The stories we noticed this week: warmer rental homes; lower mortgage deals; bad news for savers: energy bills rip-off; exit fees warning; current account charges.
Private landlords will soon no longer be able to rent out cold and draughty homes. Under new laws, landlords will be required to improve properties’ energy efficiency rating by 2018, the energy secretary Ed Davey said yesterday.
He predicted that the move will lead to a million warmer tenants. The changes are a reaction to the fact that fuel poor households living in the least efficient privately-rented homes already need to spend on average around £1,000 more to keep warm compared to the average home.
But the new rules don’t go far enough, said Friends of the Earth. “The new regulations only ban the most dangerously cold homes, and are riddled with loopholes which unscrupulous landlords can take advantage of,” said Sophie Neuburg, energy campaigner.
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There are more mortgage moves today as FirstDirect reduces its 10 year fixed rate to 2.89 per cent, which is available as long as you have 35 per cent equity in your home.
There’s a £950 fee with the deal. The online bank has also cut rates on its five-, three- and two-year deals.
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Bad news for savers after the Bank of England confirmed yesterday that interest rates will be held at 0.5 per cent for the 71st consecutive month.
“We are still at least a year away from even a small increase, and several years from any meaningful rise,” predicted Paul Whitlock of Charter Savings Bank. “Beleaguered savers will have to keep waiting to get decent returns, especially customers of large high street providers stuck in the doldrums with dismal rates.”
Samantha Porter of Wesleyan said: “It is more important than ever to find the best deals rather than leave money in low interest accounts.”
There’s more good news for mortgage borrowers as five year fixed rates slip ever lower, leading experts to predict that there’ll soon be deals at less than 2 per cent.
This week’s new offers include Barclays’ lowest-ever five-year fix at 2.29 per cent launched today and Virgin Money introducing a five-year deal pegged at 2.24 per cent.
“We are edging ever closer to a sub-2 per cent five-year fix,” predicts Mark Harris, chief executive of mortgage broker SPF Private Clients. “Even though it is coming, it will still be truly astonishing when it happens: an incredibly low rate for medium-term certainty.”
Barclays has also launched its lowest-ever two year fixed rate today at 1.38 per cent, for those with 35 per cent equity in their home.
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Many older people faced being turned down for mortgages simply because their loan term stretches into retirement. Because of that some lenders fear that the mortgage deal won’t then be legal under affordability rules introduced last year.
They have taken the view that when people retire and their income drops, the loans could then be open to question and so some lenders are simply turning down deals even though the borrowers are creditworthy .
That’s not on, according to broker Simon Tyler who says the problems are the “greatest underwriting fiasco since the sub-prime crisis.”
He warns that lenders are adopting a “refuse first, ask questions later” attitude which is causing grief to older borrowers. “Most of those refused by mainstream lenders can actually get a mortgage from specialist advisers,” he says. “All it takes is access to an underwriter who has the authority and common sense to make sensible lending decisions.”
There’s good and bad news for savers. Banks are busy cutting the number of confusing accounts they have, but as part of the process they’ve moved many people onto lower interest.
Since 2013, some 13 providers - including Lloyds, Barclays, Santander and NatWest - have simplified parts of their savings range and a massive 711 accounts have been reduced to just 114. Halifax, for instance, has recently scrapped 51 old accounts and replaced them with just three.
“Thousands of existing savings accounts have been reduced in recent years and now, under the guise of simplification, more accounts are being moved over to lower-paying versions,” warned Susan Hannums of Savingschampion.co.uk.
The average rate cut has been 0.51 per cent, though some lucky people have been moved into higher-paying accounts and ended up getting 0.58 per cent more on their savings,
“Although providers should be commended for reducing their vast range of accounts, cutting rates in the process is testament to the shocking state of the current savings market,” said Ms Hannums.
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The financial ombudsman is today launching new advice for bank staff and consumers to help them avoid power of attorney problems, which arise when people help an ill or elderly relative manage their finances.
Complaints about power of attorney have been increasing. More than a million are registered and the ombudsman gets around 30 to 40 new cases every month - often involving highly distressing situations.
But most of them could have been avoided, reckons chief ombudsman Caroline Wayman: “The majority of the complaints we see could have been prevented, had bank staff understood more about how a power of attorney works and the rights they give people.”
The big energy companies are cutting gas prices but still overcharging consumers by £145 a year, analysis shows.
Their recent flurry of price cuts are half as much as the savings they made in the wholesale gas market while energy firms are also accused of failing to pass on cuts to electricity bills despite being able to reduce electricity prices by 10 per cent.
And the price increases in winter 2013 were unnecessary, the report concludes, adding millions to UK bills while boosting profits by the same amount.
Their refusal to pass on the full extent of price drops in the wholesale cost of gas and electricity has cost UK consumers £2.9bn over the last year.
The new allegations of profiteering by the Big Six suppliers have been made by consumer group Which?. They follow last Friday’s predictions from energy watchdog Ofgem that gas and electricity firms’ profit margins will climb from £105 to £114 per customer over the next 12 months despite planned price cuts.
Four million poor families will be left with no official support to improve the heating in their homes in the next decade, a new report warns.
Anti-fuel poverty campaigners today accuse the government of ineffective and unambitious programmes to ease the plight of Britain’s six million poorly-insulated, low-income homes. The Energy Bill Revolution warns that less than 30 per cent of them will be handed crucial energy-efficiency support in the next 10 years.
Its research reveals that the number of major energy efficiency measures delivered by authorities since the introduction of the Green Deal and the Energy Company Obligations has fallen from 112,000 in the winter of 2011/12 to just 22,000 this winter.
Campaigner Ed Matthew said: “It is a complete disgrace that we are one of the richest countries in the world yet thousands continue to die of the cold because they can’t afford to keep their homes warm. If we are to end this needless suffering, we must make the homes of the fuel poor super-energy-efficient.”
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Fund broker TD Direct Investing has today weighed into the investment exit fee debate by scrapping the charge on its online platform.
Since investment firms were forced to make charges more clear by the City regulator in 2013, a few have scrapped unfair exit fees, which often hit investors by surprise when they switch Isas or unit trusts to different online platforms.
Firms such as Fidelity, Cavendish Online and Axa Self Investor have already scrapped the charge and TD Direct joins them today and calls on others to follow.
“Investors should have the freedom to make their own investment choices, including which platform to use,” said John Tracy, head of TD Direct.
Current account fees are inevitable a new report published today warns. It concludes that the current free banking model is unsustainable and may increase the likelihood of mis-selling in the future.
The study by accountants PriceWaterhouseCoopers reveals that while two-thirds of people are aware of hidden current account charges, one in two customers would change bank if an upfront fee was introduced instead.
On top of that, nearly two thirds say they are not prepared to pay anything upfront for their current account while a quarter would not pay more than £10 a month.
“UK current accounts are not free at all and are paid for through overdraft charges, penalty fees and uncompetitive or zero rates of interest,” pointed out Steve Davies, retail banking leader at the accountants. “But the irony is that most customers understand the unspoken bargain operating here and prefer it to paying an upfront fee.”
Almost one in five women are now the main household breadwinner while two in five keep their finances totally separate from partners, according to new research published today.
Among younger woman financial independence is even more pronounced with the proportion of 25-34 year old women in relationships who claim to be the main breadwinner rising to 25 per cent, compared to 17 per cent overall.
The age group is also the most likely to keep finances separate from a partner, with 52 per cent admitting they do not share any bank accounts, compared to 39 per cent of women overall.
But the study from Scottish Widows shows that more than a third of women still say having children limits their financial independence.
“Despite the huge strides that women have taken with finances, it is clear that childcare remains a significant barrier when it comes to career progression,” said Jackie Leiper, of Scottish Widows. “Employers and the government should support families in balancing work and childcare responsibilities better.”
If you put off sorting out your money, you’re not alone. A quarter of Brits admit to procrastination when it comes managing their personal finances.
Instead of dealing with finances, people tend to watch TV, according to Ratesetter. The average Brit spends an hour a day glued to the box rather than doing as planned. Others browse the internet for over half an hour a day, dawdle on social media for 25 minutes or resort to cleaning or tidying for a further 25 minutes.Reuse content