The Financial Blog

House prices continue to fall - During August house prices fell 1.9 per cent according to new government figures released last week.

Unfortunately for homeowners this means that for the year to date house prices stand 4.6 per cent lower than a year ago. What kind of makes things worse is that these figures are based on completed house sales which dosen’t include mortgage lending figures - which are even worse as I’m sure you’ll have already seen double figure percentages quoted in the press!

Basically everywhere in the country saw a decline, lets just hope we can all afford to sit tight and weather the storm.

Barclaycard are one of the first credit card companies to have cut balance transfer fees from 3 per cent to 2.5 per cent on it’s OnePulse credit card. This signals what industry experts are predicting as the beginning of a series of fee cuts in a bid to attract new credit card customers.

With rival credit card companies always looking to attract more new customers the balance transfer fee looks set to be the next area of focus for attracting new business…

Virgin and Barclaycard both offer 0% on balance transfers for 15 and 14 months respectively and something like 75% of the credit card market offers a 0% deal with balance transfers.

Over the last 18 months the average balance transfer fee has risen from around 1.7 per cent to 2.4 per cent and most credit card issuers charge from 2.5 to 3 per cent on long term balance transfer deals.

So if you can hold out for a few more months and perhaps pay the interest on your credit card balance for one or two months you could end up with a smaller balance transfer fee to pay in a few months time.

There is some good financial news today! Following on from my post Fuel Price Drop - Asda and Tesco announced they’re cutting back prices on thousands of products in a bid to attract more customers, which is great news if you ask me.

The increasing UK inflation figures are putting emense strain on household finances across the UK and this is good news if you shop at either Asda or Tesco. If you dont then maybe you should consider it?

Tesco say they’re aiming to become britain’s biggest discounter by adding 350 new discount products to it’s own brand label; Richard Brasher, Commercial Director for Tesco said; “This is discount shopping with all the added quality and service customers want and have come to expect from Tesco.”

Asda say they’re cutting 5,000 prices, Chief Executive Andy Bond said; “For the past 11 years we have been voted the UK’s lowest priced supermarket. I’m determined that ASDA continues to win this coveted award which underlines our commitment to always offering our 17 million customers everyday low prices.”

It’s been reported today that Lloyds TSB are in talks with Halifax Bank of Scotland (HBOS) regarding a possible takeover.

According to the BBC website the deal could be worth an estimated £30 billion and could help strengthen HBOS shares which have taken a hammering over the last few months and particularly since the colapse of investment bank Lehman Brothers on Monday of this week.

Lehmans was the 4th largest US investment bank.

>> Click here to watch the full BBC report by Robert Peston >>

The deal is being backed by the prime minister Gordon Brown and the Financial Services Authority because it would be seen as a strengthening of the UK banking sector, which in the current economic climate can only be a good thing - especially for Gordon Brown!

Gocompare.com’s Chief Executive, Hayley Parsons says “In the main, consumers won’t be disadvantaged by Norwich Union’s withdrawal from comparison sites. The reality is they have struggled to keep their premiums competitive and, unfortunately for them, there’s now nowhere to hide for their existing products.

While we respect their decision, we would urge consumers to be extremely wary of their new price checking service, launched this week. This is not a comparison service and I hope consumers aren’t drawn in by suggestions that it compares anything of much value at all.

When you visit sites such as Gocompare.com you get a full comparison of actual quotes from over 80 insurance brands. With Norwich Union, they are offering quick quotes which are estimates based on premiums that are two months out of date. These premiums bear little reflection to the actual quote that you will see once you have completed the full quote process.

When you eventually get a genuine quote for a Norwich Union policy you are given the opportunity to compare it against three insurance companies, out of a possible list of nine. This list gives the consumer no indication which of these companies are the best three to compare against, or even if the nine choices they are presented with give them any hope of finding a cheaper quote.

The whole service is confusing, misleading and represents a big step backwards for the insurance industry. Consumers who are familiar with using true comparison sites will find it very unhelpful. Our advice to anyone looking to compare car insurance is to use a real comparison service.

Personally, I hope Norwich Union makes a speedy return to comparison sites with some updated and competitive products.”

Mortgage lenders still cutting interest rates

According to new research from the price comparison site Moneysupermarket.com 9 out of the 12 main mortgage lenders in the UK have cut their 2 or 3 year fixed rate mortgage deals in just the last fortnight.

At last some good news for homeowners and particularly those people looking to remortgage in the next few months. Infact mortgage rates are beginning to look very reasonable once again, the first time in the last 12 months.

HSBC is a good example because it has reduced ALL fixed rate mortgages by a minimum of 0.46 per cent. A new HSBC 3 year fixed rate mortgage is on offer at 5.69 per cent if you can get a 10 per cent deposit together. Juat a 10 per cent deposit for a competitve rate like that isn’t bad at the moment and I’m sure this is welcome relief for the mortgage and housing markets.

Halifax and Lloyds TSB offer 2 year fixed rates at 4.89 per cent and 4.99 per cent - although beware of the fee which is 2.5 per cent of the loan amount.

So the good news is for the remortgagers with big deposits to put down against their loan value. Unfortuneatley first time buyers are still seen as high risk and so these more competitive deals are often not available to them. The problem is; as I posted last week - Average fixed mortgage rates drop - at the moment 37 per cent of buyers are first timers…

Your credit card could become a thing of the past sooner than you think! Barclaycard say they are investing a seven figure sum to explore new ways customers can make their payments.

The idea is that you could, in theory, use anything you have on your person to make a credit card payment whilst shopping. When I say anything Barclaycard are thinking a mobile phone and even the possibility of fingerprints or eye recognition!!

The Barclaycard Onepulse product was launched in London and Barclaycard hope to have 1 million customers using the service, which allows you to pay for items under £10 by simply touching your card against a payment terminal.

o2 have also recently joined forces with Barclaycard to trial a mobile phone payment system.

Antony Jenkins, chief executive of Barclaycard, said: “”The chips on credit cards now have incredible untapped capability, but the plastic around the chip limits its potential.”

“Take the plastic away and the possibilities are endless.”

“In time you won’t have to carry a plastic credit card around with you if you don’t want to, although some people will choose to for nostalgic reasons.”

At last it seems the mortgage industry is seeing some healthly competition return to the market as the average two year fixed mortgage rate drops from around 7 per cent in July this year to around 6.3 per cent today.

A new survey from Spicerhaart Financial Services also reveals that first time buyers are now making up 37 per cent off all borrowing, compared to just 7 per cent of all borrowing at the begining of 2008. Steve Cox is Operations Director at Spicerhaart, he comments; “Borrowers are now attracted to short terms deals thanks to the drop in lending rates, with the average two year fixed mortgage rate now standing at 6.39% compared to 7.08% in July.

“Previously consumers were looking for the long term security of five or more years fixed deals, but with lenders offering increasingly competitive rates, this situation is beginning to reverse with borrowers now looking to secure cheaper deals for short term products.”

“The fact that short term mortgage deals are becoming more affordable will be welcome news for borrowers, particularly first time buyers looking to get onto the housing ladder.”

Uswitch say the Government has failed to stop fuel poverty, Ann Robinson, Director of Consumer Policy said;  “2008 is set to be remembered as the year Britain was crippled by inflation, soaring fuel bills and the rampant growth of fuel poverty.

“Government failure to stamp out fuel poverty has not only allowed it to tighten its grip on our pensioner population, but spread its roots into other parts of society too.

“Now single income households, including families, face a real threat to their standard of living as fuel poverty becomes part of everyday British life.”

The average UK household energy bill is now £1,292, a massive increase of around £380 and thats only since the beggining of 2008. Fuel poverty is when more than 10 per cent of monthly income is spent on energy bills.

Unfortunately Uswitch.com are predicting further price increases early next year.

I’ve just spotted this story on The BBC Web Site  - Basically millions of people are due to benefit from a tax rebate of around £60 as the government scraps the ten pence tax band.

If you’ve been affected by the ten pence tax, you should see your September pay packet increase by £60 and then £10 for every pay slip you receive from then on. At last some, albeit small, good news for UK tax payers!..