using internal controls and credit reference agencies before advancing them money. However, the British Bankers’ Association warned that increasing numbers of firms were extending credit to people who did not meet the right criteria, which can result in serious consequences for the consumer who is overstretched.
The British Bankers’ Association has published a factsheet titled Lending Money Responsibly, which contains the relevant sections of the banking code and the information needed for responsible borrowing for consumers. Alongside this factsheet, a letter was written stating that all lenders outside of the banking system need to be brought in line with the Banking code on responsible lending to ensure consumers are protected. Within the Banking Code, it states that lenders must pledge to treat people sympathetically and positively if they get into difficulty. Usually when there is a gap between what a borrower wants and what a bank will lend, too often an irresponsible lender steps in, funding the borrower the needed amount, without consideration of whether the amount will overstretch the individual.
Currently only around 65% of unsecured loans now come from the banks, and although there are responsible lenders amongst the remaining percentage it is difficult for a consumer to know who the responsible lenders are and what their lending rules are. Consumers are asked to be made aware of any lending rules before taking out a personal loan through a lender other than a bank.
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Fri 20th Jul, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, Banking, UK Finance, interest rates, mortgages, Consumer debt, Homeowners, House buying, Spending, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Budgeting at 11:01 am by admin
The Bank of England Governor Mervyn King has warned families that further hikes in interest rates should be expected. Mervyn King claims that these interest rates will continue to rise as an alarming number of economic indicators, including property price rises, are remaining elevated as the past rate rises seem to have made very little effect.
Currently the base rate is at an all time high in six years with expected rises which could cause thousands of homebuyers with large mortgages to go into the red. Mr. King not only addressed the issue of the interest rates, but he went on to warn families and first-time buyers about debt and urged them to be more cautious especially at a time of rising rates. Governor Mervyn King said that he fears that many Britons will be unable to cope with another rate rise due to the fact that many of them have taken on excessive debts. Many families are already living on a stretched budget due to the highest borrowing costs since 2001.
This follows a period when interest rates on credit such as cards and personal loans seemed affordable and when consumers had a feel-good factor about borrowing. Secured loans still remain at competitive rates, but consumers may now feel reluctant to borrow.
Many homeowners who are currently on fixed-rate mortgages have not felt the effect that these last four increase have made on many homeowners, and Mr. King fears that many families are ignoring the dangers of high borrowing costs and are not budgeting these interest rate increases into their personal finances. Homeowners who are currently on a fixed-rate mortgage should make themselves aware of the date when the fixed-rate will expire and financially prepare for an increase in their mortgage payments.
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