The Financial Blog

Commenting on Nationwide’s monthly house price survey, Louise Cuming, head of mortgages at moneysupermarket.com, said:

“This is further gloomy evidence that house prices are slipping and will undoubtedly not do anything to help the already low levels of confidence in the market. The figures will also fuel the ‘wait and see’ approach among the millions of homeowners too afraid to make a move in the current environment, which will add to further stagnation.

“The softening of house values will continue to hit the most vulnerable borrowers, those with little or no equity in their homes. As equity is eroded with falling values, these borrowers will find themselves paying more for their mortgages or, in the worst case scenario, find themselves with no borrowing solutions at all.

“But with every cloud comes a silver lining for some and in this case, it is the first-time buyer who stands to gain. Our recent research found 11 per cent of people who were planning to buy this year had subsequently decided against it due to affordability issues, so today’s news may encourage some to re-enter the market. However, as there is an expectation of prices falling further, they may well play a longer waiting game to try and pounce at the bottom of the market - the longer they wait, the more stagnant the mortgage market becomes.”

Nationwide Building Society say that house prices fell by 2.5 per cent in May and prices are 4.4 per cent lower than this time last year. The good news is that prices are still 5 per cent higher than 2 years ago.

Although we all seem to be living in fear of another recession, as mortgage borrowers, Nationwide say that we are better placed to weather the storm than in the 1990’s and that tighter credit conditions should help the longer term sustainability of the market.

We’ve started seeing the first signs of a recovery with mortgage rates being cut in a attempt to stimulate the housing market, so you could take this as a sign that perhaps we’re moving away from the affects of the credit crunch.

But the problems will come for people who have very little or no equity in their properties, if house prices continue to fall and the equity is eaten away.

Some more good news on the mortgage rates front; from tomorrow First Direct will reduce interest rates and fees on it’s 2 year fixed rate mortgages.

Here are the details;

• 2 year fixed rate at 5.59% (6.3% APR); £499 booking fee and £999 arrangement fee.
  (Previous pricing: 5.76%; £499 booking fee and £1,499 arrangement fee.)
• Low fee version: 2 year fixed rate at 5.89% (6.2% APR); £99 booking fee and £399 arrangement fee.
  (Previous pricing: 5.99%; £99 booking fee and £399 arrangement fee.)

At the end of the fixed rate term these mortgages revert to First Direct’s standard variable rate.

Maximum loan size is £400,000 and the maximum LTV (loan to value) percentage is 80 per cent. Unfortunately the prices and rates on 5 and 10 year fixed rate mortgages are unchanged.

First Direct’s chief executive, Chris Pilling, said: “We regularly review our fixed rate mortgage offers to make sure they’re competitive. Today, we’re reducing the cost of our popular two year fixed rates, which is likely to give them a prominent place in the best buy tables.” 

You can call 0800 24 48 24 or visit firstdirect.com for more information.

>>Click here to compare mortgage rates and find the best deals.

Uswitch.com have reviewed the digital TV market and found that the UK spends over £4 billion a year on digital TV! They also conducted the first ever digital TV customer satisfaction survey which revealed that more than 25 per cent of customers are not satisfied with the service they receive.

• Households spend on average £190 a year on their digital TV service yet 6 million which equates to 27 per cent, are not satisfied.
• Customers voted Sky the best overall provider with 76 per cent satisfied, despite coming last for value for money with 57 per cent of their customers unsatisfied.
• Virgin Media has the least proportion of satisfied customers - over 1 million or 32 per cent, are not satisfied with the overall service.
• Freeview wins Best Value for Money award with 75 per cent satisfied - value for money was voted the most important feature when choosing a DTV provider.
• Less than half , 46 per cent, of customers are satisfied with the customer service provided by their digital TV company - 5 million Sky and Virgin Media customers are not satisfied.

This just goes to show that although overall we’re happy with our digital TV, Sky and Virgin boxes, a staggering 75 per cent of us think it’s not good value for money.

The question is why do people continue to pay for some forms of TV? If the service and value for money is really that bad, as 75 per cent of people say, then surely customers should cancel their subscriptions?

Personally I cannot see the point in paying £40 - £50 per month just to watch the TV. I think it’s a bit sad really that people want the TV in their lives so much they feel the need to fork out that kind of money every month.

Initially I could see the benefit of having sports channels, especially the rugby and football - or OK it would be nice. But now, if I really must see a football or rugby match, I can easily get to a pub and watch there instead. Before anyone mentions it of course I’ll be spending money in the pub!

New research from Alliance and Leicester Current Accounts revealed that 34 per cent of UK adults realise they will have less disposable income over the next 6 months.

79 per cent of people said the this was because of the ever incresing costs of food, household bills, fuel prices and consumer goods and services. No real surprise there. I’m sure we all realise this is becomming more neccissary as UK household finances are stretched to breaking point.

Interestingly, 55 per cent of Brits in the research  had started changing the way the budget and started to improve their financial situation by selling expensive non essential items like cars or jewellery. I think this is the main point here; people need to decide what exactly they need to live comfortably and adapt their lifestyles accordingly, especially if they cannot afford luxuries.

The most popular money saving tips were;

• 20 per cent of people say change utility bill providers
• 12 per cent say switch credit card providers to one with a 0% rate
• 8 per cent are changing current accounts
• 7 per cent are consolidating credit card debts into a personal loan
• 6 per cent are changing jobs to a higher salary
• 6 per cent of people are taking on a second job
• 5 per cent choose to sell expensive items such as a car, jewellery or down-sizing their house

Some good news from this research was that 42 per cent of people questioned said they are budgetting more carefully and trying to live within their means. People are also looking at cheaper supermarkets for food shopping.

Current Account Manager at Alliance & Leicester, Emma Walkley, said: “It is encouraging to see people are making positive changes to their spending and budgeting habits. This will hopefully stand them in good stead should they see their disposable income affected over the forthcoming months.”

“Taking advantage of the best financial deals on the market is always important, but more so in the current environment.  We would advise people to take a good look at their finances and see how they can be improved. Often making simple changes like switching to a current account provider offering a better interest rate can make any belt-tightening feel a little bit easier.”

>>Click here to compare current accounts and apply online!

>>Click here to compare savings accounts and find the best rates

>>Click here to compare loans and find the lowest rates

The mortgage lending figures for April, released today by the British Bankers Association, reveal that April’s mortgage lending was stronger than March and that a high number of remortgages were approved in April.
Credit card borrowing fell and this was reflected in the overall marginal fall in consumer credit figures.

Unsurprisingly, deposits, in particular ISAs, grew strongly.

BBA statistics director, David Dooks, said: “Pressures on household finances, stalling house prices and tighter lending criteria in response to lower liquidity are all constraining demand for house purchase and equity withdrawal loans, which are both well down on levels last year.”

“In contrast, there is an active remortgaging market as people switch lenders to obtain better deals. With some £18bn of new lending and nearly 150,000 loans approved in April, it is clear that, contrary to some reports, the mainstream mortgage market has not ground to a halt.”

British Bankers Association April Report 2008

>>Click here to compare mortgages and find the best rates

Gocompare.com today becomes one of the first, if not the first, insurance comparison web site to join the British Insurance Brokers Association (BIBA).

Gocompare.com compares insurance policies by suitability to an individuals requirements along with price, meaning that they provide clear and fair information for their users. This is something that BIBA welcomes and calls for all price comparison web sites to provide this kind of information.

Commenting on the decision to welcome Gocompare.com as a BIBA member, BIBA Chief Executive, Eric Galbraith, said: “We are delighted to welcome Gocompare.com as a member of BIBA. Gocompare.com is leading the comparison sites by helping consumers receive clearer information on the policies they are purchasing, and how they meet their needs.”

“Comparison website technology has moved ahead of existing regulations, resulting in potential detriment to consumers. We have welcomed the FSA’s recent review into this area, and it is now incumbent on all comparison sites to review their practices and ensure they are delivering the highest standards.”

Chief Executive of Gocompare.com, Hayley Parsons, said:  “We are delighted to join BIBA membership. Brokers are key to the success of comparison sites and vice versa.  Working with BIBA is one way that we can help protect brokers’ interests and in turn, ensure we continue to provide the best service for customers.  I think it is important that comparison sites work with the bodies helping to shape our industry. I look forward to working closely with BIBA on all issues affecting the insurance market, including comparison technology.”

Gocompare.com allows you to compare home insurance, car insurance, van insurance, travel insurance, motorbike insurance and motor breakdown cover. Find the right cover and compare insurance by policy features that you require.

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The National Association of Estate Agents (NAEA) say that consumer confidence is low although the property markets are stabilsing in specific regions. The stability comes in the form of sales agreed, a good number of viewings before a sale and the average difference between an asking price and the actual sale price agreed.

President of the NAEA, Chris Brown, said: “The figures from the April report suggest that the market is stable, however, consumer confidence is still dented.”

“Properties supply is good but buyers are being cautious. It is apparent from the survey results that some people are adopting a ‘wait and see attitude’, watching the market, before making any decisions.”

“Many, especially first time buyers, will be feeling the results of the credit crunch and tighter lending leading to them being unable to move onto the ladder or up the chain.  Some agents are also finding it difficult to stop sales falling through as people get ‘cold feet’ or fail to secure mortgages but we must remember that this happens in the best of markets.”

“However, what people need to remember is that the market is stable and we are not seeing massive price drops.  There are still strong economic factors at play, such as high employment and low interest rates and sales are still taking place.  Moreover, people need places to live and property purchase remains a good long term investment.”

The number of viewings before a sale remains steady at 14. This is only 2 up on the same time last year. The average difference between sale price and asking price is 4.7 per cent. There is a decline in the number of sellers on estate agent books down from 249 in March 2008 to 237 according to reports from NAEA members.

As you might predict, first time buyers remain uneasy about making that commitment to purchase, first time buyer numbers dropped from 8.3 per cent to 7.7 per cent in just 1 month from March to April 2008.

>>Click here to compare mortgage rates and find the best deals

Sainsburys finance say that 4.9 million plan to buy a second hand car at some point between March and August 2008, spending an average of £4,636 each, which equates to £22.76 billion and a lot of loans to go with it!

Although this is an incredible amount of money it’s actually down by 8 per cent on the £24.87 billion intended spend on second hand cars, for the previous 6 months!

Head of Sainsbury’s Loans, Steven Baillie, said: “Sellers need to make sure they know the market value of a vehicle to ensure they get a good deal when they come to sell their existing car, or indeed come to buy a new one. Our findings show the amount people anticipate spending on second-hand cars is significantly less compared with six months ago, which may be a knock-on effect of people’s growing financial uncertainty.

“It’s important that people remember to haggle when negotiating any car purchase, as haggling can save the buyer an average of £1,468. Despite this our findings show that over half of people who are intending to buy a second-hand car in the next six months say they do not plan to haggle or they may only haggle slightly.”

Rather suprisingly I thought, only 17 per cent of second hand car purchases in the next 6 months will be financed by a loan. Sainsburys Bank are urging people to shop around for a competitive loan rate.

Probably one of the best things you can do is visit a financial comparison website to get an understanding of the interest rates on offer for the loan amount your require. These comparison web sites make it easy to compare loans and loan APRs.

Customers who choose to take out a Sainsburys Loan can choose to make no repayments for the first 3 months and get and instant decision and get a cheque delivered within 24 hours.

Don’t forget your car insurance! >>Click here to compare car insurance quotes

And >>Click here to compare loans and apply online today!