Weekly Money: Round-up of the personal finance stories you may have missed 5-9 January


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The stories we noticed this week: mortgage war; 6% savings account; interest rate confusion for borrowers; call for government to help savers; logbook scam warning; house price predictions

9 January

Worried about unexpected winter costs? You’re not alone. More than half of UK homeowners are concerned by boiler breakdowns, car repairs, or burst pipes, according to a survey by for Homeserve. But younger people are most at risk of facing financial difficulties because of a winter problem, the survey suggests.

“There’s a stark generational gap in preparedness for unexpected costs,” said David Black of Consumer Intelligence. “Almost half of under 25s just aren’t prepared, it seems, for unexpected costs when they hit. Compare that to just 8 per cent of over 65s.”

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With energy bills hanging over from the festive season, Home Heat Helpline has come up with three tips to help you get back on track and in control of your energy costs.

“Draw your curtains to keep the warmth in,” is the first tip from Jim Crews, adviser at Home Heat Helpline. “Next, use thermostats on radiators to make sure you are only heating the rooms you are using. Finally put a lid on the pan when you are cooking, or even better, use the microwave instead!” For help call 0800 33 66 99.

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Thousands of homeowners are being burgled with their own house keys as opportunistic crooks use keys hidden under the mat and in other easily accessible places to gain entry, warns insurer LV.

Official Police data obtained through a Freedom of Information request shows that more than 6,000 burglaries in 2014 involved the culprit using keys to gain access to the property. Despite the risks, nearly one in three people say they hide a ‘spare’ key under a plant pot or doormat.

If you must leave a key outside, use a Police-approved key safe and only give the code to people you trust,” advises Selwyn Fernandes of LV.

8 January

There’s a mortgage war bubbling away with lenders fighting to outdo each other with ever-better deals. Todayday’s new offering was a 10 year fixed rate deal at just 2.99 per cent, which is the lowest-ever rate for such a decade-long loan.

The deal has come from Barclays which previously offered the same 10 year mortgage at 3.45 per cent. But you’ll need a deposit - or equity in your home - of at least 40 per cent to get it. The bank has also cut rates on a number of two-year and five-year fixed rate mortgages.

Sylvia Waycot of Moneyfacts said: “The 10-year fixed rate bandwagon is racing down the road which is great news for borrowers as they can fix repayments for a decade at a time, which removes the fear of what happens if interest rates rise.”

Mark Harris of mortgage broker SPF Private Clients, said:  “A ten-year fix at 2.99 per cent is a phenomenal rate and if you can commit yourself for that length of time you won’t regret it. For those who want a bit more flexibility there are five-year fixes at less than 2.5 per cent or two-year fixes at less than 1.5 per cent.”

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The importance of saving is thrown up by new research published today. A study by Select Statistical Consultants for debt charity StepChange suggests that half a million households could avoid falling into problem debt by if they had just £1,000 in precautionary savings.

The charity wants the government to set a target of every household having £1,000 saved which could be achieved by building “rainy day” savings pots into the auto-enrolment framework already used for pensions.

“Encouraging more saving, especially by people on low income, is vital if they are to have a financial buffer to cope with financial shocks,” warned Mike O’Connor of StepChange.

7 January

M&S Bank will tomorrow launch a savings account paying 6 per cent - but to get that rate you’ll have to open a current account with the bank. M&S Current Account customers will be able to save up to £250 a month into the new monthly savings account.

“The no-fee M&S current account launched last May with a competitive overdraft tariff and no charges for overseas ATM withdrawals,” says Andrew Hagger of Moneycomms. 

”Paying the maximum £250 per month into the account will earn £78.31 net of 20 per cent tax after one year, and is only bettered by two competitors when compared with interest paid on a £3,000 current account balance.”

The highest return comes from Nationwide’s FlexDirect at £124.32 but that includes a first year introductory rate of 5 per cent which slumps to just 1 per cent after the first 12 months. TSB Classic Plus in second position also looks attractive if you are always in the black, paying 5 per cent on the first £2,000. However, the cost of authorised borrowing and debit card use abroad is among the most expensive,” Mr Hagger warns.

* * *

Skipton building society has today launched a new two year fee-free discount mortgage range with rates starting from 1.69 per cent. However to get that rate you’ll need to have a 50 per cent deposit.

If you have just a 10 per cent deposit the rate climbs to a much less competitive 3.25 per cent. However, if you’re looking to remortgage and have plenty of equity in your home, the deal is worth a look.

6 January

Almost a million more people in England rent than five years ago, and many are stuck in a cycle of short-term lets that leaves them unable to put down roots or plan for the future.

The National Housing Federation says private renters are now nine times more likely to have moved in the past year than homeowners.

David Orr, of the NHF, said:  “With house prices soaring out of reach, and deposits for first-time buyers hitting £30,000, younger generations are seeing dreams of home ownership replaced with a life of renting.”

* * *

Homeowners are confused about rising interest rates. Six in 10 say they have no idea when it could happen, according to Barclays Mortgages.

That’s hardly surprising as experts have changed their views several times in recent months, although the consensus is that rates won’t rise until after May’s general election. However, more alarming is the statistic that almost half don’t know the current bank base rate.

The Centre for Economics and Business Research predicts that at the minimum, mortgage payments could increase by £81 a year by the end of 2015 as a result of possible base-rate rises. If the base rate were to increase sharply, typical mortgage payments could climb by £119 a year.

* * *

Don’t hand over cash for a used motor without a logbook is the warning from the vehicle history expert, HPI. The company says a rising number of people are falling prey to dodgy sellers passing on vehicles without a logbook or V5C, leaving them vulnerable to a number of scams.

Buyers must ensure the logbook is with the car before parting with any cash. “Logbooks are an integral part of verifying a car’s identity and ownership,” said Shane Teskey of HPI.

5 January

Are house prices going to carry on rising this year? The Halifax reckons growth will continue with property prices climbing between 3-5 per cent in 2015. “Housing demand should be supported by continuing economic recovery, growth in employment and still low mortgage rates,” says Halifax’s housing economist, Martin Ellis.

But there are concerns that May’s General Election will hit property prices. Mark Hayward, managing director of the National Association of Estate Agents, reckons there’s little to worry about. “A general election will always cause uncertainty, whichever party is likely to come in to power and any uncertainty may result in a temporary lull. However, we don’t believe this will have long-lasting implications on the market.”

In fact the changes to Stamp Duty announced in the Autumn Statement may have a greater impact. “The Stamp Duty reforms will have two effects,” says Fionnuala Earley, research director at Hamptons International. “First to give buyers more to spend and second to make it slightly easier for them to pass affordability tests. The largest effect is likely to be felt in the first half of 2015, mitigating some of the usual slow down we’d expect in the run up to an election.”

But property prices won’t fall before the election, predicts Paul Smith, CEO of estate agent haart. “I am optimistic for 2015 and while we may not see the market reach the giddy heights of the first half of last year, I predict that property price growth will remain strong and confidence will continue to ride high as we approach the next election.”

Beyond that?  Hamptons International forecasts that house prices in England and Wales will grow by 4 per cent this year and then 4.5 per cent in 2016. In other words, we are in for more gentle growth than in recent years.

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