September 21st, 2017 | Andrew Hagger | News

21 Sept 2017

Car insurance bills are rising five times faster than inflation, taking average annual bills to £755, new research from insurance research experts Consumer Intelligence shows.

Its data shows average premiums rose by 14.6% in the past year – five times inflation at 2.9% ­– but there is some relief with the pace of increases slowing in the past three months.

Government proposals to increase the discount or Ogden rate which sets pay-outs for major personal injury claims has helped stabilise prices but tax rises, the weakness of the pound and rising claim costs mean premiums are still climbing.

Older drivers are feeling the impact most. Average premiums for over-50s rose by 16.5% in the year to September, but their bills are the lowest at £434. Premiums for under-25s rose by 11% as increased use of telematics, or black box technology, kept prices down but they still pay nearly four times more than older drivers at £1,719.

Drivers in London and the North West of England face the highest annual bills at more than £1,000 a year – nearly double the £518 average in Scotland.

Average motor insurance premiums have increased by 32.2% since October 2013, Consumer Intelligence, whose data is used by the Government’s Office for National Statistics to calculate official inflation statistics, estimates.

John Blevins, Consumer Intelligence pricing expert said: “Prices are stabilising but the future is unclear with the new Ogden rate, whiplash reforms and the possibility of another Insurance Premium Tax rise in the Budget.

“Car insurance claim costs have increased in the past three months, partly because we are driving more technologically advanced cars which cost more to repair, but also because the weakness of the pound means the cost of parts is rising.

“Older drivers are being hit with higher premiums because they are driving for longer and consequently becoming involved in more accidents.”

Younger drivers are benefiting from telematics bring average costs down – 65% of the most competitive prices for under-25s come from telematics policies, and one in five of all best buy quotes. Prices for younger drivers are still slightly lower than in 2013.

Telematics, which rewards good driving behaviour, even helps older drivers with 11% of the best deals for those aged 25-49 available from telematics, and 7% for those over 50.

September 19th, 2017 | Andrew Hagger | News

19 Sept 2017

The latest research from Aldermore’s 2017 Annual Savings Tracker reveals that over three fifths (61%) of the nation are saving, putting away an average of £2,748 a year. However, while it seems the savings message is recognised by the majority of people, the rate at which the nation is saving means that it could take considerable time to reach long term goals such as buying a house and significant home renovations.

Of those who are saving, almost three quarters (74%) are aiming for a specific goal. Younger savers in Britain are the most goal-orientated, with nearly nine in ten (87%) of 18-24 year olds wishing to reach a specific target, compared to only half (55%) of 65-74 year olds. However the nation isn’t saving consistently for these goals with the majority (37%) only putting money away if they have some left at the end of month, compared to under a third (29%) who save a fixed amount each month regardless.

Overall, the most common long terms goal in the UK (for 29%) is saving for retirement. The other long term priorities the nation has set itself include:

Despite the nation making the important decision to save, it’s apparent there is a savings gap between reality and aspiration. Based on what Brits are saving on average, it will take a significant amount of time to reach the goals set.  For example, for those who have set the goal to renovate their home, the average cost of improving a kitchen is now £17,690, meaning it could take over six years to save for this.

For the younger generation, their primary goal is a deposit for their first home with over three in five (62%) aiming for this. With the average deposit for first time buyers now standing at nearly £50,000, this age group would need to set aside money for 21 years to reach the first rung of the housing ladder based on their average annual savings of £2,367.

The research also reveals the short term saving goals set by the nation. Saving for a holiday proves to be the number one choice for two in five savers (40%), and over a quarter (28%) is saving to provide a buffer for unexpected expenses.

Commenting on the findings, Simon Healy, Managing Director – Savings, Aldermore says: “It is encouraging to see that, despite the low interest rate environment, three fifths of the nation saves on a regular basis. Of these savers, a significant proportion has a specific goal in mind, highlighting that people are planning for their financial future. However, it’s clear that the current rate of saving will result in it taking longer than people expect to achieve their goals.

September 19th, 2017 | Andrew Hagger | News

19 Sept 2017

As half a million students are off to university this month, Co-op Insurance is warning of the dangers of over-packing cars ahead of these journeys.

The study conducted among UK students revealed that three quarters travel by car when moving into or out of their student home. Of these, two fifths (41%) say they disregard their rear-view window when packing up their vehicles meaning visibility is compromised.

Furthermore, a fifth (20%) block their side window visibility by over-packing their vehicle, a fifth (17%) strapped items to the top of the car without a roof rack, and 16 per cent were unable to properly close their boot because of the amount of luggage they crammed in.

Two thirds said their visibility was poor, a quarter (24%) worried items may fall off the roof or out of the boot, and a fifth couldn’t fully access the car controls.

In addition, when moving, 27 per cent said the passengers in their vehicle didn’t wear seatbelts and a fifth explained that the driver of the vehicle didn’t wear one either.

How students are compromising safety by over-packing:

• 41% say they disregard their rear-view window when packing up their vehicles
• 20% block their side window visibility by over-packing their vehicle
• 17% strapped items to the top of the car without a roof rack
• 16%  were unable to properly close their boots
• 27% said the passengers in their vehicle didn’t wear seatbelts
• 17% said that the driver of the vehicle didn’t wear one either

The study also reveals that over half (54%) of students take two or more trips to move items to and from university and over two fifths (44%) say that they travel over 100 miles to get to their destination.

When looking into how students secure items in their vehicles when travelling to or from university, over two fifths (44%) said they cram items into their vehicles so they didn’t move and a fifth (21%) said they use the seat wells.

Steve Kerrigan, Head of Young Driver Insurance at Co-op Insurance commented: “It’s concerning that 61% of students will venture to or from university in a vehicle where there’s poor visibility due to over-packing. Visibility when driving, particularly on motorways is absolutely critical and nothing should compromise this element of safety.

“Bedding, toiletries and food are among the most popular items that people pack, but these are good examples of items that can be bought once you’re unpacked and will free up extra space in the car. We’d advise parents and young drivers to devise a packing strategy before setting off, secure all items to the car and consider which items are critical and which can be bought closer to university.”

Top 10 tips for packing student cars safely:

1. Use vacuum storage bags for items that take a lot of room
2. Remove all items from the car that aren’t needed
3. Pack items in the order that they’re going to be needed
4. Use soft bags rather than rigid suitcases
5. Don’t cram so much in that the driver’s view is obstructed
6. Ensure there’s space for safety equipment
7. Keep larger/heavier items low down and pack smaller items around them
8. Consider roof boxes to carry large items
9. Keep the dash board clear in case it’s necessary to suddenly brake
10. Adjust tire pressures to allow for a heavier load

September 13th, 2017 | Andrew Hagger | News

13 Sept 2017

New analysis of the mortgage market by Tesco Bank reveals that up to 2.5 million UK home buyers may be over-paying on their mortgage as a result of slipping onto higher Standard Variable Rates (SVRs) at the end of their fixed rate period. With the typical SVR at 4.39% compared to the average 2 year fixed rate at 1.95%, these customers could be over-paying on their mortgage by up to £274 a month. To help customers manage their money, Tesco Bank automatically offers existing customers access to the Bank’s competitive rates 12 weeks before the end of the fixed rate term.

Why does this matter?

Tesco Bank’s new Home Buyers research reveals that one-third of home buyers would need to reduce their discretionary spending should interest rates increase by 0.25% – equivalent to £21 per month on an average mortgage balance.

Furthermore, the research reveals that while 62% of prospective home buyers are optimistic about their housing prospects – a reduction of 11% over the past 6 months – a third of prospective home buyers are more pessimistic, citing economic uncertainty, budgetary pressure, and the prospect of future interest rises as key concerns around purchasing their first home or moving house.  

David McCreadie, Managing Director, Tesco Bank said:

“Our goal is to reward the loyalty of our customers. Our latest home buyers research illustrates that customers continue to face many challenges when buying a home and so we give them a little help by offering our competitive rates when their fixed rate term comes to an end.

“Alongside our competitive mortgage rates, we are also launching a series of guides to help customers navigate some of the potential bumps in the road as they move into their new home – especially those who are moving home for the first time.”

September 11th, 2017 | Andrew Hagger | News

11 Sept 2017

As more than half a million students pack their bags for University this September, a new study by Co-op Insurance reveals almost half don’t have home contents insurance.

The study, conducted among UK University students found that 46 per cent don’t have home contents insurance and a tenth simply don’t know if they have it.

When it comes to reasons for not getting contents insurance, more than a third cited cost as the biggest barrier, whilst less than a third (28%) just haven’t got round to getting it.

For a tenth (13%), it’s simply not knowing how to get cover, a sixth presume their landlord has it sorted and a tenth (11%) would rather risk it than take out cover.

Highlighting the importance of such cover, two fifths (40%) of students calculate their contents to be worth between £1,000 and £2,499 and a quarter (24%) estimate that their belongings are worth £2,500 or more.

A high proportion of students own valuable possessions, including a laptop (84%), mobile phone (84%), TV (59%), tablet (55%), jewellery/watch (46%), games console (45%), sports equipment (20%) and designer clothes (24%) or shoes/handbags (20%).

With this is mind, a fifth (21%) have had their home broken into or had an attempt made, and a third admit to worrying about break-ins.

Furthermore, those living in a detached house are significantly more likely (51%) than others to have experienced a break-in, which is concerning given that a fifth of students live in this type of property.

It’s not just theft that requires cover either. Contents insurance can also protect against fire damage, personal possessions, accidental damage and emergency repairs**.

Caroline Hunter, Head of Home Insurance at Co-op commented: “It’s concerning to see that as many as 46% of students don’t have contents insurance, especially given the cumulative value of many of these properties, which are often made up of multiple tenants.

“Unfortunately accidental damage and theft does happen within student homes and so we would urge students to take out home contents insurance, which doesn’t have to be expensive but can often safe a whole host of hassle and expense in the future.”

September 8th, 2017 | Andrew Hagger | News

8 Sept 2017

More than 3.9 million over-55s plan to downsize to a cheaper property later in life – but it is convenience rather than the cash that is their biggest motivation, according to new research from Prudential.

The nationwide study found nearly half of over-55 homeowners planning to sell and move to cheaper homes in later life. On average they expect to raise around £112,000 in equity by downsizing with around one in 10 expecting to make more than £200,000. In fact, more than one in seven (13 per cent) said they could not afford to retire unless they downsized.

However, it is not all about the money – the main reason for downsizing is the convenience of running a smaller home in retirement. Nearly three-quarters rated convenience as their main reason for downsizing compared with just 28 per cent who said they were doing so to mainly release cash for retirement. Meanwhile, just over one in three said having a smaller garden was a major motivation.

But worries about a shortage of homes suitable for retirement, fees and high property prices are the major reasons deterring some older homeowners from downsizing, the study found.

A lack of suitable available housing is the main reason over-55s believe downsizing is not more popular – 38 per cent blame the lack of suitable houses while a quarter blamed the cost of moving in terms of stamp duty, solicitors and estate agents, and 17 per cent say high house prices put people off.

Of those who expect to raise money from downsizing 60 per cent will use it to boost their retirement funds and improve their standard of living. Nearly half (47 per cent) will use the cash for travelling more, while (13 per cent) want to release equity to help their children buy a house and 14 per cent will simply give the cash to their children.

Vince Smith-Hughes, a retirement income expert at Prudential, said: “It is interesting to see that these figures challenge the common theory that ‘my house is my pension’. Although we see a large proportion of those taking equity from their homes to boost their retirement incomes, most people have accepted that the main reason they need to move home in later life is for convenience.

“With the average amount of equity raised likely to be just over £100,000, and with many other demands on this cash – such as helping children, paying off debts and putting money aside to pay for care in the future – it is clear that for most people the best way to fund retirement is through saving as much into a pension as early as possible in their working lives.

“The results also show that many people are worried about that the costs involved in moving house may eat into the equity they’ll be able to take from their home. Most people who are considering making major financial decisions, such as selling their home, in the run up to retirement should benefit from a consultation with a professional financial advisor and the free guidance on their pension options available from the Government’s Pension Wise service.”

September 6th, 2017 | Andrew Hagger | News

6 Sept 2017

A study by comparison site finder.com reveals today that the younger generation is most likely to switch energy providers, with 32 percent of millennials having switched in the last 12 months.

The study also found that over two in five Brits don’t know or understand their energy tariff options, and one in five have stayed loyal to their energy provider for over 10 years. Baby Boomers are most likely to stick with what they know, with 26.4 percent keeping loyal to their current provider for over 10 years. The findings come after British Gas announced that its standard electricity tariff will increase by 12.5 percent from 15 September, 2017.

A spokesman for Finder said: “It’s great to see that Millennials are taking more control over their energy costs. As a generation of digital natives it’s not surprising that they’re more comfortable with exploring their options and switching online. However it’s alarming that almost half of Brits don’t know or understand their energy tariff options, which could be costing them hundreds of pounds a year.”

Based on the average energy usage per person per year, finder.com has calculated that Brits could save up to £231.47 a year by switching energy providers.

Jon continued: “Although British Gas is still offering the cheapest tariff of the Big Six, it’s important to continue to compare what’s out there ahead of price hikes. As it’s such a highly competitive market, if you haven’t changed suppliers recently, or even if you have without doing your research, you could be missing out on an opportunity to stretch your pound further.”

In order to avoid the price hikes in September British households are encouraged to review their options as soon as possible.

September 4th, 2017 | Andrew Hagger | News

One in four UK adults (23%) is considering buying an electric car within the next five years, according to new research from Sainsbury’s Bank Loans. The supermarket bank’s latest Car Buying Index, which tracks consumers’ car purchase intentions, reveals that recent Government announcements designed to boost the switch to zero-emission vehicles are convincing large numbers of motorists that their future is electric.

Government announcements

First came news from the DVLA that Vehicles registered from 1 April this year would see CO2 calculations change.  After the first year, the amount of tax depends on the type of vehicle, with petrol or diesel vehicles charged £140 a year compared to £130 for alternative fuel vehicles and no tax at all for vehicles with zero CO2 emissions. Vehicles with a list price of more than £40,000 will be charged a rate based fuel consumption, and an additional rate of £310 a year for the next 5 years.

In June’s Queen’s Speech the Government announced it would introduce an Automated and Electric Vehicles Bill which would require the installation of charging points at motorway service areas and large fuel retailers⁽³⁾. In July it committed to banning the sale of all new petrol and diesel cars and vans from 2040 as part of its clean air plan⁽⁴⁾.

Drivers’ intentions

While 23% of adults are considering buying an electric car in the next five years, a total of 41% believe they will buy one in the next decade.

The surge is not likely to be immediate, however, with just 3% of those who intend to buy a car over the next six months planning to choose one powered by electricity, compared to 52% who will opt for a petrol vehicle, 22% who plan to buy a diesel car and 14% who will opt for a hybrid. One in ten (11%) did, however, say they  are ‘seriously considering’ buying an electric vehicle for environmental reasons, increasing to 16% who would seriously consider doing so if all petrol stations and motorway services had electric charging points.

Registrations of electric vehicles are increasing, with 13,800 being registered in the first quarter of 2017, a 17% rise on the same period the year before.

Sainsbury’s Bank’s research found that recently introduced vehicle tax changes were affecting the vehicle choice of many motorists. One in five who plan to buy  a car (19%) said they would deliberately avoid buying new vehicles with higher petrol or diesel emissions because they are more expensive to tax, and 15% said they would deliberately spend less than £40,000 on a new car in order to avoid the vehicle tax surcharge.

Robert Oag, Head of Loans at Sainsbury’s Bank said: 

“Over the last six months around four in ten of our personal loans were arranged by customers in order to buy cars. As well as considering the type of car that’s going to be economical for you, and the environment, it’s important you consider the best way to finance the vehicle too.

“Right now, personal loan rates are very low which means monthly repayments and total interest could work out lower than some other finance options. Make sure you do your homework and make a decision that best suits your needs.”

Six per cent of those planning to buy said they had bought a diesel or petrol car since 1 April this year and been caught out by the new vehicle tax rules, while 13% said they were unaware that the calculations had changed.

Concern over potential future rules is also proving a deterrent to buying diesel vehicles for some motorists, with 19% of buyers saying they would deliberately avoid buying one because they fear new rules such as city centre low-emission zones would be introduced that would cost them more money.

Sainsbury’s Bank is offering customers a typical rate of 3% APR representative on loans between £7,500 and £15,000 taken over one to five years^.

Nectar customers taking out a loan over one to three years could get an even lower rate. Sainsbury’s Bank has a loan calculator  to help customers gauge what their monthly repayments and total repayable amount would be with different Sainsbury’s Bank loans.

Sainsbury’s Bank offers the following tips for those looking to buy a car:

–          Check the new vehicle tax rules carefully before you buy – while some pure electric cars remain eligible for no tax, this is not the case with low-emission hybrids or combustion-engined cars, though tax is now partially calculated based on the level of CO2 emissions. You can check the new tax rules here

–          Know the market: the What Car? Target Price for each make and model is a good guideline

–          When a new model or facelifted version of a car is launched, or is imminent, the ‘old-look’ model can be bought at a greater discount.

–          Larger discounts are often available before the introduction of new registration plates.

–          If asking for a drop in price is a daunting prospect, try getting additional extras thrown in with the deal, such as a SatNav, Bluetooth or metallic paint.

–          Make sure you’re fully decided on the car you want, and on your budget. Don’t be persuaded into spending more than you can afford – and if you don’t like the deal, walk away.

–          Shop around. Visit more than one dealer to compare prices and test their willingness to do you a deal. Let them know you’re considering other options.

–          Never respond too quickly to an offer/deal. Pause before answering – or say you’ll think about it – to let the dealer know that you’re not desperate.

August 31st, 2017 | Andrew Hagger | News

Parents with preschool aged children looking to take a step on or up the property ladder could see a 17% increase in the amount they can borrow once the government’s new free childcare scheme comes into play, says Yorkshire Building Society.

From September parents with children aged three and four years old could be eligible for 30-hours free childcare a week, meaning they could potentially pocket more than £210 each month.

With the estimated average monthly cost of full-time childcare reaching a whopping £963.56, parents could see a dramatic increase in the amount they can borrow for a new home or additional loan.

For example, a typical couple both earning the national average salary of £26,156 with a youngster in full-time childcare receiving the universal free 15-hours childcare a month could borrow a maximum of £182,528 with the Yorkshire over a 25-year mortgage term.

However, if they receive 30-hours free childcare the couple could borrow up to £213,244, an increase of £30,716.

Charles Mungroo, Mortgage Manager at Yorkshire Building Society said: “An expanding family usually means there’s a need for more space, which can be a struggle for parents who are shelling out almost a £1,000 a month on childcare.

“The new government initiative is great news for parents’ ability to buy the home they want. The extra cash will really make a difference, particularly for those looking to move on to or up the property ladder.

“Parents who are happy in their current property could use the extra cash for home improvements or an extension. They may also consider making overpayments on their mortgage to pay it off quicker. A word of caution though, most lenders will charge borrowers if they overpay beyond a certain percentage of their home loan, so always check the small print first.”

Parents can refer to the criteria outlined on the government’s website to see if they are eligible for 30-hours free childcare.

August 30th, 2017 | Andrew Hagger | News

New research from American Express reveals that dads plan to spend £366 on back to school items, whereas mums are more cost-conscious, spending £192.

Jenny Cheung, Director at American Express, said:

“As the new school term approaches, it’s not surprising that parents across the UK are busy shopping for back to school items – but it appears the spending habits for mums and dads are quite different.

Our research shows that dads plan to spend an average of £366 on school items, whereas mums are most cost-conscious, spending £192. Sport-mad dads will splash out £32 on new PE clothes and gear for their children, compared to just £10 spent by mums. Meanwhile, digitally-inclined dads will spend on average £20 more on gadgets for the new school year (£35 versus £16).

“Whether you’re buying gadgets or lunchboxes, back to school costs can soon add up, so it’s a good time to purchase all these essentials on a credit card that earns cashback or rewards so you can treat the entire family at a later date.”