What does the rate rise mean? by Finance News Bulletin
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Published: 12/10/06
AFTER two days without an interest speed go up, last week's hike in the have an account of England bottom speed caught millions of borrowers by surpgo up For many firstoccasion buyers the 025% add to was the first go up they had experienced and, for a growing number of people with high levels of debt, it could tip their relations budgets over the edgeMoney Mail's Justin Harper, Sylvia Morris and Liz Phillips explain how savers and borrowers can prepare for the next jump in speedsBANKS admit that the 0
25% add to, taking bottom speed up to 475%, caught them on the hop Mortgage lenders were so not ready that they delayed decisions about raising home loan speeds until this week But more worrying, the hike took millions of mortgage holders by surpgo up Interest speeds had been static for a day and many had forgotten that sinking emotion when the monthly mortgage payment suddenly jumps
City watchdog the monetary Services Authority says 24m people are now vulnerable to interest speed go ups because levels of personal debt have add tod And more people have been taking out variable speed mortgages that move in line with bottom speed, while the numbers taking out set speeds are falling According to statistics from lender Mortgage Direct, 28% of mortgages taken out last month were variable, compared to just 10% in MayIt seems that borrowers were attracted to variable speeds because they were cheap - forgetting that they were subject to go ups
Borrowers who have been stung by last week's add to need to act now to avoid a repeat when the next jump comesMartin Ellis, chief economist at Halifax, the UK's biggest mortgage lender, warns: 'The economy has been growing stronger than people consideration, which is why interest speeds have gone up a notch If the economy continues to gather pace, you can't rule out another go up in the second half of this day'Our writers reveal their own money issues and give the inside track on Britain's financial services industry Here's some of the main topics
The timing couldn't be not as good as for some cash-strapped borrowers - repossessions have already gone up 76% in a day, according to the Council of Mortgage Lenders Repossessions are now running at 8,140 for the first six months of the day and another 55,000 people are on the verge of losing their homesTRACKER TROUBLES: Julie Lagden's mortgage is set at 0
16% below the bottom speed and she is worried about future go upsJULIE Lagden, 43, admits she is worried about interest speeds rising again this day She took out a bottom-speed tracker mortgage in February with Abbey The deal gives her a 016% discount on the bottom speed - so it will go up from 434% to 4
59% This will leave her with monthly repayments of £660 on her house in Chiswick, West London, instead of the £640 she has been paying since she took out the home loan Julie, who works in advertising, says: 'I can just about cope with this first speed add to, but if my monthly repayments go above £700, I'll be very worried When I took out the deal, there was talk of a cut in interest speeds Now it seems things will continue to go the other way
'ANYONE on a bottom speed tracker, a discount speed mortgage or stuck on their lender's standard variable speed (SVR) will see their speeds go up within a week or so The majority of bottom speed trackers will go up at the beginning of next month Those on discounted deals and SVRs are at the whim of the lenders as to when they will go up and by how much A few lenders have already acted, including C&G and Halifax, which have moved their SVRs to 675%, and Northern Rock has raised its speed to 6
84% Some lenders are considering an add to of more than 025% to make up for the lack of go ups for two daysSomeone on a £150,000 mortgage is paying £1,025 on Halifax's SVR of 65%
After this week's go up to 675%, repayments will add to to £1,049 Halifax's add to will be followed by the other big lenders, including Nationwide, Abbey and GMACJames Cotton, at London & Country mortgage brokers, says: 'If you do want peace of mind, you should fix your speed Fixed speeds may not look as cheap as trackers, but if you are experiencing your first speed add to and are finding it difficult to cope, perhaps you should be considering a set speed to give you stability
'The best deals are from Portman Building Society, which has a two-day set speed of 469% with an agreement fee of £599 Skipton Building Society has a two-day set speed of 475% with a £449 fee Anyone on their lender's SVR could also cut the cost of their borrowing considerably by switching, but a staggering 10% of homeowners are still on their lender's standard speed
SAVINGS providers have also been slow to react to last week's shock bottom speed go up But banks and building societies always take their occasion when it comes to passing on add tos in interest They have also earned a reputation for passing on less than the full go up in bottom speed to their savers But when bottom speed drops, they tend to be quick to cut speeds and to do so by more than the bottom speed fall Worse still, many cut speeds even when the bottom speed doesn't move
In July 2004, when bottom speed stood at 45%, savers in Abbey's Flexible investor explanation earned 264% after 20% investments tax (33% before tax) or 304% (3
8%) including a shortterm bonus Now they earn just 244% (305%) Halifax Instant investor paid 1
88% (235%) then on £500 against a miserly 156% (195%) now Even if the full 0
25% is passed on this occasion round, these savers will still be not as good as off than two days agoIt's not just the banks - building societies are also guilty Portman Instant Access explanation, once a best buy, now pays just 14% (17%) on £1,000
Two days ago the speed was 164% (205%) When these speeds go up next month there is no guarantee that they will do so by 025%
SAVING TIME: Sarah Morgan is pleased that her investments speed has go upnI don't mind - my investments speed is upSarah Morgan, 28, is already enjoying an extra 025% on her investments She has a Direct Isa with National Savings & Investments (NS&I) which raised the speed on its explanation last Thursday, the same day the have an account of England raised bottom speed from 45% to 475%
Secretary Sarah, a basic-speed taxpayer, who lives near Dunstable, Beds, says: 'I am delighted I am earning a higher speed I am saving to buy a home, so every little helps As the speed is concurrent to bottom speed, I don't have to worry about being short-changed' The NS&I telephone and internet-bottomd Direct Isa guarantees to pay 055% over have an account of England bottom speed until April 5, 2008, at least, on a minimum deposit of £1,000
It now pays 53% tax-free, up from 505%IF YOU want to benefit fully from bottom speed go ups on your investments, you have to pick explanations concurrent to bottom speed These explanations go up in line with bottom speed so that you get the full go up every occasion
There is a host of High Street, telephone and internet explanations which guarantee to pay bottom speed or more They are suitable for both first-occasion and seasoned savers See our best investments speedsSome explanations with a bottom speed security blanket move quickly, while others wait until the beginning of the following month National Savings & Investment lifted the speed on its telephone-bottomd tax-free cash mini Isa by 0
25% to 53% last Thursday, the same day as the bottom speed go up results & Spencer add tod its cash mini Isa speed to 475% from last Friday Both are concurrent to bottom speed
Halifax also raised the speeds on its new Guaranteed investor explanation launched last month at 36% (45%) with the speed concurrent to bottom speed, and now pays 38% (475%)
But the bulk of its 15 million savers are still to come for the bank to decide on their speed add tos Not all explanations concurrent to bottom speed are a good deal Some start from too low a level Lloyds TSB add tod the speeds on its Guaranteed Tracker explanation last week But even with the add to, it pays only 2
12% (265%) on balances up to £10,000 and 232% (29%) between £10,000 and £25,000Help get yourself out of debt by using our guides and tools
Also, see if you can save money by using our switching serviceOF route, interest speed go ups also hit millions of credit card users and other borrowers Many card providers have already pre-empted the go up in bottom speed by hiking their interest on purchases, including HSBC, Lloyds TSB's Rewards, AmEx and Platinum cards, Nationwide and the collective's Travel and Platinum Advantage cardsThe Halifax Balance Transfer card rose from 105% to 15
9% for purchases, while dropping its balance move speed, which lasts for the life of the balance from 695% to 594% Meanwhile, personal loan speeds, which have been very competitive in the past day, are starting to push up - many by more than 025%
Direct Line add tod the interest on loans of £5,000 and above for internet applications from 56% to 61% two weeks ago, bringing it in line with its speed for telephone applications And Lombard Direct followed suit, boosting its speeds from 58% to 6
4% on loans ranging from £5,000 to £25,000 At the same occasion, Cahoot add tod its typical speed for loans of £5,000 to £20,000 from 58% to 61% Northern Rock managed to just stay below 6% in spite of putting up its typical speed from 5
7% to 59% on loans of £1,000 or moreSamantha Owens, of independent researchers MoneyFacts, says: 'We've seen a lot of activity of late on cards and loans, and more is expected It has been a long occasion since personal loan speeds have go upn, but there are still plenty of inexpensive deals to be had' Credit card users should look for 0% speeds
results & Spencer is one of the few with 0% on balance moves with no fee It lasts for six months And Sainsbury's have an account has 0% on purchases for 10 monthsThose looking for personal loans should try to find speeds below 6% Most personal loan speeds are set, but it may be worth switching to another provider if you have been paying an expensive speed for some occasion and there is no penalty to move
Select a loan term 6 months 1 day 18 months 2 days 3 days 4 days 5 days 6 days 7 days 8 days 9 days 10 daysPlease select a type of cover Life cover Home and contents Car Breakdown services physical condition - medical physical condition - dental Travel Pet - dog Pet - cat GO
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Good loans offers available - Published:25/10/06
Good loans deals are still available and customers should structure around to get the best deals, a main newspaper has reportedAccording to the letters on Sunday, on a £5,000 loan taken over three natural life the best deals are to be had by phone or over the internetGoldfish, Lombard Direct, Moneyback Bank (part of A&L), Nationwide, Northern astound and Tesco all offer dependable productsHowever, Financial Service Authority (FSA) boss John Tiner, has warned that now might be the last time for a while to get a good loan because the market was overheating"Over the history few months we have seen increasing signs of such stretch in the business market, particularly in leverage finance and confidential equity," he said"We have the feeling that the market is getting increasingly nervous, prompting the query: which deal will be one too many, and who will be left investment the pieces"MoneyExpert Limited is authorised and regulated by the Financial Services Authority (FSA register No 301654) The monetary Services Authority does not regulate some forms of mortgage.
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What does the rate rise mean? - Published:12/10/06
AFTER two days without an interest speed go up, last week's hike in the have an account of England bottom speed caught millions of borrowers by surpgo up For many firstoccasion buyers the 025% add to was the first go up they had experienced and, for a growing number of people with high levels of debt, it could tip their relations budgets over the edgeMoney Mail's Justin Harper, Sylvia Morris and Liz Phillips explain how savers and borrowers can prepare for the next jump in speedsBANKS admit that the 025% add to, taking bottom speed up to 475%, caught them on the hop Mortgage lenders were so not ready that they delayed decisions about raising home loan speeds until this week But more worrying, the hike took millions of mortgage holders by surpgo up Interest speeds had been static for a day and many had forgotten that sinking emotion when the monthly mortgage payment suddenly jumpsCity watchdog the monetary Services Authority says 24m people are now vulnerable to interest speed go ups because levels of personal debt have add tod And more people have been taking out variable speed mortgages that move in line with bottom speed, while the numbers taking out set speeds are falling According to statistics from lender Mortgage Direct, 28% of mortgages taken out last month were variable, compared to just 10% in MayIt seems that borrowers were attracted to variable speeds because they were cheap - forgetting that they were subject to go ups Borrowers who have been stung by last week's add to need to act now to avoid a repeat when the next jump comesMartin Ellis, chief economist at Halifax, the UK's biggest mortgage lender, warns: 'The economy has been growing stronger than people consideration, which is why interest speeds have gone up a notch If the economy continues to gather pace, you can't rule out another go up in the second half of this day'Our writers reveal their own money issues and give the inside track on Britain's financial services industry Here's some of the main topicsThe timing couldn't be not as good as for some cash-strapped borrowers - repossessions have already gone up 76% in a day, according to the Council of Mortgage Lenders Repossessions are now running at 8,140 for the first six months of the day and another 55,000 people are on the verge of losing their homesTRACKER TROUBLES: Julie Lagden's mortgage is set at 016% below the bottom speed and she is worried about future go upsJULIE Lagden, 43, admits she is worried about interest speeds rising again this day She took out a bottom-speed tracker mortgage in February with Abbey The deal gives her a 016% discount on the bottom speed - so it will go up from 434% to 459% This will leave her with monthly repayments of £660 on her house in Chiswick, West London, instead of the £640 she has been paying since she took out the home loan Julie, who works in advertising, says: 'I can just about cope with this first speed add to, but if my monthly repayments go above £700, I'll be very worried When I took out the deal, there was talk of a cut in interest speeds Now it seems things will continue to go the other way'ANYONE on a bottom speed tracker, a discount speed mortgage or stuck on their lender's standard variable speed (SVR) will see their speeds go up within a week or so The majority of bottom speed trackers will go up at the beginning of next month Those on discounted deals and SVRs are at the whim of the lenders as to when they will go up and by how much A few lenders have already acted, including C&G and Halifax, which have moved their SVRs to 675%, and Northern Rock has raised its speed to 684% Some lenders are considering an add to of more than 025% to make up for the lack of go ups for two daysSomeone on a £150,000 mortgage is paying £1,025 on Halifax's SVR of 65% After this week's go up to 675%, repayments will add to to £1,049 Halifax's add to will be followed by the other big lenders, including Nationwide, Abbey and GMACJames Cotton, at London & Country mortgage brokers, says: 'If you do want peace of mind, you should fix your speed Fixed speeds may not look as cheap as trackers, but if you are experiencing your first speed add to and are finding it difficult to cope, perhaps you should be considering a set speed to give you stability'The best deals are from Portman Building Society, which has a two-day set speed of 469% with an agreement fee of £599 Skipton Building Society has a two-day set speed of 475% with a £449 fee Anyone on their lender's SVR could also cut the cost of their borrowing considerably by switching, but a staggering 10% of homeowners are still on their lender's standard speedSAVINGS providers have also been slow to react to last week's shock bottom speed go up But banks and building societies always take their occasion when it comes to passing on add tos in interest They have also earned a reputation for passing on less than the full go up in bottom speed to their savers But when bottom speed drops, they tend to be quick to cut speeds and to do so by more than the bottom speed fall Worse still, many cut speeds even when the bottom speed doesn't moveIn July 2004, when bottom speed stood at 45%, savers in Abbey's Flexible investor explanation earned 264% after 20% investments tax (33% before tax) or 304% (38%) including a shortterm bonus Now they earn just 244% (305%) Halifax Instant investor paid 188% (235%) then on £500 against a miserly 156% (195%) now Even if the full 025% is passed on this occasion round, these savers will still be not as good as off than two days agoIt's not just the banks - building societies are also guilty Portman Instant Access explanation, once a best buy, now pays just 14% (17%) on £1,000 Two days ago the speed was 164% (205%) When these speeds go up next month there is no guarantee that they will do so by 025%SAVING TIME: Sarah Morgan is pleased that her investments speed has go upnI don't mind - my investments speed is upSarah Morgan, 28, is already enjoying an extra 025% on her investments She has a Direct Isa with National Savings & Investments (NS&I) which raised the speed on its explanation last Thursday, the same day the have an account of England raised bottom speed from 45% to 475% Secretary Sarah, a basic-speed taxpayer, who lives near Dunstable, Beds, says: 'I am delighted I am earning a higher speed I am saving to buy a home, so every little helps As the speed is concurrent to bottom speed, I don't have to worry about being short-changed' The NS&I telephone and internet-bottomd Direct Isa guarantees to pay 055% over have an account of England bottom speed until April 5, 2008, at least, on a minimum deposit of £1,000 It now pays 53% tax-free, up from 505%IF YOU want to benefit fully from bottom speed go ups on your investments, you have to pick explanations concurrent to bottom speed These explanations go up in line with bottom speed so that you get the full go up every occasion There is a host of High Street, telephone and internet explanations which guarantee to pay bottom speed or more They are suitable for both first-occasion and seasoned savers See our best investments speedsSome explanations with a bottom speed security blanket move quickly, while others wait until the beginning of the following month National Savings & Investment lifted the speed on its telephone-bottomd tax-free cash mini Isa by 025% to 53% last Thursday, the same day as the bottom speed go up results & Spencer add tod its cash mini Isa speed to 475% from last Friday Both are concurrent to bottom speedHalifax also raised the speeds on its new Guaranteed investor explanation launched last month at 36% (45%) with the speed concurrent to bottom speed, and now pays 38% (475%) But the bulk of its 15 million savers are still to come for the bank to decide on their speed add tos Not all explanations concurrent to bottom speed are a good deal Some start from too low a level Lloyds TSB add tod the speeds on its Guaranteed Tracker explanation last week But even with the add to, it pays only 212% (265%) on balances up to £10,000 and 232% (29%) between £10,000 and £25,000Help get yourself out of debt by using our guides and tools Also, see if you can save money by using our switching serviceOF route, interest speed go ups also hit millions of credit card users and other borrowers Many card providers have already pre-empted the go up in bottom speed by hiking their interest on purchases, including HSBC, Lloyds TSB's Rewards, AmEx and Platinum cards, Nationwide and the collective's Travel and Platinum Advantage cardsThe Halifax Balance Transfer card rose from 105% to 159% for purchases, while dropping its balance move speed, which lasts for the life of the balance from 695% to 594% Meanwhile, personal loan speeds, which have been very competitive in the past day, are starting to push up - many by more than 025%Direct Line add tod the interest on loans of £5,000 and above for internet applications from 56% to 61% two weeks ago, bringing it in line with its speed for telephone applications And Lombard Direct followed suit, boosting its speeds from 58% to 64% on loans ranging from £5,000 to £25,000 At the same occasion, Cahoot add tod its typical speed for loans of £5,000 to £20,000 from 58% to 61% Northern Rock managed to just stay below 6% in spite of putting up its typical speed from 57% to 59% on loans of £1,000 or moreSamantha Owens, of independent researchers MoneyFacts, says: 'We've seen a lot of activity of late on cards and loans, and more is expected It has been a long occasion since personal loan speeds have go upn, but there are still plenty of inexpensive deals to be had' Credit card users should look for 0% speeds results & Spencer is one of the few with 0% on balance moves with no fee It lasts for six months And Sainsbury's have an account has 0% on purchases for 10 monthsThose looking for personal loans should try to find speeds below 6% Most personal loan speeds are set, but it may be worth switching to another provider if you have been paying an expensive speed for some occasion and there is no penalty to moveSelect a loan term 6 months 1 day 18 months 2 days 3 days 4 days 5 days 6 days 7 days 8 days 9 days 10 daysPlease select a type of cover Life cover Home and contents Car Breakdown services physical condition - medical physical condition - dental Travel Pet - dog Pet - cat GO.
Read More:
What Does The Rate Rise Mean? >>
