‘Featured’ News

Mortgage Approvals Hit Record Low

Posted 2008-05-1

Figures released from the Bank of England at the end of April confirm that the slowdown in the UK mortgage market continues unabated.

As the effects of the credit crunch continue to bite into the economy, mortgage approvals for house purchasers in March fell to the lowest level since recent records began in January 1999, with only 64,000 approvals, around 8,000 down from the previous month and only 44% of the comparative figure for the same month in 2007.

Commenting on the sharp drop in approvals, Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (Rics), said that it was hardly surprising given that lenders had been aggressively scaling back in providing finance to homebuyers.

The figures also showed a steep rise in credit card and other forms of lending from the beginning of the year, with a substantial dip in property prices throughout 2008.

The Bank of England further reported that approved remortgaging loans also dropped by 11,000 in March, compared to a cumulative total of 98,000 for the previous month.

There was also a sharp reduction in loans arranged for other purposes, including buy-to-let loans reduced by 6,000 from the previous month’s total to just 57,000.

The total net lending secured against homes was £6.9bn, a figure that contributed greatly to a successive fall in the growth rate, reduced from 9.4% to 9.1% in February.

In a move designed to arrest the current downward trend, leading bankers the Royal Bank of Scotland (RBS), which includes NatWest, has pledged to cut its fixed and tracker rate mortgages by between 0.1% and 0.3% for existing customers in the process of switching deals and for new customers in what appears to be an aggressive attempt to increase its present share of the mortgage market.

The continuing credit crunch – an appellation used to describe the financial state of affairs created by banks becoming less willing or able to lend money, both to each other, as well as to consumers, has obviously precipitated a huge demand for further unsecured and homeowner loans, but appears also to have created a steep learning curve for both lenders and borrowers alike.

There are very strong indicators that lenders will be far more wary of assessing risks when offering new unsecured and homeowner loans, and will not repeat the exercise of casually providing 70% of unsecured loans without even taking proof of income, as the uSwitch financial comparison site reported had indeed been the case in the previous year.

Borrowers, now faced with the current meagre market for unsecured loans, are also becoming more astute, with increasing numbers of consumers researching the terms and conditions of loan companies much more thoroughly, and at least 20% of potential customers now checking their personal credit report before applying for any type of loan, according to figures recently published by the credit report company Experian.

Similarly in the home and car insurance sector, also deeply affected by the current financial climate, consumers appear to be heeding advice to check the validity of all current insurance policies and to cancel those that no longer afford real value. More and more motorists are also shopping around for better value insurance policies and are keenly comparing prices, with 4.9million car and van owners actually switching insurance providers during the previous six months, according to figures from the independent price Monitoring Index published by MoneyExpert.com.

There has also, understandably, been a surge in the demand for debt services, particularly for Individual Voluntary Arrangements (IVAs) and Debt Management Programmes (DMPs), as the effects of the credit crunch continue to eat into consumer’s expenditure.

However the UK Insolvency Helpline, a National debt advisory service for debt advice and debt management, has recently voiced concern at the number of, what it calls, “IVA factories”, that have begun operating in recent years.

The Insolvency Helpline’s social policy team are warning that in some cases consumers are being ‘mis-sold’ IVAs, and that they are currently dealing with around 100 calls a day from members of the public who are being encouraged to take up IVAs by debt management firms, when clearly these arrangements may be entirely unsuitable.

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Understanding Car Insurance Discounts

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Posted 2008-04-24

Trying to save money wherever you can is important to us all. Car insurance should be no different. Do not assume that your agent knows everything about you and your vehicle.

Drivers should take advantage of all discounts that many providers offer, that can significantly reduce the cost of car insurance. Understanding discounts and how they can affect auto insurance premiums can help smart shoppers make better decisions about their coverage and possibly save themselves some money in the process.

Read below to identify possible discounts that could help you save on auto insurance this year. Other than discounts, there may be some other ways for you to save on your insurance premiums. We will go over several discounts that can help with your current situation.

First, there are discounts for Auto Safety features. Certain states will give you discounts for anti-lock breaks. Make sure you know if it is two or four wheel anti-lock break vehicle. Automatic seatbelts and airbags are frequently discounted on your insurance premiums. In most states, a defensive driver class discount may apply. If the principal driver usually 55 years old or older has completed an approved defensive driving class a discount could apply. Keep in mind that most states will only approve this class if it is voluntary meaning that it was not the result of a violation or infraction.

Some insurers will give you a discount for having multiple vehicles. In some cases, this will only apply if you have two or more drivers. If you have a clean driving record, meaning you do not have any tickets, accidents or suspensions in the last three years (some companies require five years) then you could be eligible for a safe driver’s discount.

Many companies will reward you with staying with the same insurance company for many years without any accidents reported. They will offer you a renewal discount. It makes sense, you have carried insurance with a company for several years, and have not had an accident, your insurance company likes you and wants to reward and keep your business. Some companies honor you with a discount if you had prior limits on your previous policy. They discount you because they understand you are a better risk.

Conversely, if you do decided to change insurers a proof of prior insurance discount may apply. Most insurers request at least 6 months of consecutive insurance from the previous insurer. If you are a full-time student who meets certain grade requirements and are unmarried and usually under 25 years of age (some states the age is 21) you could be eligible for a good student discount. If you own a home, including condominium, town home, or mobile home, which is used as a principal residence, a discount could apply. Military personnel either currently active or retired from any branch of the US military a discount could apply. If your vehicle is equipped with an anti-theft device, a discount could apply.

You could lower the cost of your insurance in other ways.
For people who own older cars, it may not be necessary or cost-effective to protect them with collision and comprehensive coverage. By comparing the book value of your vehicle and the premium that the insurer has offered, you may find that it cost as much for the insurance as it does for the vehicle. If the car is worth less than $2,000, you will probably spend more insuring it than it is worth. The whole idea of driving an older car is to save money, so why not get what is coming to you.

In addition, keep in mind that the type of vehicle you buy could greatly affect your premium. A flashy red sports car is usually going to cost more to insure than a mid sized sedan. This is also true of vehicles that are on the list of most stolen. There are many ways that policyholders can save on their insurance. Knowing more about auto policies and premiums can help consumers take advantage of less obvious discounts while ensuring that they have the appropriate protection for their vehicles. The last way to save is to assume more risk. If you chose higher deductible on your Personal Injury Protection or Comprehensive and collision coverage will lower your premium as well. The deductible is the amount of money you have to pay before your insurance company begins paying the rest.

Understanding how discounts affect your insurance rates is important to save you money.

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