‘HSBC launch 1.9% mortgage deal’
September 25, 2009 at 1:18 pm
Mortgage rates have been going up slowly recently, but there are now signs of a looming price war on the way. First Cheltenham & Gloucester and Woolwich lowered their mortgage rates, and now HSBC is getting in on the act with a new 1.99% mortgage deal.
Initially it looks very attractive, but experts have warned homebuyers not to expect a proper price-war just yet as the deal comes with quite a few catches.
Although the starting rate of 1.99% means it is the cheapest available mortgage on the market at the moment, the significant drawback is that you need to come up with a massive 40% deposit to take advantage of it. On top of that, there is an arrangement fee of £1,199.
And if you pay a deposit of just 25% of the property value, the interest rate goes up to 2.49%.
This is a discount mortgage, meaning that the rate changes in line with the SVR (Standard Variable Rate). At the moment this is 3.94%, but this usually alters in line with changes made by the Bank of England. Predictions in the market suggest the Bank of England will not increase interest rates until 2010, meaning it could be a great time to take advantage of the cheap deal if you are able to.
However, as you never know when rates are going to change, it is usually a safer bet to go with a fixed-rate mortgage.
The mini price war comes after campaigners recently expressed their fury that the savings in wholesale funding costs being made by the banks had not been passed on to customers. The banks are finally starting to drop their rates in response, but hopefully this is just the beginning.
‘Compensated quickly and fairly for any unfair charges’
September 25, 2009 at 12:58 pm
The Conservative Party leader, David Cameron, has said that "bank customers must be compensated quickly and fairly for any unfair charges that they have had to pay."
He has now asked the Shadow Chancellor, George Osborne, and his Shadow Treasury Team to look at the "suggestion that banks should pay money back automatically if the courts do rule that the charges are unfair."
Mr Cameron was writing in answer to a letter from the founder of MoneySavingExpert.com, Martin Lewis. Mr Lewis, through his website and appearances in the media, has been a long-term opponent of unfair bank charges, claiming that the banks make between £2.5 and £3.5 billion a year from these charges. To help bank customers reclaim bank fees Mr Lewis offers free bank charge template letters on his website, and to date approximately 6 million of the templates have been downloaded.
The banks are waiting for a House of Lords appeal to be heard against the High Court judgment on a test case against excessive bank charges. A decision is expected this autumn. Nat West and RBS have taken the initiative and announced on 7 September 2009 that, amongst other reductions, they are lowering the price of unauthorised overdrafts to £5 from £38.
Nick Clegg and the Liberal Democrats have also backed the suggestion that unfair bank charges should be repaid automatically, bailing it as ‘an extremely good idea.’ The Government has published its own White Paper on financial regulation with proposals to create a body to instigate group compensation schemes. This does not mention the automatic repayment of the charges.
Online bankers ‘vulnerable to fraud’
September 18, 2009 at 1:43 pm
Several high street banks peddle insecure online banking facilities, a report commissioned by Which? Computing has revealed. The advisory group claimed that HSBC, Halifax, and Abbey National have negligible security measures, exposing many of their customers to fraud.
Which? drew attention to the spread of illegal keystroke loggers – viruses that collect keyboard input data and transmit it to a remote location; a hi-tech bugbear that contributes to the theft of around £52.5m a year.
Online, Halifax’s internet banking venture requires the customer to input their username and password before answering one of three set questions – data that can easily be stolen by rogue programs.
The Royal Bank of Scotland and NatWest also depend on a similar security system, which begs the question why, when millions of customers have placed their money and their livelihood in their hands, are banks leaving the front door wide open?
Halifax claims that ‘invisible’ security measures are responsible for keeping its customers safe. A 128-bit encryption tool (a ‘stream cipher’ in web jargon) prevents unauthorised access to its websites.
Barclays and TSB, both of whom make use of alterative security systems, favouring drop-down menus for password insertion, won the hearts of the Which? panel. Barclays’s PINsentry, a graphical Chip-and-PIN interface, also drew praise from the judges.
One of the best defences against keystroke loggers, Trojan horses, and computer viruses, is a firewall, a piece of software that comes bundled with the Windows operating system. Microsoft also offers a small security package – Windows Defender – that protects against adware and spyware.
For help configuring Windows Firewall, visit the Microsoft website – for Vista users, and for XP users.
‘Debit cards may be bad news abroad’
September 18, 2009 at 1:41 pm
If you have been on holiday abroad recently and been using your debit card as a means of withdrawing cash from ATMs or for paying bills in restaurants, hotels, shops and petrol stations, you may be in for a nasty surprise when you check your bank statement.
More and more banks have taken to charging customers hefty fees for using their debit cards abroad and the point has come when travellers should start giving serious consideration to opting for a pre-loaded card, specifically designed for use abroad. The idea is similar to that of prepaid mobile phones and the card looks just like a credit or debit card.
Prepaid currency cards are available from a growing number of places including many of the High St banks, the Post Office, Travelex and specialists such as FairFX and CaxtonFX.
Using a debit card to get cash from an ATM abroad costs around 2.5% of the amount withdrawn or a minimum of £3, compared to no fee at all from many of the prepaid card providers. If you are unlucky enough to have your card swallowed up by the machine abroad it can be extremely difficult to arrange for a replacement to be issued and delivered. Likewise if you have your debit card stolen it is one thing arranging to have it cancelled but another one to arrange for a replacement. In the meantime you could be stuck with no means of supporting yourself financially. Many of the pre-paid cards can be replaced within 48 hours, regardless of where you are in the world.
If you use your debit card to pay a bill in a restaurant you may not notice, since it is not shown separately on your statement, but you will be charged a “loading” fee of 2.75% by almost all providers. Then there is the “point of sale” fee, charged by many High St names; this varies from £1.50 to £2 each time you use the card. There are no fees of this nature associated with pre-paid cards
Currency fluctuations can make it hard for you to keep track of what things are costing you on a daily basis. With a pre-loaded card you know exactly what the rate of exchange was when you loaded it. Talking of exchange rates, debit cards very rarely give a competitive rate of exchange, whereas bodies such as Claxton FX offer to refund the difference if you find a better exchange rate anywhere else.
Terms and conditions vary from card to card so customers are advised to read the small print carefully.
‘Economy: Back in the Black’
September 14, 2009 at 2:41 pm
Optimism is a tricky business. Ever since the UK recession began, some eight months ago, business gurus have kept their rifles loaded, determined to shoot down mad idealists before the media gets hold of the news.
The now-notorious ‘green shoots’ comment – coined by one Norman Lamont during the Great Recession of 1991 – has crossed the lips of countless professionals over the past year. Only in August, as the credit beast stomps over the horizon, is the public allowed to take it seriously.
On the 17th August, the Bank of England (BoE) declared an end to the recession by December 2009. Inflation rates remain frozen at 1.8%, but many British executives are witnessing profits rise for the first time in two years.
In June, the BoE was adamant that the economy was still foundering in the dark. Dr. Andrew Sentance, policy maker for the bank, believes that a low interest rate and an improved global economy contributed to the bank’s change of heart.
Investors are permitted their pessimism, however. Some experts believe that Britain is at the mercy of international banks, and will remain in the red until the economy settles in the US and in Europe.
With around twenty European countries still struggling to claw their way out of recession, the BoE’s newfound optimism may be short lived.
History has a few lessons to teach: compared to the Great Recession of 1991, the UK economy is ‘recovering’ some twenty-two months – almost two years – sooner than expected.
Whether the recovery is sustainable is another question altogether, but consumers can be forgiven for hoping for a white knight to steer all these black clouds away.
‘HSBC brings smiles to 5000 faces’
September 14, 2009 at 2:40 pm
In the last twelve months HSBC has brought a smile to the faces of 5,000 customers who have been “reunited” with money which they had forgotten about. The campaign, launched last September, has focused on 40,000 savings and current accounts which contain a massive £38.8 million and which have not been active since 1994.
It may seem hard to believe that people could forget that they have these accounts but, according to Brendan Cook of HSBC, money can lie in dormant accounts for a number of different reasons.
Often when people die, accounts do not come to the attention of the administrator. As well as that, accounts with small amounts of savings are forgotten about and large sums are often just left to be used in an emergency.
With some 35,000 accounts still waiting to be “claimed” by the owners and with an average of £1,000 in each, there are a lot of people out there who could find themselves with a welcome windfall.
Under new legislation to be introduced later this year, money in accounts which have been dormant for 15 years will be able to be used by the government for social programmes, although it will be returned to the account holder should they contact their bank at any time.
If you think you may have money in a dormant account you should contact your bank with as much information as possible, including any previous addresses, the name of the branch at which the account was opened, the approximate date on which the account was last used and a rough idea of the amount in the account.
If you have details of the account, you can get further information on how to claim it here.
‘Northern Rock crumbles’
September 4, 2009 at 4:09 pm
Northern Rock’s tale of woe looks set to continue after bosses announced losses of £724.2m over the first six months of 2009.
Despite robbing the taxpayer of billions of pounds, nationalisation has done nothing for the fortunes of Northern Rock – successive bailouts have eaten almost £11bn in government rescue packages, with no end in sight.
It begs the question, why, when millions of people are struggling to find work, is the government continuing to support a company that may never be able to return to private ownership?
The answer is not obvious.
Pre-empting its collapse, Northern Rock encouraged many of its customers to switch banks, a move which pulverised consumer confidence, and may have crippled its crusade to generate £5bn in fresh loans before the end of the year.
Even when solvent, Northern Rock earned less than 9% of the profits collected by its closest rival, Barclays, and a meagre 5% of those accrued by Chinese finance colossus, HSBC.
Rising employment is the biggest thorn in Northern Rock’s side. The bank shored up much of its capital in mortgages and the housing sector – a market that could slip further before the end of 2009. Unfortunately, with unemployment at almost 2.5m, many people are unable to afford their mortgage repayments. The government, and by proxy, the taxpayer, might as well be stuffing its money down the toilet.
In similar news, Lloyds-TSB has lost almost £4bn over the last six months, as debts accrued from the acquisition of HBOS begin to pile up. Toxic assets and sour loans have been blamed for the slide.
The resurgence of investment banking – particularly in the case of Barclays’s BarCap division – has led some experts to comment on the stability of the banking sector. Consumers are advised to be cautious, however, as some banks may be lending beyond their means, doling out “too much, too soon” in an effort to rebuild the economy.
