The Financial Blog

Direct Line is offering new customers who purchase motor insurance between 20th February and 31st May 2008 a guaranteed same price cap on their motor insurance premium when it renews the following year.

Head of Car Insurance at Direct Line, Tony Chilcott, said, “Drivers have been watching their motoring costs rise dramatically in the last few years and it looks like the trend is set to continue. We recognise that people need to budget for the months ahead so that they can effectively manage their finances. New customers joining Direct Line will now be offered a helping hand as we cap their motor premium for the next year so it’s the same as they paid this year.”

Funnily enough my car insurance is up for renewal in March and I’ve just today been sent an email from my current insurer. I’ve got a 5 years no claims discount and I’m 31, I drive a 7 year old 1.9 diesel car and my renewal price is £281.00, not bad I thought…

I decided to try a comparison web site, Moneysupermarket.com – After completing my details I found a few quotes around £200, so I could in theory save around £80. The problem is can I really be bothered to go through the hassle of changing everything to a new insurer just to save myself less than £8 per month?! I suppose this is what the insurers rely on; customer apathy…The thing for me is that I’ve got enough to do without having the hassle, and to be honest complete boredom, of changing car insurance!

With my current insurer Swiftcover.com everything renews automatically, I don’t have to do anything, apart from read the emails they send me. On the other hand a friend has just said that he’d never deal with them again because they were awful when his car was written off…I guess we all just hope that we’d never have to deal with that situation.

I think I’ll get a few different quotes from other comparison sites, maybe a few insurance specialist sites like confused.com If I can’t save a decent amount then I’ll just leave my policy with Swiftcover, after all insurance can only get so cheap they’re not going to give it away!

The number of people taking out a new mortgage was down by 31 per cent in January compared to this time last year.

The figures released from the BBA, British Bankers Association, state that mortgage approvals were at 44,288 for January 2008. This was a slight increase on December 2007 of 42,343 mortgage approvals.

However it also showed that re-mortgages increased from 67, 535 in December 2007 to 79,016 in January 2008 a very strong 39 per cent increase.

This could be something to do with the poor run of interest rate rises over the course of 2007 forcing people to take stock and re-mortgage to a better deal in the New Year.

BBA director of statistics, David Dooks, said “Higher gross mortgage lending in January largely reflected very strong re-mortgaging activity, as borrowers sought out the best deals available,”

“Although house prices and new loans for house purchase, appear to be subdued as the housing market slows, the strength of re-mortgaging would suggest competition for mortgage business and switching remains high.”

katie price is set to launch her own credit card, personally branded ‘pink and girly’, aimed at young women. The credit card will complement the range of jewellry, clothing and cosmetics that are also planned to hit our shops sometime next year.

The idea of a Jordan or Katie Price branded credit card has caused concern amongst consumer groups who say this could encourage young women to get into debt.

debt on our doorstep CEO, Damon Gibbons said: “This is a totally irresponsible idea. Jordan is a very influential celebrity who has a lot of young fans who want to be just like her.

“Giving them a credit card endorsed by Jordan herself will encourage youngsters to spend cash on living a lifestyle they wouldn’t normally be able to fund.

“UK debt is currently up to around £1.3trillion. The last thing young people need is to be sold a glossy celebrity-backed credit card.”

A spokeswoman for Katie Price said: “This is something we are in talks with financial companies about doing in the next year.

“It will be the Katie Price credit card and it will be her own card rather than something Katie just puts her name to.”

I’m not that sure if Katie will be funding this with her own money! I’m sure; if it goes ahead then the credit card will be funded by one of the big credit card companies who already provide other brands or banks with credit card facilities for their customers.

I think this is a good idea for Katie Price, I wonder how long it will be before we see more celebrities fronting credit cards? If young people are stupid enough to spend money they don’t have then maybe we need to think about increasing the eligability age of a credit card and loan or mortgage to 21 years old?

At 18 years of age I knew I was spending money on a credit card that I couldn’t repay at the time. It didn’t stop me, and having a celebrity on the credit card wouldn’t have made a bit of difference. The bank where I held my current account posted out the credit card offer, all I had to do was sign one peice of paper and post it back in a pre-paid envolope! Much easier and far more influential than a celebrity branded credit card.

In fact it’s not really much different to the football credit cards that are already available today, it’s just a celebrity as opposed to a football club.

It seems as though 80 per cent of the post’s I’m writing over the last few weeks are about increasing costs. We’ll, I’m afriad here’s another one!

According to the latest Sainsbury’s Car Insurance Index the cost of insuring your car will have increased by an average of 5.24 per cent over the last 12 months. Sainsbury’s say that shopping around is essential if you want to reduce the cost of your car insurance they also offer a 10 per cent discount if you buy online.

The average price from December 2006 compared to December 2007 has increased by 5.24 per cent, from £472.52 to £497.26.

Sainsbury’s Car Insurance Manager, Joanne Mallon said: ”Car insurance premiums continue to rise  which makes it all the more important for motorists to shop around for competitive insurance.  The trick is cutting your costs without cutting your cover. Comprehensive can be a loosely used phrase with some comprehensive policies not even providing courtesy cars as standard.

“Cover and benefits vary dramatically between insurers but unfortunately, as many as one in five motorists only obtain one quote when they buy car insurance, many saying they can’t be bothered to shop around or that they don’t have enough time to do this. Missing out on a cost saving is one thing but not taking the time to make sure you’ve got good quality cover could turn out to be a major regret.

“When comparing policies do so with a like for like approach, there’s no point comparing apples and pears, it’s worth considering why the cheapest policy is so cheap, you may find you’re not just compromising on service but cover too.”

The Sainsbury’s research continues to underline the fact that men pay more for their car insurance than women and that the under 25 year olds pay the most for their car insurance.

>>To get an online quote from Sainsbury’s car insurance click here>>

The Post Office has reduced the rate on its 3 year fixed rate mortgage to 5.34 per cent making it one of the better fixed rate mortgage deals in the UK today.

What’s more is the arrangement fee is just £399, one of the lowest available, and the lending fee is £199.

I don’t know why they don’t just have one fee of £599 rather than splitting the fees between an arrangement fee plus lending fee. I suppose it’s one way for the Post Office to make up for having such a low arrangement fee, i.e. they tie another fee in with the product. The only good thing is that the lending fee can be paid at the end of the mortgage term so at least you can put off the payment if you’re struggling to find free cash at the time.

The three year fixed rate mortgage deal is part of a new range of mortgages being trialed by the Post Office in selected branches across the North. The early success has now led the Post Office to expand the trial to other branches across the UK.

If you want to find out more then visit the Post Office here or call 0800 707 6204.

On 3rd March 2008 Abbey will be launching a new Super ISA with a market leading rate of 10 per cent AER, tax free! It’s really a two part ISA, essentially a cash ISA the 10 per cent is available if customers agree to put an equivalent amount into Abbey’s tax efficient Guaranteed Growth Plan or any other investment that’s specified.

The Super ISA also allows you to transfer in cash from other ISA accounts you may have and it offers instant access to your cash if you need to get hold of your money quickly. Any money you put into the Guaranteed Growth Plan is tied in for a longer term but it offers guaranteed returns of 6 per cent if you invest for 3.5 years or 18 per cent if you invest for 6 years. The capital is guaranteed, so no matter what happens to the stock market your money is safe!

If you decide to close the Guaranteed Growth Plan early you might get back less than you invested, but as long as you keep your money in for the full agreed term Abbey will guarantee it. Abbey also reserve the right to withdraw the product if it becomes over subscribed, but they don’t mention how much exactly oversubscription would be…

Director of Savings and Investments at Abbey, Reza Attar-Zadeh said:  “Super ISA offers the compelling combination of strong instant access cash ISA rate coupled with a tax efficient investment, guaranteed against falling markets.  It also offers the potential for higher returns based on any growth of the FTSE 100.

“Given current market uncertainty and volatility, we think this product is particularly attractive as it offers the potential for capital growth yet provides capital protection against a further market down-turn.”

Well worth considering if you’ve already got an ISA and can transfer the money or a great product to start investing with. Take a look by >>Clicking here from 03rd March onwards!>>

Recent research from Halifax has revealed a surprising sharp increase in stamp duty costs compared to annual earnings. Halifax analysed figures from 2002 to 2007 to compare the average stamp duty costs in 405 local authorities with average full time Gross earnings.

As a result of their findings Halifax calls on all political parties to increase the stamp duty thresholds in-line with the house price increases over the last decade and to continuously raise the thresholds in-line with future house price inflation.

The key findings were;

• Home buyers in 29% (118 out of 405) of local authorities (LAs) have a stamp duty bill equivalent to more than 20% of average annual gross earnings, compared to only 5% (19) of local authorities five years ago
• The average residential stamp duty bill in the UK is equivalent to 7% of annual full-time gross earnings compared to 5% in 2002.  In the South East, the proportion has increased from 7% to 23%
• The average home buyer in the majority of LAs in London (91%) and the South East (61%) has a stamp duty bill that equates to more than 20% of local average annual earnings
• The number of properties in the higher stamp duty bands has increased dramatically in the past five years. The number of properties in the UK valued above £250,000 has increased by 201% from 1.8 million in 2002 to 5.5 million in 2007
• Homebuyers in Chichester have seen the biggest rise in stamp duty bills as a percentage of earnings over the past five years; from 7% in 2002 to 37% in 2007

Additional key points;

• The average UK home buyer pays 7% of average earnings in stamp duty
• Stamp duty bills are highest relative to earnings in London and the South East
• Homebuyers in only 2% of local authorities pay less than 5% of earnings compared to 38% five years ago
• South Buckinghamshire has the highest stamp duty bills as a percentage of average earnings - The average homebuyer in South Buckinghamshire paid stamp duty of £21,241 in 2007, equal to 49% of average annual full-time earnings
• Chichester has seen the biggest increase in stamp duty bills relative to earnings - Chichester in Dorset has seen the largest proportionate increase in stamp duty bills as a percentage of full-time earnings over the past five years, rising from 7% in 2002 to 37% in 2007

Higher stamp duty thresholds must be raised by significant amounts;

If the higher stamp duty thresholds had been increased in-line with house price increases since July 1997 - when the £250,000 and £500,000 stamp duty thresholds were introduced - they would now stand at £720,000 and £1,440,000.

Anther one for the government to sort out! Maybe they’re just, conveniently, forgetting about it…

Experts are warning that petrol prices will hit £1.50 a litre this year if the rise in crude oil prices continues.

For every £1.00 we pay a staggering £0.70 goes to the government in fuel duty and VAT. With prices at the pumps already increased by 20 per cent in the last 12 months this will only put further strain on family finances.

I think it’s absolutely disgusting that we pay such high tax on fuel compared to the rest of the world. It will make running a fairly ‘standard’ small car as costly as some of the bigger more expensive saloon cars.

For example to fill the tank of a Peugeot 206 1.9 litre, diesel engine it costs around £53. Last year this would have cost just £43. If we do hit £1.50 a litre this will rise to £75! For many people this will be the weekly cost of running a car just so they can get to work, £300 a month! That’s what I paid for my first mortgage about 5 years ago. It’s absolutely ridiculous.

Managing director of the website Petrolprices.com, Brendan McLoughlin said “If these conditions in the crude oil market continue, we will hit £1.50 a litre this year.

Chancellor Alistair Darling is planning two further fuel duty increases by October and with such worldwide economic instability, oil prices are likely to rise in the future.

The last time oil hit $100 a barrel it was artificially inflated by a rogue trader wanting to claim his place in history as the first to buy oil at such a landmark price.

This time the price has jumped as a result of speculation over conflict in Nigeria, a refinery explosion in Texas, market traders using commodities as a way to protect themselves against a weak dollar and fears that OPEC (the Organisation of Petroleum Exporting Countries) will cut production because oil reserves are drying up.”

From 1st April 2008 BT are going to stop charging customers for calls to their customer service and helpdesk telephone numbers. Currently the 0870 and 0845 numbers cost customers up to as much as £0.50 per minute, so that’s a staggering £30 for one hours call.

BT managing director consumer, Gavin Patterson, said: “BT has been setting the pace with its pricing and today we’ve decided to go a step further. We’ve always had some of the lowest prices for such calls and now we’ve decided to make them free. We call on the rest of the industry to follow our lead. There really is no excuse for companies whose prices are either sky-high or verging on the ridiculous. We believe that customers are out of pocket to the tune of £70 million a year.”

Main reasons for calling BT technical support
Network connection problems (37%)
Service interruptions (18%)
Set-up problems (16%)
Wireless router problems (11%)
Issues with speed (9%)
Other(9%)

I recently found an interesting blog about saving and how we all seem to focus on a big lump sum, a huge pile of cash, when we think about savings but especially in relation to retirement or financial freedom.

This blog by Monevator.com explores the idea that we should really be thinking about replacing our salary with an income, because it’s that income that will enable us to retire or become financial free, i.e. not have to work!

I think Monevator.com has a point, replacing a salary is a realistic goal for many of us. Most ‘ordinary’ people don’t get the chance to make investments because we simply don’t have the cash. But the blog explores good ideas and makes you think about it…>>Click here to take a look>>