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.”

August 29th, 2017 | Andrew Hagger | News

The latest research undertaken by Lloyds Bank shows that over half of holidaymakers (53%) look forward to taking a break from the online world by taking a digital detox on their holiday. Just under seven out of ten people (69%) also stated they were planning to take less ‘tech’ items next time they went away. This jumps to three quarters (75%) of 18 to 24 year olds and nearly nine out of ten (86%) in the over 75 age bracket.

However, in reality, the urge to check social media or send emails appears to be an unbreakable habit. Just under nine in ten people (86%) logged in whilst on holiday, spending an average of 15 hours online during a break of five days or more with 18 to 24 year olds spending an average of 17 and a half hours connected to the internet.

Surprisingly, in the modern world of social media apps, the most common activity spent online was reading or replying to emails (75% of people doing so), with over half (55%) of 18 to 24 year olds doing this, and a big leap to 93% of the over 75s. This could be work related, as people on average spent three hours online for work or business whilst away, and for 25 to 34 year olds, this jumped to eight hours on average.

Holidays can also be an excuse to spend more on exotic food and luxury items, and just under one in three people (30%) stayed in control of their finances and checked them online whilst away. Transferring funds from a savings account (44%) was the most common activity for those that did do their online banking whilst on holiday, followed by paying a contact or bill (42%).

A spokesman for Lloyds Bank said: “While people are rightly taking the chance to take a break from their busy lives and have a digital detox on holiday, it’s important to stay in control of your finances, particularly at times when you might be spending more on things like trips, excursions and meals out. Convenient banking is exactly what people need when they’re away, so they can focus on enjoying their holiday.”

Most people still can’t go half a day without checking social media, with the average time without checking an account at just under 12 hours. Just under one in three (30%) of 18 to 24 year olds thought it was important to receive ‘likes’ on their social media activity and Facebook was the most widely used app with over half using it (55%).

Unsurprisingly, the smartphone was the most common tech item to be packed with over three quarters (86%) taking one on holiday, and almost all (97%) 18 to 34 year olds. Of the bigger tech items, over half (51%) took a tablet on holiday and just under a quarter taking a laptop (23%) away.

August 23rd, 2017 | Andrew Hagger | News

At a time when estate agents are warning that house price affordability is reaching a crisis point it seems that more people are turning to their grandparents in order to get a foot on the property ladder.  The Bank of Gran and Grandad has donated a total of over £37bn in funds to their grandchildren and one in ten grandparents say this money was to be spent on a deposit for a house.

The generous donations look set to continue as the research from Saga shows that a further third of grandparents are still considering or intending to give a financial gift and one in ten are considering lending money to grandchildren. The typical donation from Grandparents is £9,365, with those in London and the South East giving the largest deposits, although grandparents in Yorkshire are some of the most likely to gift to their grandchildren.

Grandparents say that they view the gifts as an early inheritance, with over half saying that they would rather see their relative enjoy the money than wait to leave it as an inheritance. In keeping with this generous spirit many grandparents do not specify what the money should be spent on; four in ten are happy for it to be spent on whatever their grandchildren would like to buy themselves.  Other expenditure from the Bank of Grand and Grandad goes on education, (23%), holidays (13%), driving lessons (12%) and house deposits (9%).

A spokesman for Saga Money, commented: “Most of the money grandparents are gifting is coming from their cash savings, so whatever small amount of interest they are missing out on is clearly outweighed by the joy they get by seeing their grandchildren benefitting from the money.

“If you are giving your grandchildren support as a loan rather than as a gift it pays to take a few sensible steps so there is no awkwardness later on,.  Only half of grandparents say they discussed repaying the loan with their grandchild, our advice is to be upfront about the conditions of the loan including how you would like the money repaid in order to avoid difficult conversations at a later date.

“Our customers are increasingly turning to gifting money through equity release in order to help grandchildren onto the property ladder.  On average they take £33,000 out of their property in order to give to family.”

Saga Magazine has put together some tips for people considering lending or giving financial gifts to their family, for the full article please see www.saga.co.uk/magazine/money/personal-finance/giving/a-guide-to-giving-money-to-your-family

• Make sure you are secure and have enough money to fund your retirement and future care needs before you choose to assist others.
• Make sure the terms of the gift or loan are clear, particularly if there is something specific you want to help your grandchild with or, in the case of a loan, an agreement about how and when it will be paid back.  It might sounds distasteful at first, but will possibly save a lot of awkwardness in future.
• Giving an early inheritance can be Inheritance Tax efficient, look into the options as to how much you can give before becoming liable to tax
• Gifting could affect your own or your grandchild’s entitlement to benefits, particularly if you might need long term care in later life.  Gifts could be regarded as a ‘deliberate deprivation of assets,’ which means taking cash out of your estate to ensure you qualify for means-tested benefits so it is best to take advice to ensure you do not fall foul of the regulations.
• Many people take equity built up in their home in order to gift money to grandchildren.  It is important to take advice before doing this as the ‘deprivation of assets’ rule may still apply and there could be a cheaper way of finding the money.  It is also important to discuss this option with your family to let them know what you are thinking of doing.

August 22nd, 2017 | Andrew Hagger | News

Fraudulent credit applications against people in their twenties have soared in the last three years, according to new research from Experian.

The proportion of frauds against those under 30 years old has risen by 6% since 2014, while those aged 50 and up have experienced a decrease of 8.4% over the same period.

A spokesman for Experian, said: “Our statistics show young people are increasingly falling into the crosshairs of fraudsters, who see them as an easier target to open an account. They are more interested in getting an account open so they can use it for money laundering, or to establish a footprint at the bank for further fraudulent activity.

“Young people are more likely to live their lives online, so there is a good chance they will not be monitoring their post for statements. They often live in accommodation with shared mail areas, which provides an opportunity for fraudsters to intercept their post. Fraud can happen to anyone and it’s important not to get complacent. If you do use online statements then make time to check them each month, and keep an eye on your credit report for unexpected applications.”

The 60-plus cohort have experienced the sharpest decline in fraud attacks, down 5.8%, suggesting they have heeded advice to monitor their statements for suspicious activity, given scam emails a wide berth and use a range of passwords online.

In 2014 the stereotype was supported by statistics, with 17.1% of frauds perpetrated against people aged 60 and over. But this year, 11.2% of frauds are against this age group, the biggest single movement of stats related to age.

Shifting targets of fraudsters:

• Are male: Males victims have seen a rise in frauds of 1.6%, since 2014
• Are 20-29 years old: This age group has faced a rise of 5.7% in attacks since 2014
• Live in London: 28% of frauds in the UK are targeted against London residents

Fraudulent applications for current accounts reached 164 in every 10,000 in the second quarter of 2017, up from 128 in every 10,000 between April and June last year. Mortgage fraud rose to 75 from 63 in every 10,000 applications over the same period, although credit card fraud dropped from 48 to 42 in every 10,000 applications year-on-year.

Households struggling to get by on minimal incomes who prefer to deal in cash are becoming a particular target of fraudsters, analysis using Experian’s Financial Strategy Segments (FSS) tool shows. Frauds against this group are up 2.4% compared to last year and 4.2% since 2015. Other households struggling to make ends meet in the Family Pressures segment were also increasingly preyed upon by scammers, up 4% over two years.

Experian offers proactive steps people can take against fraud:

Online passwords: There’s nothing more attractive for ID thieves than someone who uses the same password across multiple online accounts. It’s crucial to have unique and secure passwords for each online account. People should consider the strength of their password; always use a combination of upper and lower case letters, numbers and symbols, and change them regularly.

Security First: Be conscious of the information you share when using shared Wi-Fi networks. Public networks and open Wi-Fi hotspots can be compromised more easily by fraudsters than secure networks. Be cautious of the information you share on your social profiles such as your email address, date of birth and all other personal information that could be easily traced.

Passcode protect: A lot of personal information is stored on devices that are not password protected. That’s emails, apps, messages – a vast amount of information that could be a goldmine for fraudsters if the device is lost or stolen. People should always lock their mobile device, whether it is with a passcode or a gesture, to prevent access to such information, should the worst happen.

Check the post: While e-banking is becoming increasingly popular, receiving unexpected, irrelevant mail, could be a warning sign of ID fraud – particularly mail that is outside of your usual purchasing habits. Shred and destroy any documents that contain sensitive, personal details. And if you move house, make sure you re-direct your post and register to vote at your new address.

Be credit wise: By being credit smart and checking your credit report to see if there are rogue applications, you can get a better handle on whether personal information has fallen into the wrong hands. Web monitoring tools are also useful as they scour the web for stolen details – sending people an instant notification if their information appears somewhere new online.