The Financial Blog

House Price Index - October 2008

October data shows a continued decline in annual house price change, with a movement of -10.1 per cent. This marks the fourteenth consecutive month where annual price change has decreased in England and Wales.

The monthly change stands at -1.5 per cent and the average house in England and Wales is worth £165,529. Prices are now at a similar level to what they were during the summer of 2006.

Sales volumes in England and Wales remain low. The number of recorded property transactions per month averaged 54,488 in the months May to August 2008.

Please click Here to get the House Prices Index Report

Borrowers beware … loan rates at an all-time high

The Gap between the average loan rate and base rate almost doubled in just two months moneysupermarket.com’s SmartSearch tool can help find the right loan for you…

Analysis by moneysupermarket.com has revealed that the average cost of a personal loan has crept up to almost double that of base rate since September this year.

Borrowers looking for a loan can now expect to pay 8.46 per cent. With a base rate of just three per cent, consumers are paying more than a five per cent premium for their personal loan. This is compared to just two months ago, when the gap between the average loan and base rate was a more manageable 2.92 per cent.

Tim Moss, head of loans at moneysupermarket.com, said: “Loan costs are often overlooked in the frenzy of a base rate cut, when the focus is on the impact of any rate movement on mortgage payments and savings rates. What our calculations clearly show is that the cost of a personal loan is as apparently uncorrelated to base rate as mortgage rates are. The key difference though, is that mortgages are priced according to LIBOR rather than base rate - loan rates are not.

“Whilst personal loans are often seen as the ‘poor man’ of everyday financial products, there is always a spike of activity post-Christmas and into the New Year when consumers take their finances in hand, and turn over that new leaf. Invariably this involves consolidation of store cards, credit cards and overdrafts. However, loans are not the cheap form of borrowing they once were. In the last two weeks, we’ve seen three of the top loan providers - Tesco, Asda and Yourpersonalloan (the Co-Op’s loans vehicle) increased their rates by as much as 0.3 per cent, despite base rate dropping by 1.5 per cent.

“The Competition Commission’s recommendations on the sale of PPI last week will undoubtedly result in loan rates soaring next year, perhaps up to around ten per cent, which means they won’t be that much more competitive than credit cards. However, it’s likely we could see one or two downward rate movements after Christmas as providers seek to attract those with New Year’s resolutions of the financial kind, but borrowers need to keep a close eye out for the best deals and ensure they only apply for products they’re likely to be accepted for. This is where our SmartSearch tool will help - enter a few basic details and we’ll point you towards loans you are likely to be eligible for with your credit history. With lending criteria becoming more and more stringent, it’s important to keep your credit record as clean as possible and not taint it with failed applications for loans.”

The British economy is declining and disposable incomes are falling, so why not go back to basics, saving money and the environment by having an ethical Christmas this year?

Ethical gifts

As retailers and producers realise that Brits are becoming increasingly concerned with ethical products, more are being made, offering heaps of choice for Christmas gifts.

Things to look out for include:

Recycled goods - Get everything from top of the range blankets to kids’ wooden toys, all made from ethically friendly recycled goods.
Fairtrade - Make sure the people who made and supplied your Christmas gifts were paid a fair wage by choosing gifts with the Fairtrade logo.
For the family members who already have everything - Why not forgo personal gifts and give to charity instead? Oxfam offers gifts including a goat, mosquito nets and school books, all of which will go to those who need it most.
Really get back to basics with homemade gifts - Things like homemade chutney or chocolates always go down well and you will save on air miles, cash and energy.
And, why not make your purchases even more ethical by paying for them with a charity credit card. Choose the card of your choice and every time you make a purchase, a portion will be donated to charity.

Useful gifts

It is so easy to fall into the trap of buying presents for the sake of it at Christmas, and sadly, more often than not, the gift is unwanted. In the current financial climate, people are really struggling to pay for their day to day expenses, so, although it may sound boring, helping a friend or family member out by paying for their car insurance for the year, or getting them a better deal on their mobile phone could be really welcomed.

The tree

A Christmas tree can really make the festive period special. But buy from a sustainable source to make sure it is as environmentally friendly as possible. And make sure it is recycled afterwards!

Energy efficient Christmas

Gas and electricity bills are set to hit the roof this winter before coming down again, so bear this and the environment in mind during the festive season.

Switch normal Christmas tree lights for energy saving LED lights.

Try not to use electrical appliances like the TV too much - visit friends instead!

Always switch appliances like televisions off at the plug - standby uses power.

Save the Christmas lights for night time - Don’t waste money and save the environment.

Get festive and use candles instead of electric lights (but be careful!)

Food

Food is at the heart of Christmas so keep it ethical and buy local. Hunt down your nearest farm shops and support your local producers. You may even save money and time as well as food miles.

Commenting on the ethical and thrifty Christmas tips, Fairinvestment.co.uk spokesperson Rachael Stiles said: “There has never been a better time to become environmentally and pocket friendly at Christmas. Brits are struggling to pay for every day costs so saving a bit at Christmas is essential.

“It is time to go back to basics with homemade presents and candles as opposed to computer consoles and energy guzzling Christmas lights. You would be surprised how much energy and money you can save with a few simple alterations.”

Good news for consumers here, Moneysupermarket.com has improved its car insurance comparison serivce by allowing 5 insurers to be compared side by side, including all the notes and benefits each policy offers.

This is something perhaps Moneysupermarket.com had lacked in the past and competitors like Confused.com and Gocompare.com often angled their PR towards the ‘compare policy benefits and not just price’ - now it seems Moneysupermarket.com has covered that angle off - now you can easily see price and policy benefits all on one page.

Personally I’m not really all that interested in anything than price and utlimately price will always be the overall deciding factor, for me. At least now if you are really interested in additional benefits you can check it all out before applying online…  Take a look at www.moneysupermarket.com

MoneyExpert.com comment on Competition Commission recommendation that PPI should not be sold to a customer within 14 days of being sold a loan.In the current economic climate the right PPI could still be vital for customers; Sean Gardner, director of MoneyExpert.com, said:”Stopping lenders from filling their boots with missold and overpriced PPI income is obviously a welcome move. But if you remove PPI from loan sales altogether there is a real risk that many consumers will simply do without, and while PPI still has a part to play consumers should be able to purchase it with appropriate financial products. After all, with a recession looming large and unemployment levels spiralling it could be that this once maligned product will be very much needed in 2009.”