Home & Money News

Bank governor: living standards falling

Thu, 14 Feb 2008 02:48:25 +0000

The governor of the Bank of England has warned that standards of living are falling in the UK as economic conditions bite. Commenting on the Bank's latest Inflation Report, governor Mervyn King said: "The higher level of energy and food prices is a genuine reduction in our standard of living relative to where it would otherwise have been."Since the last report in November, inflation has been markedly increased by higher food and fuel prices and the cost of imports. Mr King said that CPI inflation – currently above the government-set 2.0% target at 2.2% – was likely to jump to "around the level [3.0%] at which I would be required to write an open letter to the Chancellor".The prediction appears to dampen borrowers' hopes for a big cut in interest rates. However, some analysts seized on the report's statement that inflation would fall below target if the Bank rate remained at 5.25%. Quoted in the Guardian, David Page of Investec said: "To our minds, the report and ensuing press conference suggested a further reduction in bank rate, but not by as much as markets had hoped. We expect the Bank rate to reach 4.75% in August."

Government warning to HIPs providers

Wed, 13 Feb 2008 03:02:32 +0000

The government has warned providers of Home Information Packs (HIPs) not to take shortcuts in obtaining legal proof of property ownership. In an email sent to members of the HIP industry, the department of Communities and Local Government said it was aware that some HIP providers were including 'Register Views' obtained from Land Registry Direct as evidence of title.However, it stressed that the HIP regulations require an 'official copy' of the individual register and title plan.Obtaining the two official copies costs £6, just £3 more than a Register View. However, official copies are admissible as evidence in court, and the Land Registry will indemnify people against any mistakes they contain."Official copies are required as these are encrypted documents that the Land Registry will stand by - if there are any errors in the register for example - and are therefore acceptable during the conveyancing process," the email explains."Although the information they contain is similar, register views have no such status," it adds.

Petrol drives inflation up to 2.2%

Tue, 12 Feb 2008 02:47:02 +0000

Inflation rose to 2.2% in January, according to figures released today. The Office for National Statistics (ONS) says that Consumer Price Index (CPI) inflation increased by 0.1% for the 12 months to January, compared to December's figure of 2.1%. It attributes much of the increase to the rising prices of fuel and food.Though analysts already expected inflation to rise over the next few months, the news will be unwelcome for the Bank of England, which is responsible for maintaining the index at a government-set target of 2.0%. Last week, the Bank's Monetary Policy Committee reduced the interest rate to 5.25%, a move likely to stimulate spending and add to the upward pressure on inflation.Meanwhile, figures from the British Retail Consortium show that, after a disappointing December, retail spending picked up during January. The Financial Times writes that the increase will 'dampen' the prospects for further interest rate cuts this year.Retail Price Inflation (RPI), which tracks additional prices including mortgage repayments, also rose slightly, from 4.0% in December to 4.1% in January.

OFT recommends credit card shake-up

Mon, 11 Feb 2008 02:59:50 +0000

Consumers should be helped to shop around when choosing a credit card, an Office of Fair Trading (OFT) report says. Its recommendations include improving the information available to customers, and the setting-up of a credit card price-comparison website to be run by the Financial Services Authority.The report is the result of the OFT's investigation into a co-called super-complaint brought by consumer group Which, driven by concerns that consumers choose credit cards without fully understanding their costs. Research commissioned by the OFT found that only 32% of users had compared the cost of cards when choosing their most recent one, while another 32% simply chose the card recommended by their bank."No-one wants to throw money away," said OFT chief executive John Fingleton, "but consumers who don't shop around for credit cards are doing just that.""It is essential that consumers are given the right tools to make comparisons between credit cards more easily, and we can achieve this through some of the recommendations announced today."

English councils 'getting better'

Fri, 08 Feb 2008 12:24:14 +0000

The majority of councils in England are delivering a high standard of service, an independent public body has found. The Audit Commission says that 83% of councils achieved a three- or four-star rating in its yearly Comprehensive Performance Assessment (CPA) for 2007. No councils failed to score on the scale, while the number awarded just a single star fell from five to two.Not all councils performed well, however, with 14 dropping a star, and 13 remaining 'stuck' on two stars.The CPA awards a maximum of four stars to councils, based on their care for children and adults, and an assessment of their housing, environment, culture, benefits and fire services."This is good news for most councils and taxpayers in England, with the majority of councils performing better than ever," said Audit Commission chair Michael O'Higgins."The 2007 results show that councils continue to rise to the challenge of delivering better services for local people at better value for money."Not everyone agrees with the commission's assessment, however. Replies to the thread "My council is great because..." on the BBC Radio 5 Live website include praise from people such as Simon from Enfield, who writes that his council "is great because it gives me a disabled freedom pass so I can travel any where in London."Many other comments are negative. Steve in Newcastle writes that the council charges "more and more council tax and [delivers] less and less value", while Phil on the M25 condemns his council as "a bunch of bureaucrats in non-jobs trying to justify their own existence".

Bank interest rate drops to 5.25%

Thu, 07 Feb 2008 01:55:58 +0000

As widely anticipated, the Bank of England has lowered the Bank interest rate to 5.25%. The 0.25 percentage-point reduction comes after recent figures showed a marked slowdown in mortgage lending and static house prices. The decision means that the cost of borrowing money will go down, stimulating spending, but also that the returns on savings will fall.The Bank has been under increasing pressure to reduce the rate after its nine-member Monetary Policy Committee (MPC) opted to leave it unchanged in January. The British Retail Consortium has made repeated calls for a further cut, after comparatively weak high street sales at Christmas.In January, the US Federal Bank stunned analysts with an unscheduled 0.75 percentage-point reduction in its lending rate, but economists have stressed that the Bank of England had no need to make such a dramatic reduction.Howard Archer, chief UK economist at Global Insight explained: "Latest data and survey evidence indicate overall that while UK growth is currently clearly slowing appreciably, it is not collapsing."However, some analysts have predicted that the Bank will reduce the rate to 4.0% during 2009 to avoid a full-blown recession.

MPs to probe energy prices and regulation

Wed, 06 Feb 2008 04:06:39 +0000

A committee of MPs is to examine the energy market in the UK, as criticism of recent price rises grows. The all-party Business, Enterprise and Regulatory Reform (BERR) committee will investigate possible anti-competitive behaviour in the market, and whether its current structure encourages effective competition."The continuing controversy over energy prices is an issue that demands to be addressed," said committee chairman Peter Luff MP."It is a complex but vital question and one that affects everyone in the country: individual consumers and households, small businesses and major energy users alike."In recent weeks, independent watchdog Energywatch has repeatedly questioned the extent of competition between energy suppliers."This is a sensible step and we hope that it will convince government to make a referral to the Competition Commission," said Energywatch campaigns director Adam Scorer.Regulator Ofgem has said that it has no concerns about anti-competitive behaviour, reassuring the chancellor in January that "Britain’s competitive market in energy is working". However, the BERR committee said that its investigation will consider "the effectiveness of regulatory oversight of the energy market".Responding to the announcement of the inquiry, Ofgem spokesperson Chris Lock told Charcol News: "We do monitor the market continually, especially when prices are rising as they have been."We feel that the market is competitive and we've already given an assurance to the government on that. There are high levels of switching and major savings to be made, particularly if you've never switched your energy supplier before."We would welcome the opportunity to share our analysis with the committee if they so wish."

Halifax sees no change in house prices

Tue, 05 Feb 2008 10:52:00 +0000

House prices remained static in January, with the average UK property now costing £197,244, according to figures published today by Halifax. In its January House Price Index, the bank says that although prices remained unchanged, there were "continuing signs of weakness" in housing market activity. It cites Bank of England figures revealing that the number of mortgage approvals fell by 35% in the last three months of 2007, compared with the same period in 2006.According to the index, property prices in January were 4.5% higher than in January 2007, but they had fallen by 1.0% over the three months from November 2007.Halifax predicts that house prices will remain flat this year, and believes that the Bank's Monetary Policy Committee (MPC) is likely to reduce interest rates when it announces its next decision on Thursday."We expect sound economic fundamentals and lower interest rates to support house prices," said chief economist Martin Ellis."The MPC is likely to cut the Bank Rate at least twice in 2008, further supporting both the economy and housing demand," he added.

New-build prices 'should be clearer' says CML

Mon, 04 Feb 2008 09:38:47 +0000

The costs of buying a new home are not transparent and should be made clearer, the Council of Mortgage Lenders (CML) has said. In an article in its fortnightly newsletter, the CML argues that the increase in discounts and incentives offered by sellers in recent years has confused the value of many new homes. New-builds can be hard for surveyors to value accurately because of the variable 'new build premium' that buyers are willing to pay, as well as a lack of comparable properties on the market.The CML says that developers routinely offer a package of incentives to new-build buyers, which may include payment of legal fees and stamp duty, cash-backs, reduced mortgage payments or guaranteed rent for a set period.If these incentives are not clear to those valuing the properties and lending the mortgages, then the amount lent may be too high. The CML says that as well as generally undermining confidence in the market, the situation has attracted fraudsters, who bulk-buy new developments and sell them on without disclosing the initial transaction. To tackle the problem, the CML says that it wants to see amended guidelines in its Lenders' Handbook, the Royal Institution of Chartered Surveyors' (RICS) Red Book, and in lenders' own mortgage application forms.

Egg card customer fury

Mon, 04 Feb 2008 09:36:08 +0000

Pressure has been mounting on credit card firm Egg to justify its decision to cancel cards for 161,000 of its account holders. Some 7% of Egg's credit card customers received a letter last week saying that in 35 days' time they would no longer be able to spend money on their cards. The move comes after an "extensive review" by Citigroup, which acquired Egg in May 2007. The decision has angered many customers who report that they have good credit ratings and have kept up with payments.Since Friday, hundreds of forum members at MoneySavingExpert.com have posted about Egg's action, with many claiming that they are being penalised because Egg does not make enough money from them. In a statement today, Egg said: "We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to." "We can certainly understand the concerns, but even if people are up-to-date with repayments, they are people we decided we no longer wish to lend money to regardless of their status."

Tax deadline extended

Fri, 01 Feb 2008 12:18:12 +0000

Taxpayers have been given an extra day to submit their self-assessment tax return, after the online submission service crashed yesterday. In a statement, HM Revenue and Customs (HMRC) said that it regretted any inconvenience caused, and that that it would treat returns submitted by midnight tonight (Friday 1 Feb) as having arrived on time. The Self Assessment Online service was unavailable for several hours yesterday, causing disruption for tens of thousands of people and small businesses. However, HMRC said that it had received more than 200,000 online returns over the course of the day, up around 50,000 on the total for last year's final 24 hours. It said that a record 3.7 million returns have been filed online for the last financial year. Meanwhile, the 'public face' of self-assessment, science broadcaster Adam Hart-Davis, has called for tax rules to be simpler.Speaking on BBC Radio Five Live, Mr Hart-Davis said that VAT was "absurdly complicated" and, in light of yesterday's problems with the HMRC site, that he was "full of sympathy" for those struggling to file online.

Nationwide sees slight house price fall

Thu, 31 Jan 2008 12:29:49 +0000

House prices fell for the third consecutive month in January, according to the latest house price index from Nationwide.The building society now puts the average house price at £180,473, down from £182,080 in December.After the modest monthly fall of 0.1%, the three-month on three-month rate of house price inflation has dropped from +0.9% in the period to November 2007, to -0.3% in the last quarter. The indicator, which smoothes out the effect of any sudden monthly change, is generally taken to be a more useful guide to the direction of prices.Commenting on the figures, the Royal Institution of Chartered Surveyors' senior economist David Stubbs said: "With activity weak, the market is becoming looser and tilting the balance of power away from sellers and towards buyers. "However, conditions in the mortgage market need to improve if the thousands of would-be first time buyers out there are going to be able to get their foot on the ladder in coming months," he added.

Self-assessment website down on deadline day

Thu, 31 Jan 2008 02:01:56 +0000

The HM Revenue & Customs (HMRC) self-assessment website is temporarily out of service, on the final day that taxpayers can submit their return. On Thursday lunchtime, the Self-Assessment Online site had been replaced with a continuity message, apologising "for any inconvenience that this may cause".Many thousands of people had been expected to file online on Thursday, after which any returns for the 2006-7 tax year would be subject to an automatic £100 late-filing penalty.A statement on the HMRC service availability page read: "We are currently aware that some customers may be experiencing problems with this service and are working with our IT service provider to give this our urgent attention."If you are experiencing problems please try again later. We apologise for any inconvenience this may cause."It is not clear when the service will return, or whether any users unable to post will be penalised. However, according to HMRC the problem "does not affect users of Third Party Software".

Homeowners go open-plan

Wed, 30 Jan 2008 04:00:46 +0000

The UK's homes have lost 2.9 million rooms in the last five years, according to a study from Halifax. The desire for open-plan living appears to be spelling the end of the formal dining room, with a reported 500,000 set to be demolished in the next 12 months alone. The study, which polled over 1,400 UK homeowners, concludes that if the trend continues the dining room will be 'extinct' by 2020. "Britons have clearly fallen for open-plan living and are looking at ways in which they can make better use of the space inside their homes," said David Rochester, head of underwriting at Halifax Home Insurance."In many ways it's sad to see the decline of the formal dining room, but it appears that they may have become superfluous to modern living where people are perhaps less likely to eat together."Furthermore, the report says that 170,000 utility rooms will be incorporated into kitchen areas and 125,000 studies will be knocked through to create bigger living quarters.

Call to keep HIP concession

Tue, 29 Jan 2008 12:37:09 +0000

The government should abandon a change to home information packs (HIPs) due in June, according to a campaign group. Under the current system, homeowners can market their property as long as they have commissioned a HIP, and that the pack is completed within 28 days of the property going on sale.The concession, known as "first-day marketing", was always intended as a temporary measure.Last month, the government announced that, from 1 June 2008, sellers must have obtained the completed pack before they can market their home.However, Sellers' Pack Law is not the Answer (SPLINTA) says that first-day marketing should be retained, and has created an e-petition on the 10 Downing Street website calling for its preservation.In notes on the petition, SPLINTA's Nick Salmon argues that the change "will cause delays for sellers wanting to begin marketing quickly and is an infringement of the personal liberty to sell a property at will".Commenting on the petition, which had attracted 3,700 signatures by Tuesday lunchtime, he added: "There is no sustainable argument in favour of ending first day marketing and the strength of feeling about this is making itself shown in the rapidly escalating number of signatures on the petition."