Tax relief on second homes set to be cut

Posted on 29/07/2010 by Justin Moy

Thousands of second-home owners who rent out their properties for a few months a year stand to lose tax breaks under Treasury proposals that aim to focus tax relief on commercial holiday letting businesses. Tougher tax rules on furnished holiday lettings would require homeowners to secure more bookings and would stop them offsetting their mortgage costs against their personal income. The proposals, which would cut the costs of the tax breaks from £30m ($47m) to £10m a year while extending them to 10,000 owners of holiday homes elsewhere in Europe, were welcomed as “pragmatic” by the Country Land & Business Association, representing rural landowners and businesses.

Source – Financial Times

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King warns interest rates to stay low

Posted on 29/07/2010 by Justin Moy

Interest rates will have to be kept at record low levels while Britain’s economic recovery still hangs in the balance, Bank of England governor Mervyn King warned. In a forecast that raises the possibility of a fresh round of quantitative easing – or pumping money into the economy – King told MPs on the Treasury Select Committee he would keep his ‘foot on the accelerator’ of fiscal stimulus for the time being.

He said ongoing economic strife means ‘we cannot be confident that the recovery in demand, output and employment here in the UK will be sustained’. And King said that while a higher-than-expected 1.1pc increase in economic output in the last quarter was ‘encouraging’, policymakers should ‘be careful not to read too much into

Source – Daily Mail

 one number’

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Standard home insurance not necessarily a safe haven

Posted on 29/07/2010 by Justin Moy

Brits could face a hefty bill by assuming standard home insurance policies will provide adequate cover for their homes, says moneysupermarket.com.One in 10 households made a claim on their home insurance policy last year, so Britain’s number one comparison site analysed policies (buildings and contents) from the top home insurance providers. It reveals standard policies don’t necessarily include all the cover details a household may need in the event a claim is made, such as accidental damage for example.The research reveals Brits can expect to pay 143 per cent more for a ‘premium’ policy, but in some cases as little as £16 or 11 per cent more. Upgrading to a ‘premium’ policy from Tesco for example will ensure what could be considered essential details are included. Alternative accommodation costs up to £35,000 is provided, as is home emergency cover, £3,000 cover for personal possessions outside the home and a seasonal uplift of 20 per cent at Christmas.

Julie Owens, head of home insurance at moneysupermarket.com, said: “Our research shows just how much policies vary in the levels of cover they provide. At a time when people are feeling the pinch, it is easy to assume a standard home insurance policy will be enough for you – however this could be a mistake. Knowing the difference between ‘frills’ and ‘no frills’ policies is crucial; many standard policies will provide a basic level of cover, which in many cases might not safeguard your home and possessions to the necessary extent.Julie Owens continued: “The most important thing to consider when buying home insurance is what type of cover will suit your circumstances. I advise Brits to think carefully about what they need to cover and the value of those items. Some people for example may have an expensive bicycle or single items of considerable value, jewellery for example. All these things need to be taken into account when choosing your policy. Similarly, I would advise ensuring your policy covers accidental damage and possessions away from home.Source – What Mortgage?

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Number of consumers seeking mortgage advice rises 24 per cent

Posted on 29/07/2010 by Justin Moy

Despite ongoing worries over the state of the British economy, green shoots of recovery have set a firm foothold within the mortgage market. In the first half of this year, unbiased.co.uk, the professional advice website, recorded a 24 per cent increase for consumers looking for advice from a whole of market mortgage broker, compared to the same period in the previous year.Unbiased.co.uk, which hosts a ‘find a mortgage adviser’ search on its website, received over 45,000 enquiries for mortgage advice in H1 2010, with first time buyer advice coming top of the enquiries received. The first half of 2009 in comparison, saw just over 36,000 enquiries for a whole of market mortgage adviser. 

Karen Barrett, chief executive at unbiased.co.uk commented: “The mortgage market has undoubtedly had a tough couple of years. We have seen lenders drastically restricting their lending criteria or going out of business altogether, all while interest rates have remained at a historic low. And with consumers losing confidence in the housing market and unable to get mortgages, advisers of course have suffered from this downturn too. Over the last six to 12 months however, there has been more and more good news about the mortgage market. We have seen providers re-enter the higher loan to value market, more competitive deals to new and existing borrowers are re-appearing and new providers are entering the market.”In parallel to these positive moves within the industry, consumers have started re-gaining their confidence in the housing market. Our latest statistics are a very clear sign that it is not just the market that is on the way to recovery but that consumers are back, actively seeking to explore their mortgage options. We believe that the tumultuous period we have been through have led to more people seeking expert advice on their mortgages rather than going it alone, a very positive sign for consumers and mortgage advisers alike. Now is the time for mortgage advisers to up their marketing activity to be at the forefront of this regained consumer confidence.”source – What Mortgage?

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Insurers expose over 2,300 fraudulent claims every week

Posted on 29/07/2010 by Justin Moy

Insurers are detecting more fraudulent insurance claims than ever according to figures released by the Association of British Insurers (ABI). 

 Last year over 2,000 dishonest insurance claims worth more than £16 million were detected every week. ABI figures show that in 2009:
122,000 fraudulent insurance claims were uncovered, up 14 per cent on 2008. The value of these claims, at £840 million, rose by 14 per cent on the previous year. 

Motor insurance frauds were highest by value, with dishonest claims totalling £410 million uncovered. The most common frauds involved home insurance, with 62,000 bogus or exaggerated claims detected. 

Four per cent of all claims by cost were fraudulent. This is similar to 2008, although double the figure of five years ago. 

Many of the 8,500 dishonest liability claims exposed involved bogus personal injuries. Examples of such frauds include: 

A man claimed he had fractured his hand after falling over a pothole in the street, when in fact he had sustained the injury after he punched a wall during a domestic dispute.A young woman claimed to have tripped over a loose pavement, when in fact her injuries were actually sustained from jumping down a flight of stairs while running away from security guards on suspicion of shoplifting. 

Head injuries allegedly sustained by falling over, were in fact sustained after being hit on the head by a baseball bat during a fight. 

Nick Starling, the ABI’s director of general insurance and health, said: “Reducing fraud remains an ongoing battle for the insurance industry. Our honest customers rightly object to having to pay higher premiums to subsidise the fraudulent minority, which is why insurers continue to up their game in the war on the cheats. 

“Whether claiming against a third party for bogus personal injury or on their own insurance, fraudsters are more likely than ever to get caught, leading to more expensive and harder to obtain insurance and credit, and the possibility of a criminal record.” 

source – Your Mortgage

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Which?: Nationwide rate rise may breach consumer rules

Posted on 29/07/2010 by Justin Moy

Which? has claimed Nationwide Building Society will potentially breach consumer regulations or, in some cases, customer contracts by raising interest rates 1.5% for residential mortgage customers who let out their home.

Nationwide plans to introduce the rate rise from 1 September this year for customers who have let out their home for three years or more. It said that the increase reflects the higher risk and cost posed by such borrowers.

Which? wrote to Nationwide in June regarding the matter after being contacted by affected members, saying it believes the decision is unacceptable and seriously affects people who signed fixed-term deals and will now see their rates rise part way through the deal.

Which? has contacted the FSA asking it to stop Nationwide from going ahead with the rate rise.

In a statement to Which?, Nationwide said: “Our mortgages are designed and priced for customers who live in their homes. When properties on a residential mortgage are rented out over the longer term they result in additional risk and administration cost and we believe it is appropriate to levy an additional interest rate on these accounts.”

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House prices up 8.4%

Posted on 29/07/2010 by Justin Moy

The June data from Land Registry’s flagship House Price Index shows an annual price increase of 8.4 per cent.

This is the eighth month in a row in which the annual figure has been positive and takes the average property value in England and Wales to £166,072. The monthly change from May to June is an increase of 0.1 per cent.

House prices are now around the same levels as they were in the summer of 2006. All regions in England and Wales experienced increases in their average property values over the last 12 months. The region with the highest annual price change is London with an increase of 12.2 per cent. The region with the smallest annual price rise is the North East with a movement of 0.7 per cent.

Wales experienced the greatest monthly rise with a movement of 2.9 per cent. The North East region experienced the most significant monthly price fall with a movement of -1.3 per cent. The most up-to-date figures available show that during April 2010, the number of completed house sales in England and Wales rose by 26 per cent to 49,323 from 39,280 in April 2009.

NAEA Cheif Executive, Peter Bolton-King, comments:

“The latest Land Registry statistics show that the housing market is slowly recovering. This is to be welcomed, but many people are still excluded from owning a home because lending remains unfairly restricted.

“There are enormous regional differences in house prices and in the state of the housing market recovery generally. Buyers, especially first time buyers, are confused and should take advice from professional NAEA members on their local market.”

Simon Rubinsohn, RICS chief economist said:

“The data suggests house prices on completed sales in England and Wales edged up a further 0.1 per cent in June. As a result, house prices on this measure are just 9.5 per cent away from their previous high, recorded in November 2007.

“The strongest monthly gain in June was in Wales but London continues to post the highest year-on-year increase (12.2 per cent). The Welsh data is not only out of line with recent Land Registry figures (from the country) but also with the results of the RICS Housing Survey (which show a much more subdued picture) making us question the sustainability of this rise in prices.

“More generally, most RICS indicators suggest that prices across England and Wales could slip back a little during the second half of the year. London may be the exception to this.

“The more worrying element of the Land Registry data is the continuing weakness in transaction activity. While the latest numbers only refer to April, they show completed sales in England and Wales at less than 50,000.

“Moreover, subsequent figures on mortgage approvals suggest that this number is unlikely to pick-up anytime soon. With the average number of monthly transactions prior to onset of the credit crunch roughly double this figure, it is clear mobility has been impacted and many people who wish to take their first step on the property ladder or move home have been unable to do so.”

Source – myintroducer.com

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Big surge in tied products, finds Which?

Posted on 29/07/2010 by Justin Moy

The proportion of mortgages and regular savings accounts that are only available for people who have another product with the same provider has increased dramatically since the beginning of 2010, finds new research from Which? Money.

In some cases tied products offer poor value-for-money, as the products they are tied to may not be the best available. First Direct is currently offering one of the cheapest five-year fixed-rate mortgages for borrowing 65% or less of the property’s value, but you also have to take out a First Direct current account, which pays no credit interest.

Which? chief executive Peter Vicary-Smith says:

“If you’re considering taking out a tied product, look at the whole package to work out whether it offers a good deal.”

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Should you fix your mortgage for five years?

Posted on 29/07/2010 by Justin Moy

Homeowners are being encouraged to fix their mortgage as lenders launch a flurry of cheap deals. More than two million borrowers are currently on their bank’s standard variable rate (SVR) averaging 4.73 per cent, but experts say now could be the time to grab a two or five year fix before rates start to rise.

Even homeowners with just 10 per cent equity can get a good deal, with Britannia Building Society offering a two-year fix at 4.99 per cent with a £499 fee.

Michelle Slade of comparison site moneyfacts.co.uk says: ‘It seems fairly likely that the base rate will rise early next year, so borrowers who can take advantage of a similar or cheaper fixed-rate deal could do so now and protect themselves from when interest rates start to rise.

Source – Daily Mail

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Lloyds Banking Group ditches PPI

Posted on 29/07/2010 by Justin Moy

Lloyds Banking Group (LBG) has withdrawn its Payment Protection Insurance (PPI) products across all brands.

The PPI policies, which were sold direct through branches, have begun to be withdrawn on a phased basis across all channels and will no longer be sold to new customers alongside Lloyds TSB, Halifax, Bank of Scotland, C&G and Black Horse personal loans, credit cards and mortgages.

In a statement, LBG said the product withdrawal would not affect customers with existing PPI policies.

It added that all existing applications will be honoured by the group up to 31 July 2010 for personal loans and credit cards, and until 20 November 2010 for mortgages.

LBG brands will continue to offer a range of income protection, critical illness and life assurance products.

Peter Vicary-Smith, chief executive of Which?, comments: “Lloyds decision to stop selling PPI is a huge victory for consumers. Hopefully, other banks will follow suit and we’ll finally see the back of this poor protection product.

“Now is the beginning of the end for PPI, banks need to get back to the drawing board and offer their customers insurance products that actually protect them when they need it.”

Source – Mortgage Solutions
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