Money Advice Service under investigation for 'misleading' claims

Money Advice Service under investigation for 'misleading' claims

Borrowers warned over capped rate mortgage products

Borrowers currently opting for a capped rate mortgage have been warned they might never reach the cap.

With borrowers increasingly nervous about when rates might start to rise, demand for the mortgages, which have a ceiling that the mortgage rate will not increase above, has increased three-fold since November 2009, according to a recent report.

In response to the growing demand, the number of capped mortgage deals available on the market has increased from one two years ago to 39 at present.

To pay for the security of the cap, mortgage rates on the deals are typically around 0.50 basis points higher than the equivalent variable rate deal. However, with the lowest variable rate deal on the market at 1.90%, there are doubts as to whether a capped deal is currently the best option.

While capped rate mortgages are a good idea in principle, in the current market borrowers are unlikely to ever hit the cap and would likely be better off opting for an alternative deal.

To find out what is available, feel free to get in touch with me.

Thanks as always for your attention.

Mark (mark@themortgagemonkey.co.uk) 

November rate rise being predicted

The Sunday Telegraph reported on the 17^th that interest rates will start to rise in November.

The rise will be in anticipation of falling inflation in the new year and an increasingly strong recovery, according to predictions from the Ernst & Young ITEM Club.

Although major risks remain, Peter Spencer, ITEM's chief economic adviser, said that as long as European and US policymakers can allay sovereign debt concerns and calm the bond markets "things should turn out OK". Striking a hopeful note, he added it is "unlikely events will blow up in our face".

Mr Spencer, a former Treasury adviser, has consistently argued that the Bank of England should "hold its nerve" and leave rates unchanged until there is compelling evidence that the country is coping with austerity, so his move is significant.

The market is not pricing in a rate rise until August next year, but Mr Spencer said: "I think they will get a surprise."

People who offset their savings are £1.4 Billion better off than savers

Borrowers with an offset mortgage who link their savings to their loan have earned £1.4 billion more than those who simply put the cash into a savings account, according to new research.

Around 460,000 people in the UK have an offset mortgage, and over the past two years it’s estimated they ‘earned’ £1.9 billion in interest savings. Putting those savings into a best buy savings account would have earned £534 million in net interest.

The average offset savings balance has risen by 19 per cent (from £27,822 in 2009 to £33,243 in 2011) compared to a 2.5 per cent rise in the average gross loan balance in the same period (from £127,058 to £130,186). This means the average offset saving balance is now 26 per cent of the mortgage balance compared with 22 per cent in Q2 2009 as offsetters seek to benefit from higher savings rates.

An offset mortgage is an excellent option for those borrowers looking to benefit from a higher rate for their savings. While many UK savers are currently seeing the value of their savings eaten up by inflation as well as being taxed on the interest earned on these savings, no tax applies if they use their funds to reduce their mortgage balance. As well as helping them to pay down their outstanding loan, offsets can help shelter savers from the effects of high inflation on their hard earned savings pots.

In the current interest rate environment mortgage borrowers could have saved thousands more with an offset in the last couple of years, even if they had diligently been seeking out the best buy savings rates.

http://www.whatmortgage.co.uk/news/50-billion-of-clutter-in-uk-homes/

£50 billion of clutter in UK homes

The UK is hoarding enough clutter to fill 11 Wembley Stadiums, according to new research

50-billion-of-clutter-in-uk-homes/