Money News: Homeowners warned: expect another rise in interest rates
Sunday 13 August 2006
Homeowners should brace themselves for a further hike in interest rates this year after a stark inflation warning from Mervyn King, Governor of the Bank of England.
Mr King said "inflation [was] likely to be volatile" and expressed his "great uncertainty about energy prices". These remarks were interpreted by financial markets and analysts as meaning that another rate rise - probably 0.25 percentage points - was needed sooner rather than later to keep the lid on the cost of living.
Many economists, in-cluding those at the invest-ment manager Investec, now predict another rate rise by November.
Mr King's comments came after last week's quarterly Inflation Report, which gives the Bank of England's assessment of the consumer price index and what it thinks needs to be done to keep it on track.
The Government demands that members of the Bank's Monetary Policy Committee aim for a 2 per cent inflation target - a low and stable level of growth. If inflation exceeds or undershoots this by more than one percentage point, the committee must write to the Chancellor of the Exchequer to explain what went wrong, and how it will correct matters.
For homeowners on variable mortgage rates, another rise in the cost of borrowing so quickly after last week's decision to raise the Bank base rate to 4.75 per cent would be an unwelcome expense (see Property, page 20). With personal insolvencies at record levels, there are concerns that Bank policy to curb inflation could push many already hard-pressed borrowers into great financial difficulty.
Millions of credit card borrowers could also be affected as lenders adjust their rates upwards to reflect the higher costs.
Motoring: Car repair charges 'extortionate'
Consumers are being charged at an "extortionate" rate of up to £170 an hour for garage car repairs.
In eight out of 10 parts of the UK surveyed in the annual Direct Garage Labour Rates review of 3,000 workshops, car owners were charged more than £100 an hour. The survey is conducted by Warranty Direct, a provider of personal warranties.
On average, motorists can expect to pay £72.30 for each hour a mechanic spends working on a car. Although the costs are high, up by as much as 10 per cent on last year depending on the location, labour rate rises "are starting to stabilise", said Warranty Direct's spokesman, Duncan McClure Fisher.
"Garage rates are still extortionate and it's obvious that there's still a major gulf between regions and between independent and franchised [repair centres]."
The average hourly rate at a franchised repair dealer is £91.07, compared with £49.61 at independents. The maximum hourly rate was found in London, where a franchised garage charged £170.61. The lowest was in Lanarkshire, where the charge was £32.12 per hour.
Earlier this year, the National Consumer Council suspended its "super-complaint" - where it asks the Office of Fair Trading to investigate - into the costs and practices of car servicing. It said the repairs industry had made significant progress in tightening codes in favour of consumers during the nine months since it announced the procedure.
Before taking a car in, motorists should always ask the hourly charge and compare it with rival workshops.
Identity theft: Young people at risk from fraudsters
Consumers aged from 18 to 29 are most at risk of falling victim to identity theft, a report warned.
Nearly a third of the under-30s have no idea that a gas or electricity bill can be used to steal an identity, said the research from npower.
"The under-30s show least restraint when it comes to sharing personal details," its report said.
"More than two-thirds of people in this age group have at some time given friends personal details, including cash card pin number, full bank account details, online bank log details and passwords."
Such information could easily fall into the possession of a third party, the report said.
"It is relatively easy for a thief to steal someone's identity and, with the under-30s... [ID theft] really isn't seen as important; they are blissfully unaware of the dangers," said Professor Martin Gill, an ID theft specialist and professor of criminology at the University of Leicester.
Nearly 140,000 people had their identity stolen last year, according to figures from Cifas, the lenders' anti-fraud association.
The nPower report came as the HSBC bank faced claims from researchers at the University of Cardiff that its online banking system was vulnerable to "key-logging", where crooks track strokes on a keyboard to uncover typed-in security codes.
The bank said it would review its procedures but that it wasn't aware any such fraud had been committed on its customer accounts. It remained confident in its security.
House prices: Property market buoyant
The average cost of a house in England and Wales is nearly £200,000, the Land Registry said last week.
Over the three months from 1 April to the end of June, the average price rose by 7.71 per cent on last year, to £199,184.
House price inflation was at its highest, 11 per cent, in the North and North-west.
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