Mortgage lender fees rocket 70%

Mortgage lender set up fees have soared 70.3% in the last four years, according to recent research.

The average fee a lender charges for a mortgage was £899 in March 2009 when base rate fell to 0.5% but is now £1,514.

The average fee for a two-year fixed mortgage is now £1,595 and the average fee for a five-year fix is £1,014.

The highest fee is an eye-watering £3,990 charged for a five-year fixed rate product.

There can be no logical reason why fees should have increased so much. In the space of just August and September alone, they have increased by an average of £42.

Mortgage administration costs cannot possibly have increased 70%. Dealing with lenders on a daily basis as I do, I can certainly vouch that their service delivery standard hasn’t improved on the back of it – on the contrary in some situations , it has in fact worsened, so why are fees so high?

It is possible that lenders are keen to push fees because they are pure income and they get the money at the start of the mortgage.

But don’t forget, paying a large fee doesn’t necessarily guarantee a better rate – it all comes down to loan size. For example a percentage based fee can work well on the smaller mortgage sums against a set fee structure, but for a larger loan it is the other way round.

If you are unsure, talk to someone like myself who can guide you as what is the best thing to do.

This one goes out to all the ladies..

Life insurance premiums for women will rise by up to 15% before the end of the year with implementation of the EU Gender Directive due on 21 December 2012.

So if you want to do something about it, the time to do so is rapidly running out.

Although life cover has been traditionally cheaper for women because on average they live longer than men, premium costs are likely to increase as both men and women will soon have to pay the same basic premiums.

To avoid this impending price hike, all new policies must have a start date of no later than 20 December 2012.

And to qualify for gender specific premiums applications must be underwritten and accepted with the premium and any exclusions clearly defined, although the premium doesn’t need to have been paid until 20 December 2012.

However, one word of warning, some insurers may start to change to gender neutral pricing before then

 When 20 December 2012 has passed it won’t be possible to secure gender specific premiums in the future as start dates cannot be back dated. So come 21 December, it will be too late.

It is also important not to leave things to the last minute - give the insurance company time to do its work.

Almost all life insurance goes through an underwriting process, for some this is almost instant but for others it can involve getting a standard report from your doctor which can take up to four weeks.

Given that there is likely to be a last minute rush and that there is no flexibility on the cut-off date applying early could be prudent.

Santander to increase its Standard Variable Rate by 0.50%

Santander UK intends to increase its Standard Variable Rate from 4.24% to 4.74% from 3 October 2012.

There will also be an increase in the lender's SVR cap margin – the maximum amount above the Bank of England base rate that it can charge – from 3.75% to 4.99% from 24 September.

Santander said its competitors increased their SVRs by similar amounts earlier this year, reflecting the same market dynamics. In the past few months Halifax, Co-operative Bank, Bank of Ireland and Yorkshire and Clydesdale Bank have increased their SVRs.

Santander's analysis shows that its SVR mortgage holders will see an average increase of £26 per month for a £100,000 mortgage.

Santander now joins the list of lenders to hike its SVR, despite the fact the Bank of England base rate has remained unchanged since March 2009.

A Santander customer on its SVR rate with a £150,000 25-year repayment mortgage will see their payments increase by £42.54 a month; a significant amount for the many households who will be impacted by this.

Anyone affected by this or who is concerned their mortgage lender may join the SVR-hiking pack should consider remortgaging onto another deal if possible.

Speak to an independent mortgage broker like myself , if you are unsure of the best option as they will explain what is available to you and help to make the best decision for your situation.

As always thanks for your attention.

FSA to instruct banks to charge for current accounts

The Financial Services Authority (FSA) is to instruct banks to charge for current accounts, according to a report by consumer group Which?.

Research found charges for going overdrawn for two days per month without permission range from £120 to £900 a year, leading to confusion for consumers.

Customers who stay in credit also lose out through punitive charges levelled on withdrawing money abroad.

A senior executive at the FSA told Which? regulatory intervention may be needed to curb the problems arising from supposedly free banking.

Which? chief executive Peter Vicary-Smith said –

“Hidden charges completely shatters the myth that banking is free. The suggestion that banks should increase charges to avoid more scandals defies logic and is a slap in the face for consumers who are being hit hard by one of the worst financial crises in recent times. It's a disgrace that the very people who bailed out the banks are being asked to pay more for the most basic accounts, while the industry continues to be rocked by scandals like PPI mis-selling, LIBOR rate-rigging and IT failures. Banks must be far more transparent about their fees and charges so that people can clearly see what they already pay."

Many European retail banks currently level a monthly charge instead of relying on cross-selling or high hidden charges for income.

Peter McNamara, former head of personal banking at Lloyds, told the Today programme if UK banks wished to operate a similar system they would need to charge between £4 to £5 per month but felt the idea of  suddenly enforcing or regulating some charges on accounts is an extraordinarily unattractive one.

John Howard, former chairman of the consumer panel at the FSA, said he was in favour of monthly charges for a number of reasons.

Customers do not know "what the real cost of providing that basic banking service is", he said. "Banks have to be honest with us about what it really costs to provide that bank account. Consumers are immensely angry with the banks about everything that's happened, and the typical reaction is why should we pay banks even more. But there are real concerns that the regulator is trying to address, that free banking is creating distortions in the marketplace.”

The current system may have created the climate that led to the mass mis-selling of payment protection insurance (PPI), because effectively it encouraged banks to cross sell products, and unfortunately we are all too aware of what the by-product of that environment was.

An app or £13k ?

We have an electronic pass system at our Basingstoke office which means you have to swipe to get into the building beyond reception.If I change suits during the week I might forget to put my pass in the new jacket pocket and so have to ask for a temporary pass. 

Of course when I go back to the original suit later on a couple of occasions I have had the pleasure of finding a ten pound note in the pocket, or at least a pile of change.

Even though this money was mine all along it always feel as if I have just 'found' it for the first time. It's like I'm suddenly ten pounds richer.

One of the reasons that many people give for not buying life insurance is that it is too expensive, or that they cannot afford it.

And yet a 30 year old non-smoking lady can get £200,000 of life cover over 25 years for that same £10 a month.

The same ten pounds that you might find crumpled at the bottom of your pocket, could provide a lump sum equal to a small fortune.

How long would it take to build up £200,000 by saving ten pounds a month?

Over 1600 years.

Yet you could pay one premium of £10 into a life insurance policy and it could pay out £200,000 to your family immediately if you died in an accident.

Life insurance is actually amazing value for money and it has never been cheaper.

Look at it another way. Most of us now use smart phones and are used to buying apps. For an average of 69p, apps feel like great value because most of us have 69p fiddling small change in our pockets at the end of most days.

For 69p a month our lady could buy £13,800 worth of life cover.

So , is life cover expensive?

Consumer rage or criteria rage?

Tighter mortgage criteria has led to an increased number of consumer complaints about mortgage products, according to a report by the Council of Mortgage Lenders (CML).

The trade body, using data from the Financial Ombudsman Service's (FOS) annual review, said that a 'significant proportion' of complaints were caused by providers changing their lending criteria due to difficult market conditions.

FOS reported that 9537 complaints were received about mortgage lenders, up 4% on last year's figures.

There was an increase in complaints from customers who were unhappy with their lender's range of mortgages, with consumers also disappointed with the explanations provided by lenders when applications were turned down.

The FOS received an increased number of complaints about the reduction of upper age limits on some products, with older borrowers also frustrated by an increased requirement to provide details of their income in retirement.

Complaints from buy-to-let investors also grew, with customers unhappy with higher product rates and administrative charges.

 The number of issues raised to the ombudsman regarding new loans also increased, with more borrowers complaining about being unable to get a mortgage with the loan-to-value ratio requested.

Elsewhere, complaints received from people trying to switch mortgages between properties fell but the ombudsman highlighted the need for lenders to provide more information to customers having their homes repossessed.

A Jubilee tale

Buckingham Palace is estimated to be worth £1bn, up 9000% since the Queen took the throne when it was estimated to have been worth £11m.

Were it ever to be sold, that would equate to c.£70m in stamp duty.

Windsor Castle’s estimated value was £2m when the Queen began her reign in 1952 and it is now estimated to be worth 9350% more at £189m – so that would be a mere £13.2m in stamp duty.

Don’t think they would be fans of the ‘mansion tax’ somehow.

Compared to non-royal residences, the average UK house price in 1952 was valued at £1,891 and is now up 8605% to £162,722.

During the Queen’s reign the average UK house price has increased from £1,891 to £162,722.