The Financial Blog

Centrica, the company who owns British Gas is going to increase gas prices by 35 per cent and electricity prices by 9 per cent.

These latest price rises are being blamed on the rise in wholesale gas and electricity prices seen over the last 9 months.

British Gas managing director Phil Bentley said: “We very much regret that we have had to make this decision at a time when many household budgets are already under pressure.

“The simple fact though, is that we have entered an era of unprecedented high world energy prices. The only answer to cope with higher energy prices, I’m afraid, is for all of us to be more energy efficient.”

It surely won’t be long before we see the rest of the energy industry following suit…

There have been enough warnings in the media and it looks like EDF Energy are one of the first companies to hit customers with another price increase, by 22 per cent on gas and 17 per cent on electricity.

Moneyexpert.com Director Sean Gardner says: “Given that EDF are already at the foot of the table in terms of price, these increases are going to be a further kick in the teeth for their 7.9 million customers. Putting gas bills up by 22% and electricity by 17% is a huge increase, pretty much equivalent to double the increases they’d already implemented in January.

“Our research earlier in the year showed that nearly 1.4 million people missed a payment on energy bills and that figure is only likely to rise with moves such as this.

“Admittedly it looks like the hike won’t just be suffered by EDF customers. When Centrica chief executive Jake Ulrich advises wearing two jumpers instead of one only the wildly optimistic would see anything but further price rises on the horizon.”

“That said, though, EDF customers really should take these rises as a wake up call and start looking around for a better deal. It’s certainly out there.”

Get comparing gas and electricity providers today, don’t waste any more time! >>Click here to compare energy pricesand switch energy providers now

I found this newsletter from Insurancewide offering some good tips and advice when it comes to searching for new home insurance, car insurance and life insurance, see the link below.

The dreaded “credit crunch” is upon us - but don’t let that cloud your judgement.

There are plenty of companies out there vying for your attention and one sure-fire method to get your attention is to shout and scream about saving money. A nice sentiment but don’t forget to check the details behind every discount and advertising claim…

Click on the link here to view the full Newsletter from Insurancewide.com

The new rates will be effective from Saturday 26th July. This will be the lender’s ninth decrease in rates so far this year.

Bank of Scotland, the Group’s large loan specialist is also making a number of reductions.

Across the Group, 45 mortgage products are decreasing.

Halifax - 16 rates reducing by up to 0.30 per cent
Bank of Scotland - 29 rates reducing by up to 0.45 per cent

In addition to the reductions in rate, a number of new products are being launched including a 10 year fixed rate and a number deals for customers borrowing over £500,000.

Example rates;

Brand
 Type
 Change
 Old Rate
 New Rate
 Change
 
Halifax
 Large Loan 2yr Fix
 Decrease
 6.99%
 6.69%
 -0.30%
 
Halifax
 2yr Remortgage BBR
 Decrease
 6.04%
 5.94%
 -0.10%
 
Halifax
 10yr Fixed rate
 New
 -
 6.29%
 -
 
Bank of Scotland
 Large Loan 2yr Fix
 Decrease
 7.09%
 6.64%
 -0.45%

>>Don’t forget to Compare Mortgage rates online now! Click Here>>

More than 80% of AA members agree that road tax is being used as a stealth tax, according to the AA Populus panel of 15,306 members.

The AA president has today written to the Chancellor requesting that the “retrospective” nature of Vehicle Excise Duty for cars registered between 2001-2006 should be scrapped.

The Chancellor has been told that this is a growing issue of concern for AA members. A “retrospective” tax does not send out a signal but hits many motorists who cannot afford to change their vehicles. Whist 70% of motorists agree that a tax system based on CO2 will influence the type of cars bought there is confusion and lack of information about the system.

Three quarters of motorists agree that by “backdating” the charges the value of some used cars will be damaged and people will keep older cars longer.

The results sent to the Chancellor show:

• 35% do not understand the new system of VED
• 70% agree that having a VED system based on CO2 will influence the type of car purchased.
• 59% disagree that all cars registered from 2001 should be subject to the new tax system
• 56% say the new system for post 2001 cars should be stopped (22% neither agree nor disagree,19% think it should go ahead)
• 58% have not seen information about changes relevant to post 2001 cars
• 82% agree that road tax is being used as a stealth tax
• 35% agree that the new showroom tax will make a difference to the types of cars people buy, 48% disagree
• 77% agree that backdating the road tax changes will damage the value of some used cars meaning that people will keep older cars for longer.

Commenting on the results, AA president Edmund King, said;

“Over 80% of motorists now see road tax as a “stealth tax” and we have called it a mean tax rather than a green tax. We believe that the retrospective nature of the tax increases for cars registered between 2001-6 should be scrapped before it comes a ‘10p tax on wheels’. The Government should also provide more user-friendly information to inform car buyers of changes to VED over the next two years. Our concern is that people may be buying cars today that they may not know will fall into much higher bands in 2009 and 2010.

“Theaa.com website has had a record number of hits with motorists desperately trying to find out how proposed changes to the VED system will affect them.

“Even though the public and indeed the AA accept that a tax system based on CO2 can influence the choice of vehicle, there is confusion, mistrust and lack of information about the proposals.

“If the retrospective increases in tax go ahead in 2009/2010 then there is the possibility that many motorists might be driving to the polls still fuming from excessive tax increases to the cars they bought before these tax changes were proposed.”

Regional breakdown:

• Older drivers and those in Northern Ireland were less likely to think a CO2 based tax system is likely to influence the type of vehicle bought.
• Drivers in NE, Scotland and N Ireland  were most likely to think that cars registered from 2001 should not be subject to the new VED changes.
• Males,older drivers (65+) and those from the North West were most likely to strongly agree that road tax is being used as a stealth tax.
• Drivers in the south West were least likely to agree that the new tax system should be stopped (53%).
• Drivers in the South were most likely to agree that the “showroom tax” will not make any difference to the types of car people drive.

Moneysupermarket.com are reminding homeowners to scour the entire product range when looking for a new mortgage.

This is good advice as analysis from moneysupermarket.com has shown that the average two-year tracker mortgage is looking increasingly better value.

Moneysupermarket.com’s weekly credit crunch monitor shows there was little to choose from between the average two-year fixed rate mortgage and the average two-year tracker at the start of June, but that the gap between the two has increased substantially since then. As of Monday this week, there was more than half a per cent worth of clear water between the two, with the average tracker standing at 5.9 per cent, and the average fix at 6.45 per cent; the last time trackers were this low was in March this year.

Louise Cuming, head of mortgages at moneysupermarket.com, said: “In the current environment of uncertainty, it’s natural to look to fixed rate deals to provide security but our data clearly shows that it’s imperative to look at the whole product range when looking for a new mortgage deal. This is especially so if you can stomach a little leeway on payments. Trackers have been avoided like the plague in recent months due to interest rates looking unstable yet all the signs are that rates will be kept on hold for the time being, with the next movement potentially being a reduction. Some are even predicting rates will go as low as 4 per cent by the end of the year to kickstart the economy, in which case trackers could be a lifeline.”

>>Click here to compare mortgages now

Tesco Personal Finance, one of the UK’s leading providers of car insurance and breakdown assistance, is launching three new car warranty plans to help families keep costs down in the current uncertain economic times.

With the new Tesco Car Warranty plans, customers can now protect against the cost of their car repair bills from just £9.90 a month.

The Car Warranty plans can be taken out for almost any vehicle up to 10 years old as long as it has fewer than 100,000 miles on the clock and will protect motorists against the cost of most major mechanical and electrical faults, even if the car has been out of warranty for a few years.

Here are some examples of what you could typically pay for vehicle parts without a Tesco Car Warranty Plan:

1. Turbo Charger - £602

2. Cylinder Head Gasket - £444

3. Air Flow Meter - £286

4. Water Pump - £195

5. Radiator - £208

6. Gearbox - £887

7. Alternator - £225

8. Clutch Assembly - £399

9. Electric Window Motor - £313

Customers choose the repairer they want to fix the vehicle and Tesco Warranty Administration will settle the bills directly with that repairer. The cost of labour is covered, as well as parts.

There are three plans to choose from: Value; Standard and Finest. Customers can pay in 10 monthly, interest-free instalments.  Tesco car warranty plans also cover customers while they are on holiday in other EU member states, at no extra cost.

The plans will offer relief to the thousands of motorists who are putting off buying a new car, preferring to hang on to their vehicle for longer than originally planned because of the economic downturn.

A new study, carried out for Tesco Personal Finance by YouGov, found that more than half (54 per cent) of drivers questioned said they intended to keep their vehicles for longer than previously planned.

In the study, involving almost 2,500 drivers, over a third (37 per cent) indicated they would drive the same car for at least two years longer than originally planned; 11 per cent for one to two years more; and six per cent for up to an additional year.  

Only a third (33 per cent) said the economic climate would have no effect on the length of time they would keep their cars.  

Allan Burns, head of insurance at Tesco personal finance, said: “”Figures from the Society of Motor Manufacturers and Traders suggest the average age of the 24 million licensed cars on UK roads is already 6.8 years and if, as our survey suggests, that is likely to increase, the number of repairs needed is also set to rise. Many motorists worry about the cost of repairs but up until now it has been quite difficult to buy a warranty once the manufacturer’s has lapsed.

“The grim reality is, however, that the older a car becomes and the higher its mileage, the greater the chances of it going wrong and the more expensive it could be to repair. In addition, cars are becoming increasingly sophisticated, with even the most basic being fitted with technology that a few years ago was only found on executive vehicles.

“We believe in offering motorists the choice of protecting themselves even after the manufacturer’s warranty has expired, helping them to guard against large repair bills and bring down the cost of motoring. Our warranties come with the Tesco quality and value-for-money our customers trust, and we’re sure there’ll be a heavy demand for them.”

The cost of a Tesco Car Warranty Plan depends on the vehicle and plan selected. The table shows the annual cost of cover.

Cover level
 Value
 Standard
 Finest
 
Maximum vehicle age / mileage
 10 years / 100,000
 8 years / 80,000
 6 years / 60,000
 
Up to 1400cc
 £99
 £149
 £199
 
1401 - 1800cc
 £149
 £199
 £259
 
Over 1801cc
 £199
 £259
 £339
 
Prestige
 £259
 £339
 £419

Tesco Car Warranty Plans are available online, via www.tesco.com/carwarranty and over the telephone, on 0800 997 82

Customers can also call for assistance in selecting the right policy.

Asda, Morrisons and Sainsburys are reportedly looking at dropping the price of petrol and diesel byt up to £0.05 a litre this week.

Asda was first off the mark with an annouced £0.03 a litre reduction and then Morrisons said £0.04 per litre, these reductions are off both diesel and petrol prices. Next Sainabury’s followed suit offering a £0.05 cut but only for customers who spend £50 or more in stores and this promotional offer will only run for two weeks.

The really good news in all this ‘price war’ talk is that Asda say there has been more stability in oil prices over the last few weeks. Asda trading director David Miles said: “We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers. We urge other retailers to follow our lead at a time when customers need as much help as possible.”

Morrisons group store operations director Mark Gunter said: “The cost of crude oil and refined product has fallen in the last few days and we are ensuring our customers reap the benefit by passing on the saving quickly, for cheaper prices at the pumps.”

A spokeswoman for Sainsbury’s said: “From Thursday our customers can reap an even bigger reward because we are running a 5p off per litre promotion when they spend £50 or more in-store plus they will also earn Nectar points.”

AA president Edmund King said: “Asda’s petrol price drop is excellent news for UK motorists and we urge other fuel retailers to reduce their prices - and not only where they find themselves neighbouring an Asda petrol station.”

At last some good news and the weather is picking up too this weekend! Whatever next?!

Martin Lewis from Moneysavingexpert.com meets people who are being seriously affected by the credit crunch. The people in tonight’s program fear that their homes might be under threat if they cannot make the increasing repayments due on their mortgages.

 With current fixed rate mortgage deals getting few and far between this could be a good time to watch for every peice of advice you can get…

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

Commenting on the Government’s Rent First, Buy Later pilot, Louise Cuming, head of mortgages at moneysupermarket.com, said:

“At first glance, this seems to be a positive move, addressing the Catch-22 situation of how you can save for a deposit while paying the rent.

“However, there are no details of the number of properties available under this scheme. Private landlords will want recompense from the Government up to their full 100 per cent and the number of Housing Association properties being built is small in comparison to the demand for rental properties. So where are these new homes for rent under this attractive scheme going to come from?

“If you are lucky enough to qualify, the sums are still quite frightening. The 20 per cent rental discount alone would only save you enough for the minimum five per cent deposit on a house after around five years. More importantly, where are the lenders to meet the demand for mortgages?

“While it’s good to see some thought being put into how to revive the housing market, this seems to be yet more spin without substance and does not address the longer-term problems of how to stimulate lending.

“Defrosting this frozen market will take a lot more than this.”

>>Click here to find competitive mortgage deals today!