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Mon 21st Apr, 2008
Posted in Bad Credit, Consumer Credit, Homeowner Loans, Banking, UK Finance, mortgages, Remortgaging, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Secured loans at 2:54 pm by admin
The Bank of England has announced today that it will be offering £50bn in government bonds to banks and home loan lenders. This is aimed at softening the credit crunch throughout the UK.
Currently banks and lenders are reluctant to take on mortgage debt, but this BoE scheme will allow them to use government bonds, enabling them to operate normally during the credit crisis and rumoured world recession.
BoE Governor, Mervyn King, is confident that this move will raise liquidity on the money market and improve financial confidence.
The scheme allows lenders to swap current mortgage debts for the bonds, and whilst it is only applicable for existing loan business on lender books, it will still free up funds for first time buyers who are currently unable to secure a mortgage.
The scheme has the full approval of Gordon Brown, who said: “We can get markets working again in a way that we can ensure that jobs can be continued, and of course businesses can have the finance they need.”
Since the American sub-prime mortgage crash, worldwide investors have been reluctant to allow their funds to be invested in the UK home loan market. This has left a shortage of funds available for mortgages, with even banks being reluctant to lend to each other.
The Council of Mortgage Lenders warned, however, that this move would not necessarily see cheap loans reappearing on the market.
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Wed 16th Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Balance transfer, Financial news, Borrowing, Personal debt, Secured loans, Debt management at 1:36 pm by admin
It has been revealed that credit card companies have introduced an astonishing 31 different fee rises recently, a move that could end up costing consumers millions of pounds collectively.
The changes were revealed by Moneyfacts which showed that there had been large rises in fees charged for withdrawing money from cash machines as well as rises in cash interest rates. It has also been revealed that Banks and Building Societies have also increased the commission charged for foreign use as well as increasing balance transfer fees.
Alliance & Leicester implemented the largest cash fee rise, upping its rate from 2.25% to 3%. This means that withdrawing £250 with your credit card will now cost £7.50. Other banks have also upped their charges with the AA, Bank of Scotland, Halifax and Intelligent Finance all putting up their rates from 2.5% to 3%. Nationwide, Smile, and Yorkshire Building Society also increased fees from 2% to 2.5%.
Smile has increased its cash rate by the greatest amount, pushing up the interest rate for cash withdrawals on its Gold Visa from 14.9% to 23.9%. The problem with withdrawing cash using your credit card is that it is very expensive, first of all you incur a fee and then there is no interest free period. So it is best to avoid taking money out using your credit card at all costs. Comparisons with overdrafts and personal loans, show that borrowing money in this way has always been extremely expensive.
Balance transfer fees have also gone up with Alliance and Leicester increasing its balance transfer fee from 2.25% to 3%.
These new fee and rate rises plus the credit crunch are behind a massive customer move away from credit cards towards debt consolidation loans. Many borrowers are finding it necessary to tighten their financial belts, and this includes clearing old card balances and cutting up cards.
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Fri 11th Apr, 2008
Posted in Bad Credit, Consumer Credit, UK Finance, Credit Card, mortgages, Consumer debt, Property, Unsecured loans, Financial news, Housing news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments, House repossession at 12:15 pm by admin
Despite a large number of warnings that repossessions and insolvencies were on the rise as a result of higher interest rates and the fallout from the credit crunch, recently published figures actually show that the exact opposite has happened.
The figures which were released by the Insolvency Service show that 26,072 people were declared insolvent in the three months after the credit crunch hit. This is a fall of 3% on the number of insolvencies in the previous quarter and a fall of 5% of the same period the previous year.
While the number of bankruptcies had increased by 2.2% on 2006 to a total of 15,833, the number of individual voluntary arrangements (IVAs) was actually down by 14.3% to 10,239. The large drop in IVAs, which allow borrowers to write off some of their debt in return for creating a payment schedule with creditors, could be explained by the fact that most lenders dislike the schemes since they are then forced to write off bad debts. With banks needing to claw back as much money as they can, they are refusing to allow personal loan and credit card customers to ‘go bad’.
While it is not clear which lenders were behind the majority of rejections for IVAs it is believed that Northern Rock is on of the main contributors rejecting all applications for IVAs. This is unsurprising, given its recent history.
HSBC has also changed its policy to IVAs. In the past, repayments for IVAs came in somewhere around 25p for every £1 owed to the lender. HSBC has now upped its threshold to 40p for every £1 borrowed.
As a result of these changes borrowers are now more likely to enter into debt management plans with their creditors.
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Wed 9th Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, mortgages, Remortgaging, Consumer debt, Homeowners, Financial products, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments, House repossession at 1:41 pm by admin
The number of families losing their homes due to repossession is set to soar from 30,000 last year to around 60,000. It will mean that the number of house repossessions will double, prompting the worst property crisis in over ten years according to mortgage lenders.
The Council of Mortgage Lenders had said that it expects repossession figures to hit at least 45,000 in 2008, but analysis by the Liberal Democrats reckons that the figure will be more like 60,000. The Lib Dems studied homes which were spending 75% of their disposable income on home loan repayments and say that there were twice as many homes on the list than last year.
The CML now believes that the property market is on the verge of the most serous crisis since Labour came to power a decade ago. The warning was sounded on the same day that the Bank of England published figures showing that the housing market was going into rapid decline.
Borrowers have been hit by a double whammy in the past 12 months and this has left many people in serious financial difficulty. On the one hand five Bank of England interest rate rises in the past year sent mortgage repayments cost soaring by as much as £200 a month extra. Subsequent rate drops have not eased the burden. On top of this the global credit crunch means that many borrowers can no longer get access to additional credit since banks are now tightening up on their lending criteria and finding it hard to borrow the money themselves in order to lend it on.
In the mean time, cost of living has risen sharply, with increases in food prices and fuel costs, but little increase in wages. Consumers burdened with personal loans and credit cards, taken out in healthier financial times are now finding themselves squeezed hard.
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Tue 8th Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Banking, UK Finance, Credit Card, Consumer debt, Card fraud, Spending, Identity theft, Credit record, Unsecured loans, Financial news, Borrowing, Fraud at 1:22 pm by admin
It has been revealed that Facebook users are putting themselves at serious risk of becoming an unwitting victim of ID theft. Even posting just a few private details on your Facebook page can give fraudsters enough information to cause serious damage.
Using the information that they have come across on people’s Facebook pages, fraudsters are able to open bank accounts and take out credit cards and personal loans in their victim’s name.
The warning was sounded by a BBC1 consumer show Watchdog. The show conducted an experiment in which they set up a fictional identity on Facebook. The Watchdog team then invited 100 random people to become friends with their newly created fictional character ‘Amba’.
35 of those invited to become Amba’s friend immediately accepted the request despite knowing nothing about her. By accepting, the victims allowed the fictional Watchdog character to view any private details that they had posted on their page.
Details which could easily be accessed included date of birth as well as hometown. The Watchdog team then used these details in order to obtain more private details about their victims from other publicly available websites.
With this information Watchdog then opened up an online bank account in their victims’ names as well as successfully applying for credit cards.
One of the victims, Scott Gould, stated that he was “very surprised” by what Watchdog managed to do despite having only the slightest bits of information about him.
Users of Facebook as well as all other social networking sights are advised to be very careful when posting their details. Fraudsters often leave a trail of bad debts behind them, in Your name. Not only is the onus on you to prove that you are not responsible, it is hard work correcting your damaged credit rating.
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Posted in Bad Credit, Consumer Credit, Personal loans, Banking, UK Finance, Consumer debt, Unsecured loans, Financial news, Borrowing, Personal debt, Bank charges, Debt management, Overdrafts at 1:19 pm by admin
It has been revealed that thousands of customers who took their banks to court in order to reclaim their bank charges and won may never actually see their money.
It is estimated that High Street banks have paid out somewhere in the region of £1 billion in reclaimed charges in the last year. However there is a growing amount of evidence suggesting that banks are increasingly using delay tactics in order to avoid paying back their customers. These delay tactics are even being used in cases where the bank has been told to repay by the courts.
Many unhappy customers who thought they were going to get their money back after banks were deemed to be charging illegal fees are now finding that their banks are stalling on paying them amounts that are in some cases worth thousands of pounds. For customers forced to take out debt-clearing loans on charges since deemed ‘illegal’, this is sickening as the loans are still charged interest whilst the customer awaits the refunds to clear them.
It is very common for banks to lose their cases in the county courts because they do not present a defence. However once they have been ruled against they appeal the judgement which ends up delaying the case for weeks and months.
Banks are also asking that judges dismiss cases in which they have been ruled against pending the outcome of a result in the High Court of a case brought by the Office of Fair Trading.
While the FSA has allowed banks to hold off on payments to customers who have requested repayments from the banks directly this ruling does not carry over to county court judgements.
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Wed 2nd Apr, 2008
Posted in Consumer Credit, UK Finance, mortgages, Remortgaging, Inflation, Homeowners, Financial products, Property, Housing news, Borrowing, Secured loans at 1:12 pm by admin
Imagine this scenario, you have come into a little money maybe from a big bonus at work or that rich old aunt of your has passed away and left you with all her money. Now you have the opportunity to pay back your entire mortgage. Well should you do it? The answer is yes and I’m now going to tell why. The answer may be a little complicated but take my word for it.
Right now inflation is low, so debt is pretty much remaining at the same proportion of your income over time. You see if there was high inflation then you could rely on inflationary increases in your income but that’s not going to happen any time soon. Also the government has removed the tax incentive to hang onto your debt in the form of mortgage tax relief.
So lets break it down. Imagine you have a 25 year home loan at £100,000 and interest rates are at 6 percent. Overpaying on that mortgage by say £100 a month could save you as much as £27,000 and cut the life of your loan by as much as six years. That mean you can take that tropical cruise you have always wanted much earlier with plenty of money to finance it.
A word of caution however, some lenders out there charge what is known as an Early Redemption Penalty. These charges can continue for several years after you have paid back the mortgage. In a situation like this it may not be so wise to pay back your mortgage early. Sometimes you just can’t beat the banks.
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Posted in Bad Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Credit record, Balance transfer, Unsecured loans, Borrowing, Personal debt, Debt management, Zero percent cards, Missed payments at 12:54 pm by admin
If you are considering switching from your current credit card provider to a new one because you are having trouble paying back your balance then it would be helpful if you were aware of a few pointers first.
Many credit card companies offer very low interest rates on balance transfers; sometime this can be as low as zero percent. But there is a time limit on this balance transfer. So for example if you need six months to pay off your debt and the zero percent interest on balance transfers apply for the first six months then this is an option worth considering. This could possible save you from having to pay back possibly hundreds in interest fees.
Make sure you read the fine print on the deal before signing and take care to make all repayments on time. Missing a payment or paying late can result in the lender replacing your great rate with a much higher APR, leaving your paying more than if you had taken out a debt consolidation loan to clear the original debt.
Another danger is if you do fail to pay back the balance within the given time period the zero percent will revert back to the a much higher rate on the card and sometimes this includes the lender back-charging interest on the first six months of the loan as well. This could result in repayments outweighing the benefit of the zero interest on the first six months.
Lenders do have a responsibility to warn you if the introductory offer of zero percent is about to run out. However as a general rule its better not to trust to this reminder jogging your memory, as it can often be buried in small print. Just make sure you yourself are always aware of the time limit on your offer or one morning you could wake up to a big surprise.
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Tue 1st Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, mortgages, Consumer debt, Homeowners, Spending, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments, Tenant loans at 1:09 pm by admin
It has been revealed that more than one million people across the UK are using their high-interest credit cards to pay for their mortgages or their rent.
The figure which is roughly six percent of all households shows just how desperate some people are getting to keep a roof over their heads.
The figures which have been release by the charity Shelter show that more and more young people are struggling to remain on the property ladder and have been forced to take desperate measures, including the risk of long-term financial ruin.
The problem with using a credit card to pay for your mortgage is the amount of interest that credit cards charge their customers. Many credit card companies charge rates of between 15% and 18%. Rates like these are as much as three times greater than the rates applicable on the average mortgage. Paying your home loan with your credit card is a very risky and expensive way to avoid repossession or eviction.
The figures show in some areas of the country as many as one in ten people are using their credit card to pay for their mortgage. The people most likely to resort to this measure are in the 18 to 24 year age group. More and more people are finding paying for their mortgage or rent increasingly difficult as the credit crunch hits and unaffordable housing begins to take its toll on the consumer.
Experts are blaming lenders for the problem since the have allowed borrowers to borrow excessive amounts of money, not just on mortgages, but on personal loans, car finance and credit cards.
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Posted in Bad Credit, Consumer Credit, UK Finance, interest rates, mortgages, Remortgaging, Consumer debt, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing, Secured loans, Debt management, House repossession at 12:39 pm by admin
The Chancellor has lashed out at mortgage lenders accusing them of fuelling unsustainable growth in the housing market.
His accusations came out in an interview with the Daily Mail. Mr Darling told banks and building societies that they must be more responsible in the future.
The hard line the chancellor took with lenders came on the same day that the International Monetary Fund released a report which stated that Britain’s economy was highly susceptible to a property crash.
Mr Darling told the Daily Mail that ‘unsustainable house price is not good for individuals, is not good for the economy, so I think it will slow down.’ A slowdown is desirable and likely according to the chancellor.
This was the first interview the chancellor had given since he announced his Pre-Budget Report and he left little doubt about his displeasure and irritation with mortgage lenders. The chancellor has demanded that in the future lenders ask more questions in order to ascertain whether or not a borrower will be overstretching themselves.
The types of loans that encourage borrower to overstretch might be Abbey’s change of rules which meant that home loans of between five and seven times borrower’s salary were allowed.
Other examples singled out as irresponsible lending included a Northern Rocks mortgage which allowed borrowers to take out more than 125% of the value of a home (this loan has since been discontinued).
The Financial Services Authority has also found that one in six borrower’s are taking out interest-only mortgages made popular because of their cheap monthly repayments.
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