The Financial Blog

Over half a million of us spend more than a day worrying about mortgages, finances and our possessions & women are bigger worriers than men…

Research from Abbey.com reveals that Brits spend over 25 hours a week worrying. 67 per cent of us worry about our homes and posessions and nearly half of us, 48 per cent, worry about our money situation.

People in London and the South East are the biggest worriers, perhaps that’s related to house prices around that area of the UK!? Scots seem to be the most relaxed.

49 per cent of women and 47 per cent of men stress about their finances.

On a more serious note Abbey insurance has seen more people taking out mortgage repayment cover or paymentcare so that mortgage payments can be covered for a year if they loose their regular income through no fault of their own.

Head of Abbey Insurance, Lloyd Wilson, said: “The current climate has seen more people worry about the event of job loss.  While you cannot predict the future, you can at least be prepared for it.

“While it is natural for people to worry a bit about their property and financial security, for the people who worry for more than 25 hours a week, it’s more than just a healthy concern. People need to find ways to put their mind at rest.

If you would like further information about Abbey’s mortgage payment protection then visit Abbey.com/mortgageprotection

Norwich and Peterborough Building Society have asked customers in its branches to provide tips on how to save money, the top 5 tips are;

1. Budget for utility bills and put aside money for times like Christmas in a separate savings or bank account
2. unplug all electrical items or at least ensure they are not left on standby
3. Plan a weekly food menu and do your food shopping based on the list! & Don’t go food shopping when you are hungry!
4. Use your ISA allowance every year if possible
5. Check your direct debits every month to make sure you’re only paying for things you should be

This is good general and practical advice considering the ever increasing cost of living over the last 12 months.

Group product manager at Norwich and Peterborough Building Society, Gary Lacey,said: “At N& P, we are committed to helping families and have asked our customers for budgeting tips to do just that. It is refreshing to see that it is often the simple tips that can prove most popular such as changing your shopping habits, or saving on the electricity bills. By adhering to just a few of the tips our customers suggested, families can save little and often, which, in the long run, could add up to a decent amount of money.”

“Those who put these budgeting tips into practice in order to save money may want to consider opening one of N& P’s new Family Savings Accounts in which to put the cash they save. By making the most of their savings, families will find they can put these funds towards more of the important expenses in life.”

Some of the less serious comments included;

• No pocket money for the kids
• Marry a millionaire
• Don’t daydream in the shower and waste water
• Cut down on champagne

If you’re interested in seeing more budgeting ideas then visit the online budgeting guide at www.familieslovenpbs.co.uk

According to new research from Moneyexpert.com the number of fixed rate mortgages on offer has increased over the last 12 months.

There are also fixed rate mortgage deals avaialble for as long as 30 years, although the average long term fixed deal is around 10 years.

Interest rates on these long term mortgages are increasing because banks are looking to reduce the number of high risk borrowers they lend to.

Sean Gardner of MoneyExpert.com said: “Long term fixed rate mortgages are here to stay. The Chancellor himself announced his support for lengthy fixed deals in the Budget and lenders have already started to react to demand by adding long term products to their portfolios.

“However even though there is now more choice for homeowners, that choice also comes at a higher cost. Average rates on long term deals are up, meaning the consequences of making such a big decision are even more severe. If interest rates start to spiral, you’ll be laughing. But if they continue to drop then you could have saved money sticking to shorter term arrangements.”

Manchester Building Society are offering the longest fixed rate mortgage deal at 30 years but most deals range from 10 to 15 years.

Sean Gardner added: “Homeowners could be forgiven for thinking that the recent reduction in interest rates by the Bank of England would ease the strain on their finances. But with average rates on fixed mortgages, whatever the term, on the increase, it’s no wonder people are struggling to meet their repayment deadlines.

“Mortgage providers are rightly nervous about exposing themselves to customers who may not be able to repay their loans, so it’s understandable that the cost of a mortgage is on the up. People should think carefully before agreeing to high-cost, long-term deals because making the wrong decision for you could be significant.”

So if you are one of the 1.5 million people due to remortgage in 2008 you would be wise to set aside some time to compare mortgages and if you’re not sure then seek professional mortgage advice from a qualified financial adviser. Most mortgages will include some form of fee or upfront charge, like a booking charge or fee, so be sure to ask if there are any upfront fees payable. Apart from that you should also know if there are any penalties with your current mortgage provider if you are switching to a new lender.

Mervyn King, The Bank of England Governor has guaranteed to provide back-up to the financial markets in the form of cash injections as he warned that the credit crunch is now moving into a different phase.

£5 billion has already been provided by The Bank of England to try and help restore confidence in financial markets.

The housing market has weakened lowering prices and demand across business and residential property. Mr King said that house prices should stabilise over the next few years and prices should also become more affordable for first time buyers.

Mr King also commented;  “Across the world, confidence in financial markets is fragile. It is not that banks, at least in the UK, have made loans that are likely to result in unsustainable losses,”

“The heart of the problem is not in the real economy. It is in the financial sector itself.”

“Uncertainty about the strength of banks’ financial positions has grown because of their difficulties to secure funding against assets they hold.”

The main issue revolves around the inter bank lending rate, this is the interest rate at which banks lend money to each other. This rate is still very high because banks are still concerned about the available funding to repay money lent to each other.

Last Thursday Chief Executives from Barclays, HSBC, Lloyds TSB, HBOS and the Royal Bank of Scotland met with Mr King to discuss the situation.

This was of course following the huge fall in HBOS share prices after what seems to have been rumors regarding the banks lack of funding spreading across markets the day before. To date these rumors have been unproven and the bank is not in financial difficulty.

Mr King said that inflation will rise to around 3 per cent but over the next few years will return to the target inflation rate of 2 per cent.

He concluded that “Problems in the UK economy - especially in the housing and labour markets - were not as bad as across the Atlantic.”

Following up on the 0% balance transfer credit cards blog; http://www.thefinancialblog.co.uk/balance-transfer-credit-cards here are some of the best 0% purchase credit cards available today.

You’ll need to consider not only the duration of the 0% offer on the purchases you make but also the Typcial APR the card reverts to when the 0% offer comes to an end.

Halifax One Online Special - 0% on purchases for 12 months. 15.9% Typcial APR, Variable. >Click here to apply>

HSBC Bank Credit Card - 0% on purchases for 12 months. 15.9% Typical APR, Variable. >Apply online now>

First Direct Gold Card - 0% on purchases for 12 months. 16.9% Typical APR, Variable. >Goto First Direct and apply>

Bank of Scotland One - 0% on purchases for 9 months. Low 9.9% Typical APR, Variable. >Apply Now>

Tesco Clubcard Credit Card - 0% on Tesco purchases for 13 months. 0% on non-Tesco purchases for 3 months. 16.9% Typical APR, Variable. >Click here and apply today>

I’ve included the Tesco Clubcard Credit Card because it is a very good offer even though the 0% is only available on purchases you make at Tesco stores. The card does offer 0% on any other purchases you make but only for 3 months. This credit card also offers 0% on balance transfers for 13 months, there is a 2.5% handling fee on any balance you transfer.

Don’t forget if you’re thinking of making a big ticket purchase and think you might need more than 10 to 13 months to repay then a personal loan might be a cheaper option for you in the long run, especially if you start paying 15% to 16% interest on a credit card when the 0% offer comes to an end…

Here’s a quick round up of some of the best 0% balance transfer credit cards available today.

Make sure you don’t make any additional purchases once you’ve transferred a balance to any credit card. The banks will usually charge you interest on additional purchases and then continue to charge interest on the purchases until your balance transfer is cleared….be warned!!

0% Balance Transfer Credit Cards

Virgin Credit Card – 0 % for 15 months, 2.98% fee applies. 15.9% Typical APR, Variable. >Apply Now>

Barclaycard Platinum – 0% for 14 months, 2.9% fee applies. 14.9% Typical APR, Variable. >Apply Now>

Barclaycard OnePulse– 0% for 14 months, 2.9% fee applies. 14.9% Typical APR, Variable. >Apply Online Now>

Tesco Clubcard Credit Card– 0% for 13 months, 2.5% fee applies. 16.9% Typical APR, Variable. Collect Tesco Clubcard points wherever you shop! >Apply Online Now>

MBNA Platinum - 0% until 01/05/2009, 2.9% fee applies. 15.9% Typical APR, Variable. >Apply Online Here>

Please make sure you check the interest rates again when applying, obviously the rates above may change over time.

Halifax Bank of Scotland shares gained by as much as 17 per cent today after it was revealed that the banks management bought £6 million in Halifax shares. This was the best one day gain since the Halifax became listed in 2001 - it was obviously seen as a vote of confidence in the bank following last week’s rumours that it had serious funding problems and was in trouble.

It has been a good day for other UK banks with  Barclays up 9.3 per cent, Royal Bank of Scotland was up 8.3 per cent and Lloyds TSB was up 6 per cent.

Following the peak of a 17 per cent gain Halifax steadied out at around 13 per cent. The uplift was because of the improved offer for the troubled US bank Bear Stearns. JP Morgan Chase has increased it’s offer to $10 or £5 a share from $2. This seems to have had a releaving affect on worldwide markets following the fall of one of Wall Street’s biggest banks. The Bear Stearns fall was because of it’s risky sub-prime mortgage lending which led to other banks refusing to lend it any more money, and this caused major panic in stock markets accross the world.

Then last Wednesday rumours spread that HBOS was in trouble and that the bank had gone to the Bank of England to secure additional funding. See the blog; http://www.thefinancialblog.co.uk/fsa-to-investigate-share-trading

As the blog post says the FSA - Financial Services Authority - is going to investigate these rumours to try and establish if they were spread deliberately.

Consumer watchdog Which? Say that now is the best time to swtich your home energy supplier as the last of the big 6 suppliers, Scottish and Southern Energy have increased their prices; see the blog from last week; http://www.thefinancialblog.co.uk/further-energy-price-increases

Siobhan Parker at Switch with Which? says: “This latest price increase is the green light to switch - everyone’s feeling the post-budget pinch and making sure you’re getting the best deal for your home energy is a smart and easy way to take some of the pressure off.

“If you haven’t compared your rate with the competition lately, now is the time.  We can help you compare prices, switch for free and save money.”

Sainsbury’s are offering a very impressive 12 months home insurance for the price of 9 months with an additional 10 per cent discount if you purchase online.

The offer is available from today until 26th May so you will have plenty of time to compare home insurance from a few insurers. Personally I’d go to the various price comparison web sites out there and get quotes from all of them. Make sure you write down the top 5 best quotes you get back and which company the quote is with, also any contact details if possible. This way you’ll be able to see at a quick glance which comparison site actually gives the cheapest quotes for your circumstances.

Every quote will be different for everyone so make sure you complete the details online as accurately as possible, this could affect the price quoted and if at a later date the information you enter is found to be inaccurate it could invalidate your policy leaving you uninsured.

Home Insurance Manager at Sainsbury’s, Neil Laird, said: “Home insurance policies vary dramatically so its essential people compare policies not only on price but also on the level of cover they provide. Quality cover such as unlimited buildings insurance doesn’t have to be expensive and although premiums have been rising, by shopping around and taking advantage of discounts such as ours, there are significant savings to be made.”

Another couple of points to bear in mind are that Sainsbury’s offer unlimited buildings cover and they won’t charge you for paying by monthly direct debit rather than a one-off payment, making it even more competitive and affordable at a time when we’re all looking to cut back on our monthly expenses.

Find out more about this great offer at www.sainsburysbank.co.ukor call Sainsbury’s Bank Home Insurance on 0800 731 7978

Alliance and Leicester have launched an ISA aimed at 16 to 21 year olds. The headline interest rate is 10 per cent AER on balances up to £1,000.

The Premier ISA has been set up in response to a survey by Alliance and Leicester which found that nearly 2 million employed 16 to 21 year olds don’t know what ‘ISA’ means. (Individual Savings Account!). 1 in 10 have never heard of an ISA, rather an alarming lack of knowledge regarding savings accounts. 18 per cent of the working 16 to 21 year olds think that an ISA is confusing, 11 per cent think they are too complicated and 8 per cent think an ISA is too complex to set up.

Product Manager at Alliance & Leicester, Emma Walkley, said: “Young people should be encouraged to start saving early to ensure their financial future is safe. ISAs are often the first step into the world of regular saving, with customers able to make use of tax free advantages without risk on any amount from £1.”

“By offering everyone aged 16 or over a market-leading interest rate of 10%, we hope this will encourage younger people to bridge their knowledge gap, and whether they are working full-time, part-time or doing casual work, it will help make their hard-earned money work harder for them.”

Take a look at the full product details online at www.alliance-leicester.co.uk/savings or you can call 0845 300 2887. After 6th April 2008 you can transfer funds from any other ISA savings accounts you might have.