Talk Money

According to Alliance Leicester Mortgages London will remain the most popular region for property investment in 2008, with Scotland and the North of England experiencing the strongest growth.
Professional landlords, especially in London, are more successful than buy-to-let landlords. In Central London rental yields can be up to four times higher than buy-to-let properties in South East England. Scotland and the North of England are emerging as growth regions for property investment, forecast to generate 5% and 4% rental yields respectively in 2008.
Professional landlords with large portfolios are the most financially secure. Almost 50% of landlords who owned 20 or more properties were able to save a proportion of their lettings income, 40% of these landlords relied on their portfolios as their main income. Of all the landlords surveyed by Alliance and Leicester, 71% said they are optimistic about the prospects for 2008.
Jeremy Claridge, Head of Mortgages at Alliance and Leicester said:
“It is encouraging that buy-to-let landlords indicate they are feeling about the outlook for 2008. Regardless of a tough financial year, it is clear the buy-to-let property market is still healthy for longstanding landlords, especially for those in the south-east of the country.”

Data released by the Royal Institution of Chartered Surveyors (RICS) shows that the slowing housing market has increased rental growth.
The difficulties for first time buyers to step on the property ladder has led to a rise in rented accommodation. The strong rental market and continued economic uncertainty means that the outlook is good for landlords. Jeremy leaf, a spokesman for RICS said:
“With rents still on the increase many would-be-buyers will find accessing the housing market even more difficult as they struggle to raise the capital for that first important purchase.  However, many landlords will still take solace from uncertainty in the economy and enjoy the gains from rising rents.”
RICS most recent quarterly Lettings Survey showed that the demand for family homes was higher than that for flats as the market for the latter has become saturated.  Compared to the second quarter of 2007, 25.2% more chartered surveyors reported a rise in the demand for rental houses in the third quarter of 2007.
However, due to stronger lending criteria and successive interest rate rises, there is some uncertainty in the buy-to-let market.

With The Bank of England cutting the rate of interest on December the 6th, two further mortgages providers have reacted, lowering the rate of selected products.
From January 2008 Standard Life will decrease the rate of its Freestyle standard variable rate (SVR) by 0.25% to 7.21% and HSBC will reduce the rate of its variable mortgage by the same margin to 6.75% as of December 24th.  HSBC was one of the first lenders to act on the Bank of England’s decision, cutting the rate of its tracker mortgage shortly after the Bank’s announcement.
Financial comparisons website Moneyfacts.co.uk reported that 31 providers had cut their SVRs following the interest rate cut announcement with 6 providers reducing their SVRs by less than 0.25%.  Moneyfacts Analyst, Lisa Taylor, believe the pace of change was slow compared to the last time rates were lowered in August 2005. She said:
“The last time we saw rates fall back in August 2005, 46 lenders had made announcements. The rate of change now appears to be relatively slow.”

According to mortgage broker John Charcol, tracker mortgages offer better value than fixed-rate alternatives. Charcol’s confidence in trackers comes from the small number of mortgage lenders who have who have lowered lending rates in line with the Bank of England’s recent interest rate cut.
For some time Ray Boulger, Senior Technical Manager for John Charcol, has been recommending trackers to people taking on variable mortgages. He said:
“We have seen over the last few years there is always a proportion of lenders who do not move their rate in line with the Bank’s rate. Most of the time a tracker mortgage is a quarter of a percentage point higher than a fixed rate mortgage, providing the starting point is good.”
Mr Boulger noted that because of the credit crunch, mortgage lenders were cutting down their portfolios, to mitigate any risk.  However, he predicted, that trackers will be available as no restrictions will be placed on them as base rates fall. Despite his belief in the value of tracker mortgages, Boulger does not envisage a rise in consumers switching mortgages, he said:
“The reality of people deciding to look at their mortgage product is based on whether the value of a discount mortgage is cheaper than a tracker mortgage or vice versa.”

Mortgage customers are being charged exit fees when changing lenders, despite recent campaigns by watchdogs to stop the practice. Mortgage website mform.co.uk has published research saying the average cost of changing lenders is £150, despite attempts by the Financial Services Authority (FSA) to make exit terms more transparent.
The FSA has urged lenders to make the charging of exit fees clearer, resulting in lenders including Royal Bank of Scotland , Standard Life, Cheltenham & Gloucester and Lloyds TSB dropping fees. However, many lenders are still charging over £100 exit fees with many not making charges clear to their customers or on their websites.  On top of urging lenders to drop fees, the FSA has ruled that from 2008 customers can reclaim exit fess if they pay a higher charge than set out in the original terms.
Francis Ghiloni of mform believes that stopping exit fees is good for consumers. However, he believes consumers should begin to factor exit fees into the cost of remortgaging, rather assume they are an administrative charge for closing the loan. Ghiloni said:
“ [Exit fees] should be considered at the start rather than come as a nasty surprise when its time to move on. Borrowers who regularly remortgage and move from lender to lender need to take account of exit fees as well as application fees and other costs which will have an impact on the true cost of their loan.”

Credit card provider Egg has said that last minute panic buying will lead to a consumer overspend of £594 million this Christmas.
4 million shoppers will buy their Christmas presents in the week before Christmas with a further 800,000 leaving their festive gift buying until Christmas Eve.  Poor planning leads to panic buying and budget overspend. According to Egg, last minute shoppers will on average exceed their budgets by 39%, equivalent to £150 per shopper.
Alison Wright, Egg Chief Marketing Officer said:
“We still often resort to last minute panic buying.  Consumers need to find ways to drive down the overall cost of Christmas – one way seems to be by avoiding those last minute shopping sprees, when lack of choice and panic buying are rife.”
The Egg research found that there is no gender stereotyping when it comes to Christmas shopping, Women and Men are just as likely to panic buy at the last minute.

A survey by Your Money Show has found that 20% of Britons will still be paying for their 2007 Christmas shopping in June 2008.  Moreover, 10% will be paying off their credit cards into September and nearly 4% into December.  Research from MoneyExpert showed that 4.4 billion Brits are still paying off credit card bills from Christmas 2006.
Your Money Show found that Londoners were the biggest spenders at Christmas with 20% of people shelling out more than £1000 compared to East Anglians, the most frugal, who spend on average £500 each. Despite these high costs, only half of people save for Christmas.  The biggest savers are in the North East, but at the same token they are also the most likely to get in debt over Christmas.
£53billion will be spent in the UK this Christmas, with £11.7billion spent on credit cards.

Christmas shoppers are using more cash this year, potentially at the expense of credit cards. Cash machine operator Link has reported that ATM withdrawals are up 7.1% for the first ten days of December compared to November. In the previous 4 years, this figure has been around 5%.
In November, the payments association APAC predicted a fall in cash spending of 5% over the Christmas period compared to 2006 and a predicted retail spend of £53billion. This predicted spending would be a rise of 4% compared to 2006 which APAC said would be fuelled by credit card spending.
However, it appears that worries about the ongoing credit crunch have led consumers to rein in credit card spending and use cash.  According to retail spending figures from credit card company MasterCard weak sales were reported in November, slowing the annual retail sales growth rate down to 4% from 4.5%.

Just 1% of Britons have complete control over their finances and the vast majority of people show irresponsible behaviour with regards to their credit cards, banking and shopping around for the best financial deal.
This is according to a survey by Abbey which sought to find out “financial fitness” on a percentage scale, with 0 being a “financially fit machine” and 100 being “financial obese”.  The survey showed that 46% of women and 41% of men were “financially overweight”. People in Wales and the South-West were the fittest financially (42% overweight) whereas people in the North of England were the most overweight financially (46% overweight).
Sue Hayes, Director at Abbey said:
“We would encourage people to review the financial products they hold and shop around to ensure that they are getting the most competitive deal available.  Like exercise, a financial workout can take a bit of effort but for most people the rewards are well worth the exertion.”

The Post Office has warned the 2.4 million Britons heading overseas for Christmas this year that they could face “hidden” credit card charges in the New Year.
Many card companies charge an extra 2.75% in commission for each overseas transaction, a fact many consumers are unaware of until the charge appears on their bill.
Post Office Director of Lending Gary Fitton said:
“Many people could be returning from their Christmas break with a lot more than ‘memories and mementoes’ due to unnecessary card charges.”
According to the Post Office, 49% of festive holiday makers plan to use their credit cards whilst abroad.