Money Insider: Record inflation surge adds to savers' woes
Saturday 23 January 2010
The record 1 per cent monthly surge in the rate of inflation (CPI) to 2.9 per cent reported on Tuesday came as a bit of a wake-up call and was far higher than many experts had predicted.
While this may turn out to be a temporary spike, it's yet another dose of unwelcome news for consumers who are already struggling to get a decent return on their savings.
For only the third time in a decade, no variable-rate savings products (excluding ISAs) are offering a rate which enables a basic- or higher-rate taxpayer to preserve the spending power of their cash.
The Bank of England rate-cutting policy may have seemed like the right course of action to take at the time, but with base rate stuck fast at 0.5 per cent since last March, savers are getting a raw deal all round.
There were, however, a few bright spots, in the form of new products, worthy of mention.
In the fixed-rate bond market, Post Office launched issue 11 of its popular one-year growth bond, offering a top-five rate of 3.3 per cent fixed for one year.
New tax-free ISA deals this week included some excellent rates from Aldermore, with a two-year best buy at 3.6 per cent and a three-year table-topper at 4 per cent.
Post Office launched a one-year fixed-rate ISA at 3 per cent, with Aldermore at 3.05 per cent, while the current best buy for a one-year tax-free fix remains Bank of Cyprus UK's 3.33 per cent.
The basic facts
The unexpectedly high inflation numbers led some to predict that base rate may increase as soon as this summer, whereas previously the general consensus was a possible upward movement at the end of 2010 or the start of 2011 at the earliest.
Over the past year, the mortgage of choice for the majority of consumers has been a variable-rate tracker product, but this renewed base-rate uncertainty could herald a gradual swing back towards a fixed-rate option.
Even though house-price growth is predicted to taper off, we're still seeing healthy competition between mortgage providers, which is continuing to force pricing lower.
For fixed-rate products, First Direct trimmed its best-buy offset product even further, and with the two-year rate now standing at just 3.47 per cent and a reasonable fee of £498, this is an excellent opportunity to grab a good deal for those who have a 65 per cent or less loan-to-value requirement.
If it's a longer fix you're after, the new five-year mortgage from HSBC will prove popular if you've got at least 40 per cent equity. At 4.73 per cent and a £999 fee, there is likely to be plenty of interest. If you don't meet the 60 per cent loan-to-value criteria then the 4.99 per cent five-year loan from Yorkshire Building Society with £999 fee remains the best-buy option in the market for borrowing up to 75 per cent loan-to-value.
More confusion on the cards
The UK Cards Association, which represents the UK credit card industry, this week submitted its response to the Department for Business, Innovation and Skills' consultation 'Review of the Regulation of Credit and Store Cards'.
Encouragingly, they are recommending an industry-wide change to the way that credit card payments are allocated to a customer's balance.
At the moment, only a couple of credit card providers adopt the customer-friendly practice where the most expensive debt is repaid first.
However, even though the call is for the cheapest debt to be repaid first, it's disappointing to note that the recommendation doesn't apply to the minimum payment, and proposes that this portion of any repayment can be allocated at the discretion of the lender.
We need credit card charging to be easier to understand, but introducing this variable, which may be adopted by only part of the industry, will only make matters more complicated and the task of comparing products unnecessarily complex.
If we're going to clean up the image of the personal-finance industry, let's take this opportunity to eradicate confusion for end users, not make it worse.
Andrew Hagger is a money analyst at Moneynet.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
EastEnders Christmas specials are known for their shouty, over-the-top soap drama but tonight the show has done itself proud thanks to Danny Dyer.
Pension mortgages: 'The advice I was given was wrong and now I face losing my home'
You'll need £220,000 for a minimum wage in your retirement
Questions of Cash: I checked in with Air France in time and still missed the plane
Minister's pension promise to firefighters challenged
Bank-beating exchange rates on your international payments
- 1 Planes go hybrid-electric in important step to greener flight
- 2 Antonio Martin shooting: Police and protesters clash over teenager's death just five miles from Ferguson, Missouri
- 3 Northern Lights above Britain: Stunning Aurora Borealis illuminates Northumberland sky on Christmas Eve
- 4 British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
- 5 Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens