The Truth About Mortgages

1997: The Borrowers – Hewitt
The FSA published its review of the mortgage market on Friday. This did not make happy reading. Since the credit crunch crisis began (and yes I do not believe it is over) the difference between the rate that people borrow at and the Bank of England base rate has widened. Prior to the crunch, the average difference or “spread” between 2005-2007 was only 0.50%, it is now above 3.0%. The difference might be described as profit to the lender.
I’m still amazed to see that as of Q1 2012, income is only verified for around 70% of  “low risk” borrowers – meaning that they are remortgagers and movers. “Higher” risk borrowers such as first time buyers have their incomes verified in 87% of cases, which the FSA think is an improvement on the lower level of around 70% in 2008. I don’t see why income is not verified in every case, unless there are exceptional circumstances. Even assuming sensible lending based on verified income, this would suggest that there is a margin for error of around 30% which is hardly inspiring confidence in the market.
Financial Advisers (rather than Banks) used to arrange around 64% of mortgages, now this has reduced to around 46%-56% according to the FSA. This reveals a growing market share of mortgages sold directly to consumers by Banks and Building Societies.
In terms of what people can borrow, there seems to be a shift by lenders, some of whom are lending 4.5x to 5.5x income. However compared to pre-crunch, lenders are not offering as many high multiple lending. This is precisely why a specialist mortgage broker (not me) is required to source the best mortgage based upon your circumstances, particularly as the number of mortgage products is returning to pre-crunch levels, but still lower at 2,991 different mortgages available. This is despite the fact that there are still relatively few mortgages requiring a deposit of 5% or less, although more are becoming available. The bulk of borrowers  now have 25%-50% deposits. The proposition of interest-only mortgages has also reduced considerably, though this was a general trend over the last 10 years. The balance of power has altered, in part due to the collapse in the number of financial advisers offering mortgages, (which would include ourselves) almost halving since 2005. The result has been that the top 20 mortgage lenders have gained an increased market share, now at 94% of the entire mortgage market, I suspect you could name them all. On the whole, though mortgage sales have remained fairly static since 2009 at less than half the amount it was in 2005.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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The Truth About Mortgages2017-01-06T14:39:55+00:00

Banking On Full Information

1958: The Whole Truth – Guillermin
I put in what I believe to be sensible caveats about a list of top rates being paid by Banks and Building Societies. The regulator’s own website is fairly brief when it comes to checking the Banking licenses. They have several points at which you can access information, though it would be more helpful if they could simply provide pdf, word or excel document that lists all banks and their licenses. The website “UK Banking Brands and FSCS Cover” at the moment (in July 2012) simply shows the main banks in Britain. These are the Bank of Scotland, Barclays, The Co-Operative, Halifax, Lloyds, Nationwide, NatWest, RBS and Santander. These are some of the biggest names, but of course often not shown as those that pay the highest deposit rates. Not exactly “whole of market”.
The important thing to remember is that the FSCS cover is up to £85,000 per person, per banking license. So generally it is not advisable to hold more than this amount, in fact to be on the safe side £80,000 before any interest is paid.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Banking On Full Information2017-01-06T14:39:56+00:00

Cash ISAs and Doomsayers

1950: Edge of Doom – Robson
Here’s your updated Cash ISA and instant access account information. Remember this is a list (and not a very long one), it is not advice. The only advice here is to ensure that you know the compensation limits on bank accounts as outlined by the FSCS, which means not holding more than £85,000 in any account with any bank or group of banks under the same banking license. Be wary of any bank that offers the top rate, think about why they may wish to hold your money.
Instant Access Accounts
Online: ING 3.24%
Bank: Virgin Money 2.60%
Building Society: Manchester 2.81%
Cash ISA Variable
Online: Santander 3.30%
Bank: Santander 3.30%
Building Society: Market Harborough 3.00%
Cash ISA Fixed
Online: Governor Money 4.05% Fixed for 5 years
Bank: Halifax 4.15% Fixed for 5 years
Building Society: Kent Reliance 3.75% Fixed for 5 years
You may be aware that the UK’s inflation figures came out today. CPI (the Consumer Price Index) have fallen to its lowest level since November 2009 and is 2.4% but above the 2.0% Bank of England target. RPI is 2.8%. So by these figures all of the accounts shown above now beat CPI, so accounts are now heading in the right direction. This comes on the back of more miserable news from the IMF which has downgraded Britain’s GDP (growth) forecasts considerably. It seems that the world is currently full of doomsayers, which don’t forget is a very easy position to hold when being wrong is actually good news.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISAs and Doomsayers2017-01-06T14:39:59+00:00

Cash ISA Update

2010: Conflict of Interest – Manning
As usual, for the sake of the hard of thinking, I need to state that this is not advice, but a list of some of the better rates available “out there”. You should always check the detail and I recommend doing so via the Moneyfacts website as your starting point. Remember the rules about consumer protection – only the first £85,000 is covered by the compensation scheme (FSCS) and be warned that there are a number of Banks that come under the same Banking license. I would be unwise to speculate about which Banks may have liquidity problems, but a glance at the media would suggest you are more circumspect of those that from within Portugal, Ireland, Greece and Spain, which may provide you with a conflict of interest.
Instant Access Accounts
Online: Coventry 3.15%
Bank: Virgin Money 2.60%
Building Society: Nottingham 3.25%
Cash ISA Fixed Rate
Online: Bank of Scotland 3.80% (4 years)
Bank: Halifax 4.25% (5 years)
Building Society: Kent Reliance 3.75% (5 years)
Cash ISA Variable Rate
Online: Santander 4.00%
Bank: Barclays 3.05%
Building Society: Nationwide 3.50%

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Update2017-01-06T14:40:02+00:00

Cash ISA Latest Rates

1964: Time of Indifference – Maselli
It has been a little time since I last updated the blog with some of the top rates. Please note that I am often very suspicious of top paying rates. When a bank or building society offer the best rates, it does not mean that they really are the best, in current times it is more likely to mean that they are the most hungry for new funds, which may mean that they want to be competitive, but may also mean that they need the cash more than their competitors. So please treat such lists with a degree of caution. You should also always check the details carefully – making sure that it really is an account that you want. Finally – compensation is very much the word of the day, so make sure that your accounts are within the FSCS compensation limits.
Instant Access Accounts (£5,000 deposit)
Online: Coventry 3.15%
Bank: Virgin Money 2.85%
Building Society: Nottingham 3.25%
Cash ISA – Variable Rate
Online: Santander 4.00%
Bank: Barclays 3.05%
Building Society: Nationwide 4.25%
Cash ISA – Fixed Rate
Online: RBS 4.20%
Bank: Halifax 4.50%
Building Society: Yorkshire 5.00%
Cash ISA rates are generally not a lot better than standard deposit accounts at the moment, so there is very limited tax advantage with a Cash ISA at present.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Latest Rates2017-01-06T14:40:03+00:00

Cash ISA Rates – No Strings Attached

2011: No Strings Attached – Ivan Reitman
I have had a reasonable number of emails and discussions about Cash ISAs of late. So I will stick my neck out and say I have a favourite Cash ISA (ING). Its not on this list – which is a list of “top rates” but frankly a bit of digging into most of them and you find an “if”, “but”, “maybe” and a string or two. You should always check the detail (as I drone on with each of these posts) and don’t forget to ensure you understand the availability of compensation (if the Bank collapses) covered by the FSCS.
Instant Access
Comment: I like all of these and the rates are almost as good if not better than variable rate Cash ISAs (which are untaxed) which has its own story. I like Virgin – I believe the hype that they try to do a better job than others in a fairly poor industry sector. Building Societies tend to have a deeper place in my heart than a Bank and both Coventry and Manchester are Building Societies. The Coventry account has an inflated rate for the first year (extra 1.15%) and actually you can only make 4 penalty free withdrawals a year. Manchester BS similarly actually provides 3 penalty free withdrawals.
Cash ISA Variable Rate
Comment: An alternative to these, is ING at 3.00% and its a great online account.As a Bank this is one of the best rates and its a fairly staright-forward application process. You may also wish to consider M&S Money.
Cash ISA Fixed Rate
Comment: Remember that with fixed rates comes reduced access (or loss of interest). By fixing a rate of interest for a relatively long time, you are taking a fairly big bet on where interest rates are going. You will recall that today they are at rock bottom, having been there for 3 years.
Today I have not put information about the One or Two Year deposit accounts. Having spent a bit more time digging around the data that Moneyfacts pulls up you really do need to read it carefully to ensure you are getting what you asked for. Remember this is not advice, its a list of rates.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Rates – No Strings Attached2017-01-06T14:40:06+00:00

Cash ISA Rates – Strictly Ballroom?

1989: Tango and Cash – Konchalovskiy
A number of clients have been asking about deposit rates and which is the best Cash ISA. I’ve updated the list here, remember that this is not advice, just a list of some of the top rates. Please note that one of the Bank tricks is to entice with a short-term higher rate (a bonus rate) and often this would be withdrawn if you move money away. Also note that sometimes a higher rate may be payable as a bonus, but effectively turns a variable rate account into a fixed rate because of the need to hold the funds for a fixed period of time to receive the bonus. Yes, clarity is one of those things lacking in the marketing of interest rates. It shouldn’t be permitted. Banks tend to lead customers on a merry dance and few people would disagree with the sense that they’ve been tangoed, nothing strictly ballroom about the rules of marketing it seems. Remember to check the details, also remember the compensation limits of £85,000 per account owner per Banking License (not necessarily per Bank).
Instant Access
Online: Coventry 3.15%
Bank: Virgin Money: 2.85%
Building Society: Nottingham 3.25%
One Year Deposit
Online: United National Bank 3.30%
Bank: Santander 4.20%
Building Society: Leeds 4.51%
Two Year Deposit
Online: Nottingham 3.85%
Bank: Halifax 3.70%
Building Society: Progressive 3.75%
Cash ISA Variable Rate
Online: Santander 4.00%
Bank: Barclays: 3.05%
Building Society: 3.10%
Cash ISA Fixed Rate
Online: NatWest 4.20%
Bank: Halifax 4.50%
Building Society: Barnsley 5.00%
I would advise checking Moneyfacts, who provide a free online service to check rates. Have a good look at the detail. Remember though that the effort involved in moving an account may be somewhat overstated when rates are so dreadfully low. As ever, caveat emptor.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA Rates – Strictly Ballroom?2017-01-06T14:40:07+00:00

Cash ISA – time running out for the tax year

1965: The Truth About Spring –  Thorpe
As a financial planner that update you about financial products, without bias, here is today’s update about the top rates around for cash accounts. Please check the detail, this is a list to aid searching rather than a list of approved Banks, it is not advice (I’m sure that you have figured this out for yourself by now). Have a look at Moneyfacts for more information and detail and please remember the protection offered by way of the FSCS which is capped at £85,000 per person per Banking Licensed Bank. I have blogged about this before so won’t repeat myself here again.
Instant Access
Online: Coventry Building Society 3.15%
Bank: Virgin Money 2.85%
Building Society: Nottingham 3.25%
One Year Deposit
Online: United National Bank 3.30%
Bank: Santander 4.20%
Building Society: Leeds 3.35%
Two Year Deposit
Online: Nottingham 3.85%
Bank: Halifax 3.70%
Building Society: Progressive 3.75%
Cash ISA Variable Rate
Online: Santander: 4.00%
Bank: Barclays 3.05%
Building Society: Newcastle 3.05%
Cash ISA Fixed Rate
Online: NatWest 4.20%
Bank: Halifax 4.50%
Building Society: Yorkshire 5.00%
As anyone possessing an ounce of wisdom will appreciate, these rate are likely (certain!) to alter. The tax year end is rapidly approaching, which for anyone not using their ISA for long-term wealth creation, the Cash ISA element is available. However, if you are a client, do check with me first. Oh and if you haven’t heard of United National Bank (few in the UK have) it is the product of the merger between United Bank and the National Bank of Pakistan.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Cash ISA – time running out for the tax year2017-01-06T14:40:07+00:00

Good Bank… Bad Bank?

1945: The Lost Weekend – Billy Wilder
The most expensive financial costs are probably your pension, closely followed by a mortgage. So today’s news of further lenders increasing their standard variable rate, despite the Bank of England retaining their base rate at 0.50% will cause many to question the ethics of Banks again. Today, Clydesdale and Yorkshire (readers of this blog will know that they are part of the same organisation) have decided to increase their standard variable rate from 4.59% to 4.95% from 1st May. This will mean increased borrowing costs for about 30,000 of their customers. However there is a slight twist, they also seem to suggest that if you wish to move to a different lender and do so before the end of July any exit fees (early redemption penalties) will be waived.  One might question why lenders would be helpful, I would suggest that this is all part of a timed strategy to tidy up a mortgage book and continue to work on improving their own balance sheet.
It often surprises me when I read industry statistics about how few people review their mortgage, yet will seem to get very worked up over the price of petrol – which is an insignificant cost when compared against a mortgage. This is something that as a financial planner I would encourage you to do. Solomon’s do not arrange mortgages, but we can put you in touch with an excellent mortgage broker that can help you. However the first thing you should do is to contact your existing lender to determine what deals they would offer you as an existing customer, once you have this information a full assessment of the market will have some context.
Banks and Building Societies are set up to make money from you and whilst it may appear to be a significant effort to move from one to another, these days things have improved. The market is a competitive one, but most rely on your inertia to make the bulk of their profits, which in turn makes them lazy and makes for a less competitive market. So as you head off for the weekend, get out your mortgage statement and have a look at your rate, compare this against a Bank of England base rate of 0.50% and consider how much over the odds you are really prepared to pay, then consider how you might better use some of this to achieve other goals, even if its just being able to feel a little better at the petrol pumps.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Good Bank… Bad Bank?2017-01-06T14:40:07+00:00
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