A British Man's Take on Debt, Saving & Investing

Mortgage Rates. Where Next? Comments Off

Posted on January 14, 2014 by Lee

A press release landed in my inbox today that hit a nerve. Hard. It still hurts now…

Legal & General’s Mortgage Club  has today warned borrowers not to sleep walk into higher mortgage repayments. As speculation continues as to when the base rate is set to rise, with many commentators suggesting 2015, lenders will inevitably turn their attention to pricing in the change prior.

In essence, even if the base rate stays the same, what they are basically saying is we’ll raise rates anyway. Given – despite what anyone may have you think (you only need to look at the LIBOR scandal to prove otherwise), all banks are in it together. If one raises their rates – just as sure as you can bet all energy firms will follow – all banks will follow, too.

A quick analysis of the likely increase in repayments shows that a rise in rates of just 0.5% on a typical mortgage worth the UK average of £150,000 would amount to an extra £62.50 per month which equates to a not insignificant £750 per year increase in mortgage bills. And who is to say that any rate rises would be just 0.5%, and be limited to just the one rise?

The point of the press release was actually a reasonable one – and that’s to look for, and switch to if necessary, a decent fixed-rate product. If you’re currently sitting on an SVR mortgage, it’s time to start looking around for where to head to next. This isn’t immediately urgent, but something to start working towards in the coming months. The SVR bandwagon won’t be so rosy in 12-18 months time so it’s a great time – now, while you’re not under pressure – to start doing something about it and have a vague plan in place for nearer the rate-rising time.

Jeremy Duncombe, Director, Legal & General Mortgage Club says:

“Borrowers can’t afford to be complacent. Lenders will price in a change in base rate well in advance of any decision to increase and therefore the historically low rates we have seen in recent times are not going to be around for long. Borrowers should look at their options and talk to an advisor to tie down a more favourable deal while they still can. A mortgage is the largest financial commitment many of us will take out in our lives so it is crucial that borrowers make changes that are suitable for their own circumstances. Speaking to a mortgage adviser is the best way to understand all the options available and to secure one of the good deals that are still available at the moment.”

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Sainsbury’s growth increases pressure on Tesco Comments Off

Posted on January 14, 2014 by Lee

With reports showing like-for-like sales in the third trading quarter has grown by 0.2%, Sainsbury’s defied the fearful broadcasts of a 0.5% decline in sales, ensuring that previous retail behemoth Tesco are facing some serious questions today.

Joshua Raymond in a recent article stated that Sainsbury’s are in their 36th consecutive quarter of growth, which is nothing short of fantastic and astounding news for the grocery retailer.

It wasn’t all plain sailing for the company in the quarter as October and November showed disappointing results, but the Christmas period introduced a massive boost for the chain, helping them uphold their growth records.

Saved by Christmas

Total sales for the chain, not including fuel, grew by a total of 2.5%, though the pre-Christmas period almost put a spanner in the works. While Sainsbury’s maintain that customers were simply saving money for the festive season during the quieter period, industry experts have said that shoppers were in fact trying discounters like Lidl and Aldi but returned to what they knew last month..

The cut-price stores may have a lot to answer for thanks to shoppers choosing their cheaper priced products in spite of aggressive cuts by the likes of Tesco. When Sainsbury’s news was announced, I blogged predictions of a 1.5% decrease in like-for-like sales for Tesco, but the actual figures were a much more depressing 2.4% and a share fall of 4%.

Shareholder pressure

The news is sure to devastate already disappointed shareholders who have witnessed a decline in sales for the company over the two previous quarters. However, it’s not just Tesco who have experienced a fall, with Morrisons reporting a 5.6% fall. When talking to the BBC, Morrisons said of the results:

“The difficult market conditions were intensified for Morrisons by the accelerating important of the online and convenience channels, where Morrisons is currently under-represented, and by targeted couponing which was particularly prevalent in the market this Christmas.”

Cut-price rivalry

It was seem the big supermarkets, including Tesco and Morrisons, are quick to point the finger to the cut-price supermarkets which include the likes of Aldi and Lidl, with chief executive of Morrisons, Dalton Phillips, saying that the battle with discount stores was “significant” and posed “quite a challenge”.

However, the BBC’s business editor, Robert Peston, feels that the supermarket was far more likely to have suffered through its lack of online space, saying: “A retailer without a substantial online presence… is on a fast track to obsolescence.”

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Making changes for the New Year: What resolutions are most popular? Comments Off

Posted on January 14, 2014 by Lee

2014 is only a week old, so if you have a few things you would like to change about your lifestyle, now is a good time to start! Deciding what’s wrong is pretty easy, but can the same be said of actually following it up? A week into our resolution, it could seem a little too tough for us to go through with, leading us to give up and return to our old habits.

Even though it seems to happen every year, many of us have still made plenty of New Year’s resolutions for 2014 according to a recent survey. Changes to our health, finances and plans to acquire new skills featured among the most popular resolutions, but why? In the case of health and money, both come soon after Christmas, where overeating and overspending are the norm!

Thinner bodies, fatter wallets

Exercising more was the most popular answer, with 91% saying they were willing to do so. Eating right was a close second with 89%, while 26% said they wanted to get at least eight hours of sleep per night. All three are tougher than they seem, especially if those making these resolutions have to work full-time and juggle that with family commitments.

As far as finances go, 79% said they wanted to spend less money this year. Saving money can be done, especially if cutting out any habits such as drinking or smoking. Coincidentally, 87% said they wanted to drink less alcohol while 11% said they planned on giving up smoking for good at some point.

Being positive

James Dunworth  a Managing Director and Co-Founder of ecigarettedirect.co.uk said: “New Year is traditionally the time when we take a long hard look at our bad habits from the past 12 months and vow to do things better.

“While many of us decide to get more exercise and cut down on our bad habits, many others take positive steps to improve their lives by learning new skills or even changing their job or partner.

“There are many people who are planning to make such changes right now. It seems they are simply waiting to get Christmas out of the way before they turn their lives around”, he concluded.

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