Money Insider: A stronger foundation for homeowners

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The Independent Online

On Tuesday, the FSA issued a consultation paper setting out changes to the way that lenders treat mortgage borrowers in arrears.

The recession has seen unemployment surge to a 13-year high of almost 2.5 million, so these latest proposals, including a restriction on monthly arrears charges, will offer a lifeline to the growing number of households struggling to keep up with their mortgage repayments.

It can hardly be described as treating customers fairly when lenders generate additional profits by charging fees to people who are sticking to temporary reduced-repayment plans.

To have an additional £30 or £40 monthly arrears penalty added to your mortgage balance, despite having agreed a repayment plan with your lender, merely compounds the problem and is a kick in the teeth for those doing their utmost to stave off the threat of repossession.

The FSA has also emphasised that repossession of a property must be considered only once all other avenues have been exhausted, and while it's too little, too late for the estimated 48,000 people who lost their homes in 2009, at least it gives a fighting chance to thousands of others who are currently doing everything they can to hang on to their family home.

These rules will help protect many vulnerable home owners, so let's hope we see them implemented without further delay.

Instant rewards from Barclays Freedom

Many of us collect rewards when we shop, maybe in the form of points from our local supermarket or petrol station or perhaps via the use of a cashback credit card.

The problem is that we usually spread our loyalty quite thinly by signing up to a number of different schemes. Because we split our spending across two or three rewards promotions, we end up receiving rather small returns perhaps once every quarter and in some cases just once each year.

Barclaycard this week announced the details of its new Freedom rewards programme due to be launched in March, which could revolutionise the way its eight million customers are rewarded for spending on their plastic.

The simple idea is that as a Freedom cardholder, you will receive 1 per cent cashback when you shop at any one of 30,000 retailers that have been invited to be part of the scheme. The rewards are credited to your card immediately in pounds and pence, rather than having to wait months and go through the hassle of collecting or exchanging vouchers.

The 1 per cent reward rate is competitive, and as long as there is a wide enough take-up by major retailers then it could be an opportunity for some of us to slim down our wallets and purses and replace our wad of rewards plastic with a single card.

The number of cashback credit cards, and in some cases the level of rewards, has declined in recent years, so maybe this revolutionary approach from Barclaycard will reignite competition in this market.

However, it will be interesting to see if some of the existing major reward players such as Tesco and Sainsbury sign up to Barclaycard Freedom, as it could pose a serious challenge to their established and successful Clubcard and Nectar schemes respectively.

Andrew Hagger is a money analyst at Moneynet.co.uk

Get your fix of the best mortgages

Lenders are continuing to trim the cost of their mortgage deals, with the fixed-rate sector seeing the bulk of the activity during the past week.

ING Direct (UK) has slashed the rate on its five-year fixed rate by 0.86 per cent and now sits at 4.88 per cent to 75 per cent loan-to-value (LTV) with a £995 fee. Remortgage customers will also benefit from a free valuation and legal-fees package with this product. An equally competitive two-year deal from the same lender has been repriced at 3.54 per cent with a £595 fee, again with remortgage incentives and available up to 75 per cent LTV.

Norwich & Peterborough Building Society's three-year fix at 4.99 per cent with £695 fee is available up to a generous 80 per cent LTV and is potentially a good choice for those looking to protect themselves against increasingly likely future rate rises.

Yorkshire Building Society is now offering a two-year fix at 3.29 per cent with a £1,195 fee to 60 per cent LTV. The mortgage is in addition to the existing two-year 3.59 per cent deal with £495 fee – the size of mortgage will decide which of these rate-and-fee combinations is most suitable for you. As always, refer to a professional mortgage broker or IFA if you're in any doubt which is the best option for your circumstances.

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