News

The Co-operative Bank has launched a 25-year fixed rate mortgage - the new deal charging 5.99% through October 31st 2032.

It comes with a £499 application fee and a 5% early repayment charge until October 31st 2012, then 4% until October 31st 2017.

However, there are no higher lending charges. Meanwhile, free standard legal and basic valuation fees for remortgage cases, are on offer.

Customers can also make overpayments of up to 5% during the first 10 years.

Maximum LTV is 95% - the loan being fully portable.

Financial freedom begins in the mid-fifties, according to Birmingham Midshires’ latest ‘Life 2′ report. Indeed, the lender’s Life 2 campaign, which explores issues affecting the over 50s, has found that 55 is the age at which people discover their financial freedom and embark on their second life, free from some of their most pressing financial strains.

When quizzed on the financial burden posed by children, it found that in their early 50s, 47% of the respondents still have children living at home and are still supporting them financially (49%). Past the age of 55, however, just one in six of respondents have children still living under the same roof and three quarters no longer need to provide financial handouts to their offspring.

Figures also reveal that while 41% of those in their early 50s are still saddled with a mortgage, this figure halves to 22% of those aged 55 and over. Furthermore, 55% of respondents in their early 50s are still working the nine to five grind, whilst 23% of those aged over 55 have given up full time work.

Meanwhile, children acting as a financial drain on parents are most prevalent in East Anglia with almost half of respondents aged 50 and above still providing handouts. In Scotland, however, the figure is just 1 in 5.

Traditionally known to be careful with their money, Scots aged 50 and above are most likely to have paid off their mortgage in their fifties (80%), compared to 62% of people in East Anglia.

High street bank HSBC has bowed to pressure and announced it was putting on hold plans to scrap interest-free overdrafts for graduates.

The move comes after the National Union of Students organised a virtual protest on the Facebook website calling on students and graduates to boycott the bank, which attracted backing from nearly 5,000 people.

HSBC has now said it is not “too big” to listen to its customers, and has frozen plans to begin charging interest of 9.9% on overdrafts of up to £1,500 for people who graduated this year.

It added that it would also be refunding any overdraft interest it charged people during August.

Andy Ripley, HSBC’s head of product development, said: “Like any service-orientated business we are not too big to listen to the needs of our customers. Following the feedback from our graduate account holders, both directly and via the National Union of Students, we have taken the decision to freeze interest charging on 2007 graduates’ overdrafts up to £1,500 and refund any interest charged in August.

“We are also pleased that we will be working with the NUS to enhance our new account offer so that it fully reflects the needs of recent graduates.”

The NUS welcomed the move.

Gemma Tumelty, NUS president, said: “We are very pleased that HSBC have listened to the concerns of their student and graduate customers. NUS welcomes this decision and looks forward to future dialogue with HSBC about how their account offerings can benefit students and graduates alike.”

HSBC had decided to abolish the interest-free overdraft facility on its graduate account because it claimed many students were running multiple bank accounts to take advantage of interest-free borrowing facilities but did not plan to make HSBC their main bank. It also said there were high levels of bad debt on these accounts as students ran up overdrafts and then “effectively disappeared”.

The NUS protest was particularly embarrassing for HSBC as it came at the time of year when high street banks are competing against each other to gain new student customers.

Insurers are set to scrap an exemption that allows them to treat gay couples differently to heterosexual ones, a trade body has said.

The Association of British Insurers said insurers were currently able to take into account the fact that someone was in a civil partnership when assessing premiums for life insurance and other protection products.

But the group is proposing to abolish the exemption, saying there was no need for insurance companies to differentiate between people in civil partnerships and married couples.

It added that the majority of insurers did not differentiate between people on this basis, and all insurance companies would cease to do so by the end of August next year.

Nick Starling, Abi’s director of general insurance and health, said: “The insurance industry is united against discrimination and in support of treating people fairly.

“Insurers base their treatment of all customers on a fair and objective analysis of the risks they represent. It is sensible to differentiate, for instance, in the case of age or gender.

“But we do not seek exemptions where there is no case for one. There is no need for the law to provide for different treatment between civil partnerships and marriages.”

Alan Wardle, director of public affairs at Stonewall, said: “Stonewall supports the ABI’s proposal to abolish this exception.

“We trust the Government will repeal it at the earliest opportunity. Insurance premiums should be based on someone’s behaviour rather than their sexual orientation.”

Responding to the needs of Muslims who want to bank in keeping with their faith is “socially and politically right”, the Duke of York has told a Malaysian conference of Islamic financial experts.

Andrew said the opportunities in this specialised area were enormous and that the UK and Malaysia were well placed to work together in this field.

The Duke told delegates at the event in Kuala Lumpur that the global Islamic finance market was estimated at 500 billion dollars (£249 billion) - around 1% of total banking assets - but an annual growth of around 10%-15% was expected over the next few years.

He added: “The growth in Islamic finance industry is being driven because Muslims, and increasingly non-Muslims, everywhere are increasingly seeking to invest their earnings, take out mortgages and insure their assets in keeping with the principles of their faith.

“That applies not only in the Middle East or in a majority Muslim country like Malaysia. It also applies in the UK with our nearly two million Muslim population.

“Responding to their needs and wishes is socially and politically right; it is also good business sense, if we cannot meet their needs then they will take their funds to markets that can.”

Speaking at the one-day forum organised by the International Centre for Education in Islamic Finance, the Duke said: “I’m pleased to say British institutions can and are responding, through the Islamic Bank of Britain, which is a fully Islamic bank, also high street banks and building societies now offer Islamic products.”

Islamic banking has existed for centuries and has the same purpose as conventional financial institutions except it is run under Sharia rules.

Its basic principle is the sharing of profit and loss and a prohibition on earning interest from funds.

Andrew addressed the gathering of Islamic bankers, academics and scholars, which included Malaysia’s prime minister Abdullah Ahmad Badawi, in his role as the UK’s Special Representative for International Trade and Development.

People have more rights when they buy a kettle than they do when they buy a newly built home, a consumer group has warned.

Many people buying new homes face delays in moving in, while others are left with problems such as faulty wiring, badly fitting doors and leaking windows, the National Consumer Council (NCC) said.

But it warned that outdated laws were not geared up to help homeowners get these problems put right. The group is calling for a radical shake-up of the way the new-build housing market is regulated to ensure that homeowners get the protection they need.

Carl Belgrove, of the NCC, said: “Buying a house is probably one of the most expensive investments a person will ever make, yet people have more rights when they buy a kettle.

“Late completion can be a nightmare for many families as they find themselves out of pocket, paying rent and storing furniture, while they wait to move into their new home. Others face a battle to sort out snagging problems. With the Government planning to build three million new homes it’s vital that measures are put in place now to protect homeowners of the future.”

The NCC’s report, which comes in response to a study by the Office of Fair Trading into new-build housing, found that consumer satisfaction with new homes was declining. Around 29% of new-build property developments are now deemed to be of poor quality, and one in four buyers would not recommend their house builder to a friend.

Recent mergers have also cut the number of house builders and developers, reducing both choice and competition. At the same time, the group found that many homebuyers were receiving poor after-sales care. The average new home has 100 problems which need fixing, and new homes take time to “settle in”, meaning that many problems do not become apparent until later.

A spokesman for the Department of Communities and Local Government said: “The Government takes design and construction quality seriously and believes that both are essential to the creation and maintenance of places where people want to live and work, and which will stand the test of time.”

Meanwhile, house price growth picked up during August with the cost of the average home in the UK rising by 0.6%, figures have showed.

The rise, which was well up on the previous month’s increase of 0.1%, pushed average house prices up to £183,898, according to Nationwide Building Society. But the annual rate of house price inflation continued to slow during the month, dropping slightly to 9.6%, down from 9.9% for the year to the end of July, further contributing to growing evidence that the market is coming off the boil.

The average mortgage taken out by a first-time buyer has nearly tripled during the past 10 years, figures show.

In 1996 people borrowed an average of just £39,811 to get on to the property ladder, but this had soared to around £120,500 by 2006, according to online mortgage group mform.co.uk.

The group said this was an increase of 173.6%, or around 10.7% a year, and it warned that if borrowing continued to increase at this rate, the average first-time buyer mortgage would be more than £200,000 by 2012.

Francis Ghiloni, marketing and business development director at mform, said: “First-time buyers increasingly need to find huge sums of money in order to get on to the property ladder.

“For a first-time buyer to take out a mortgage that is three times their salary today, we estimate that they would need to be earning £40,190, but by 2012, it would need to be a staggering £66,806.”

Parents need to carefully consider the legal, tax and emotional implications of helping their child buy a house, a consumer group has warned.

Just under 40% of people aged under 30 who bought their first home last year are thought to have received some form of financial assistance from their parents, according to consumer magazine Which?.

This figure is likely to increase going forward, with the average first-time buyer home now costing £151,923, more than six times the average annual salary, rising to £258,062 in Greater London.

Which? said financial help from parents could take many forms, ranging from contributing to legal fees or the deposit, to making a monthly contribution to the mortgage.

But the group warned parents to consider the legal, tax and emotional implications of helping their child before they handed over any cash.

It said parents could come to regret their generosity if they thought their child was taking advantage of them, while they could also find themselves out of pocket if their child sold the house without their permission or defaulted on their mortgage.

In addition, they could also lose their stake if their child got divorced and their ex-spouse was awarded the property as part of a divorce settlement.

Which? said parents needed to be clear at the outset whether they were making a gift or a loan or an investment, and it advised people making a loan or an investment to have a solicitor draw up a legally binding agreement setting out the nature of the arrangement.

It also urged parents to fill out a HM Land Registry form RX1 so that the property could not be sold without their consent.

Parents also need to consider the tax liabilities of investing in their child’s property, as they are likely to have to pay capital gains tax on any profits above the current limit of £9,200 per person they make when the property is sold.

Nearly three million Child Trust Funds have now been opened, but six out of 10 parents are failing to pay extra money into them, new figures have shown.

Nationwide Building Society said 60% of parents were failing to top up the initial investment they received from the Government, as the first children to benefit from the accounts turn five.

Their figures were echoed by data from The Children’s Mutual, which said only 43% of parents were topping up the funds, paying in an average of £24 a month each.

The mutual said making contributions of this level would give children a lump sum of nearly £10,000 when they were 18 if the money was invested in shares, compared with just £1,200 if the £500 contributed by the Government was not added to.

Matthew Carter, Nationwide’s savings director, said: “We are disappointed that so few funds see additional top-ups because, just by saving even the smallest amount, parents, family and friends can ensure that every eligible child, when they turn 18, will have a substantial amount of money saved.

“To get the most out of the Child Trust Fund parents should invest their child’s voucher early to ensure they receive the full 18 years worth of interest or investment growth that they are entitled to.

“Encouraging a culture of saving in children can make a real difference to their lives and by topping up their Child Trust Fund on a regular basis, parents can really help to give them a head start in life.”

Under Child Trust Funds the Government gives children born on or after September 1, 2002 a £250 voucher, with children from less well-off families receiving £500, to be invested.

They receive a further £250 from the Government when they are seven, and parents, friends and relatives can pay up to £1,200 into the accounts each year.

The number of people planning to buy a home abroad has increased by nearly 10% during the past six weeks, a new survey has shown.

Just under one in four people are now considering buying a property overseas, up from 14% six weeks ago, according to foreign exchange provider Foreign Currency Direct.

The main reason people gave for wanting to buy abroad was that it was a good investment, cited by 16%, while 11% said they had recently received a windfall.

But one in 10 Britons said it was a longing for a better climate that had made them consider buying a home overseas.

Londoners are most likely to be considering buying a property abroad at 28%, while those in the Midlands are least likely at just 21%.

Peter Ellis, chief executive of Foreign Currency Direct, said: “It is no surprise that the number of people considering bailing out of Britain is on the increase.

“We have had a truly miserable summer and property abroad continues to offer attractive investment opportunities.”