Monday April 30th: Higher Interest Rates Begin to Bite on Mortgage Lending
Mortgage approvals were down 12% this March compared to last year, according to the British Bankers Association. Although high house prices mean that the total value of mortgage lending rose to $5.1bn, the number of mortgages approved fell from 85,337 in March 2006 to 75,098 in March 2007, indicating that the recent interest rate rises, increasing the cost of borrowing, have finally started to deter consumers from taking on a mortgage.
Interest rates are expected to rise again in May to 5.75%. So before taking out a mortgage – check you’ll be able to meet your monthly repayments if rates do rise to this level.
Tuesday May 1st: Store Card Customer Alert
From today, storecards charging over 25% APR will be obliged to warn consumers on their monthly bill that they might be able to borrow more cheaply elsewhere. Over 11 million people in the UK have store cards or store-branded credit cards for use in one particular chain or store.
The move follows an investigation by the Competition Commission last year, which concluded that the average interest charge on a storecard is 24.4%.
Average Property Price Hits £178,000
The average price of a house in the UK has climbed to £178,000, according to the Land Registry’s House Price Index published today.
The report found that house prices across the UK increased 8.3% on average between March 2006 and March 2007. Brighton & Hove saw the biggest rises for a county, where house prices shot up by 14.7%. The smallest annual increase was in Nottinghamshire, where house prices only rose by 1.9%.
Meanwhile house prices across London rose by 11.6%, while desirable areas (such as Kensington and Chelsea) saw rises of up to 19.6% over the year.
Wednesday 2nd May: Consumers Confused Into Taking Payment Insurance
Research from consumer action group Which? has found that some companies are bundling together the cost of loan repayments and payment protection insurance (PPI).
Payment protection insurance covers customers if they are able to make their repayments because of sickness or ill health and can be bought in addition to a loan but there is no obligation to take out PPI. However, Which?’s research has found that some customers calling to enquire about a loan are being quoted a price with PPI already included, and so could end up paying for insurance without even being aware of it.
For consumers who are worried that sickness or injury might reduce their income in the future, Which? suggests that income protection insurance might be a better bet.
So if you’re thinking of taking out a loan, check whether any quotes given include PPI. If you don’t want to buy insurance as well, simply ask for a quote without PPI.
Friday 4th May: Personal Insolvency Hit Record Levels
30,075 people went insolvent during the first three months of 2007, up 23.9% from last year. This is the first time that the 30,000 threshold has been crossed in just three months. The number of Individual Voluntary Agreements (IVAs) has increased by 47.6% from a year ago, with13,233 people opting for an IVA this year so far.
Prepared for MoneyBasics by Adela Read