Rates are down. Should you overpay your mortgage?

[originally posted Thursday 15th January, 2009]

should you overpay?

According to the Council of Mortgage Lenders (CML) today, people moving house in November (latest figures available) typically 14.4% of their income on mortgage interest.

With the base rate moving downwards again since November, it’s likely that this percentage has reduced still further. Many investors are seeing dismal returns right now, so should you be overpaying your mortgage every month?

Not all lenders allow you to make additional payments, and if you have other, more expensive debt, it’s almost certainly advisable to clear that first.

I’m afraid the usual advice applies: talk to your Independent Financial Adviser and get some professional, financial advice first. If you’re not sure, just ask.

Banks forecast continued decline in lending

decline in lending

[originally posted Monday 12th January, 2009]

Each quarter the Confederation of British Industry (CBI) and PriceWaterhouseCoopers produce an annual survey of the financial services sector. The December 2008 survey, just out, starts:

The 77th CBI/PricewaterhouseCoopers financial services survey sees the industry adjusting to a rapidly worsening economic and operating environment. Levels of demand are falling fast and the outlook for revenues is unquestionably negative. The industry is entering a new phase of decisive cost cutting as it attempts to take control of its response to the downturn.

What does this mean you and me?

Basically, the organisations that were selling lots of mortgages and associated insurance products a year ago are simply not selling them any more, as a result of which they’re not making any money are focusing on cost-cuts instead.

If you need a mortgage (e.g. your current fixed rate or tracker is coming to an end) it pays to get professional advice from an Independent Financial Adviser (IFA) who is a specialist in the field. Don’t just go to the high street or assume that your existing lender is going to reward your loyalty by offering you the best deal!

Advice Forum gives you a platform for a no-commitment dialogue with an IFA who can advise you on the best mortgage deals for you and your specific circumstances.

Read the CBI/PWC financial services survey (PDF).

Bank of England base rate cut to 1.5%

[originally posted Thursday 8th Jan 2009]

lowest for 300 years!

Bank of England base rate is now the lowest since its foundation in 1694, that’s the lowest in over 300 years!

Should we be jumping for joy or wallowing in despair? The slightly disappointing answer is neither really.

If you’re a saver, you’ll be hit by dwindling returns. What’s the point in saving with derisory interest rates? There are still some good deals out there, but you’re going to need to move quickly. Is it time to stock up on “cheap” equities?

If you’re a borrower it’s generally good news, but banks are under no obligation to offer you cheaper credit. And credit, as we know, is harder to come by.

If you’re buying a house, should you act fast or wait to see whether property prices fall further?

What about investors? Have stockmarkets reached their nadir? Should you be moving your money around? What’s the wisest way to invest a lump sum right now? Should you be drip-feeding monies into asset-backed investments?

If you’re in work, will you have to work for longer (or even ’til you die)? Conversely, if you’re over 50, would it be better to access some monies early?

Retirees, annuity rates are likely to fall, what should you do? Can you afford to wait? If you’re in poor health, or a smoker, it’s more important than ever to consider your options fully.

The reality is, of course, most of us fit into more that one category, so the right move for your specific set of circumstances may not be straightforward. But the good news is that there are opportunities out there, if you’re clear about your goals.

Now is the time to contact your financial adviser for a comprehensive financial review.