Yorkshire Building Society has launched the cheapest 10-year fixed rate mortgage on the market at 4.99%. To access the deal, you have to have at least a 25% deposit – or own 25% of your home – and you would have to pay a fee of £995.

With this deal, you would pay for all of your legal fees and valuation costs. But if you wanted to avoid paying these, then you could go instead for its 5.09% rate – which gives you £250 as well if you are moving home. But you should check how much your fees would actually cost you, as on a high value mortgage, you could find you are paying far more in interest over the years than you are spending in fees initially.

Yorkshire has already got one of the best three-year fixes too, offering a market-leading 3.89%, again with a £995 fee. However, Chelsea Building Society has a three-year fix at 3.69%, again for 75% loan-to-value (LTV). The arrangement fee is lower than Yorkshire’s too, at £495, and you can get this deal on loans up to £500,000.

To fix or track? That is the question

However, with interest rates held at their record low of 0.5% for the 15^th consecutive month by the Bank of England Monetary Policy Committee, many people are split between whether they should fix their rates or take a tracker. The latter will keep their payments lower for now, but you risk losing out if rates start to rise.

For example, First Direct’s tracker is currently at 2.29%, with a crazy low booking fee of £99, with free legal fees, and no redemption charge. The catch? You have to own at least 65% of the property you want to mortgage or remortgage.

Split the difference

However, HSBC, the parent of First Direct, has a product that will solve the problem – you can literally fix part of your mortgage and track the other on its Split Loan Mortgage, so you are getting the best – or perhaps the worst, depending on how interest rates move – of both worlds.

You can fix at least 25% of your mortgage for up to seven years, and the longer the fix the higher the rate.

For example, for a 70% LTV, the two-year fix and starting tracker rate is 2.49% if you fix 25% of the loan and track 75%. Take that up to a 50:50 split – which most customers are going for, according to the bank – and the rate for each part goes up to 2.69%, rising again to 2.99% if you want to fix 75% of your loan. At 80% LTVs the rates start at 2.99% on a 25%/75% fix to tracker split.

If you want to fix your rate for five years, the HSBC split rates would start at 4.79%, with an arrangement fee of £999.

However, without a doubt the best way to be sure you are getting the right mortgage for you is to speak to a mortgage broker who can search the entire market for you.

The Government has outlawed this practice, known as ‘negative payment hierarchy’ from the end of the year. But both AA and MBNA are taking the initiative and applying the change from September 1, four months earlier than they need to. This is good news, as MBNA provides cards for a number of credit card providers, so it will have a big impact in the market.

While they should be applauded – at last – for making the change to help their customers, the majority of other card companies are still not playing fair when it comes to the order of payments. Nationwide, Saga and Virgin are the other companies already applying these fair payment terms, the rest are lagging far behind.

The problem

Around three in five of us have no idea we are being fleeced in this way*, which helps the credit card providers get away with it.

The main issue arises when you use the same credit card for balance transfers as you do for purchases. Because a much higher rate is applied to purchases than to 0% balance transfer deals, if you end up using the same card to buy goods, you will end up out of pocket.

For example, buying something worth just £50 on a balance transfer card with £2,500 worth of debt already transferred could end up costing you £106 in a single year*, thanks to the order your payments are applied to your credit card debts.

To make more money out of you, most credit card companies will pay off the debt that costs you the least first. So any payments would initially go onto the balance transfer amount you have on the 0% deal – let’s face it, they are not making money out of you on that, and that is what they are in business to do.

That leaves any amount you have put onto the card for purchases, which could be facing interest of anything around 15% plus over the year, racking up the pounds in interest for the credit card provider.

The solution

But you don’t have to put up with it. You can switch to one of the other cards that does not pay the debts off in the most expensive order for you, or better still, use one card for balance transfers, and another for purchases – that way you are sure you are getting the best deal on both.

At the moment, the best cards for balance transfers are with Yorkshire Bank Gold MasterCard, which offers 0% on balance transfers for 16 months, with a fee of 3% of the balance transferred. After this, the rate goes to a typical rate of 16.9% APR. However, it’s only available to existing customers, which might mean that a lot of people don’t qualify.

The next best offer is probably the Barclaycard Platinum Card which is offering 0% on balance transfers for 15 months, with a fee of 2.9% of the balance transferred, and the rate goes to a typical 16.9% APR.

For purchases, you can get 0% deals for 12 months with the Barclaycard Platinum with Purchase Visa, and the Sainsbury’s Finance Mastercard for Nectar Card Holders – both of which revert to a typical APR of 15.9%. As the name suggests, you have to have a Nectar card to get the Sainsbury’s Finance offering, but there are no extra hurdles for the Barclaycard Platinum.

If you have purchases on your credit card and a balance you have transferred, now would be a good time to look at switching your cards to get a better deal – and pay off your balance sooner.

There is a catch

The catch with Sainsbury’s Finance is you have to have a Nectar card to apply for it, hence the name – the Nectar Cardholder Personal Loan – and you have to be a new customer. For these reasons, we prefer the Alliance & Leicester loan, which is available at the same rate but can be accessed by new and existing borrowers, without any additional hoops to go through.

Nectar is the points card used by Sainsbury’s shoppers – and plenty of other stores and companies are signed up to the same scheme – to get discounts on goods and services. If you are already a Nectar card holder, you will also get double Nectar points on your shopping for the next two years if you take out the Sainsbury’s Finance loan. Good news if you shop at Sainsbury’s, as it will give you an extra £52 worth of points each year if you spend £50 weekly on your Sainsbury’s shop.

Save £170 A Year On £10,000

Whether you go for Alliance & Leicester or Sainsbury’s Finance, you will save a serious amount of money with this rate. The average rate on loans between £7,500 and £14,999 is 9.5% – so this is nearly a fifth lower. The saving is significant too. On a £10,000 loan at 9.5% you would pay interest of £950 a year. At 7.8% it drops to £780 a year – saving you £170.

Tesco Bank has the next best rate at this level of borrowing, with 7.9% on its personal loan. This is available to new customers only, and you would also pay a penalty of 30 days’ interest if you repaid it early.

Can you really get it?

If you have a good credit rating, then you should be able to get hold of the top rates. But to call a headline rate ‘typical’, the lenders only have to give this to 66% of those applying for it. In reality, those with worse credit scores will pay a lot more.

Using a specialist loans broker can help as you will not need to apply directly to the lender before your application is assessed – the broker can take a look at your financial position and decide whether you would be eligible for the rate or not. The result is better for you, as it will prevent you from applying for a loan you are likely to be refused for, which will further damage your credit rating.

Gilt yields are to blame, as lenders price their mortgages in line with gilt yields, and they are going up. Research suggests they are likely to rise by 0.75 percentage points in the wake of the hung Parliament – and could go higher if inflation is not kept under control.

The average mortgage borrower with a loan of £118,000 would see their payments rise by £624 a year according to figures from easyroommate.co.uk, and it would be even more if your loan was higher. If you are earning the national average wage of £25,800, that is like increasing your income tax to 23%.

Two-Year Fixed Rates

The best rate you can get at the moment on a two-year fix is with HSBC at 2.99%, and this product will allow you to borrow up to 70% of the value of your property. The redemption penalty is 2% then 1% of the amount you repay in the first and second year of the deal. This has a booking fee of £999, and you can borrow up to £250,000. There is no flexibility on this deal though, you cannot make overpayments or underpayments.

Mansfield Building Society does allow overpayments on its two-year fix, which has a rate of 3.09%, then reverts to its standard variable rate (SVR), currently 5.59%. This has an arrangement fee of £999, but it will refund your valuation fees up to £400, and you can borrow up to 75% of the value of the property. The early redemption penalty for both years of the deal is 2% of the amount you borrowed.

Five-Year Fixed Rates

If you want to be sure of your payments for longer, there are some decent five-year fixes around. The Co-operative Bank is offering 4.49% fixed until August 31, 2015, and you can borrow up to 75% of the value of the property. The arrangement fee is £849, and the booking fee is £150. Your redemption penalties are 5/4/3/2/1% of the outstanding balance in each of the years of the fix respectively. On this deal, you can borrow up to £1m if you want to, and it is flexible. You can make overpayments, underpayments, pay off lump sums and take payment holidays.

Chelsea Building Society is offering 4.59% fixed for five years, and you can borrow up to £500,000 on this deal. The maximum loan-to-value is 75%, and the arrangement fee is £995. The early repayment charge is a flat 4% of the sum repaid for each year of the fixed rate. This deal is less flexible, but you can make overpayments if you want to.

Leeds Building Society has launched a new five-year fixed rate bond paying 4% which allows you to access half the cash at any time without penalty. The rate is not the best on the market, but having this level of flexibility could make the difference to someone being willing to put their cash into a fixed-rate product for five years.

Pros: Minimum investment is £100, rate of 4% fixed for five years, matures on May 31, 2015. Interest can be paid into this account, or paid to another account with the society if you prefer. Maximum investment £1m. You can access up to 50% of the cash deposited at any time.

Leeds also has a three year version of this bond, paying 3.2% but with the same access to half the cash deposited during the term.

Cons: You cannot access the full amount during the fixed rate term, so be sure you can afford to have that amount tied up. The bond is operated via the branch or post, so you cannot manage it online.

Any exclusions? No

Alternatives: State of India Bank is paying 5% on its Hi Return Fixed Deposit bond over five years. Minimum investment £1,000, no maximum. Operated by post or branch, not the internet. You cannot access these funds during the term.

Further reference: Compare savings accounts Related: Latest news

Pros: Best buy five year fix, you can make capital repayments of 10% of the amount borrowed per year without penalty. £199 booking fee. Early repayment charges of 5/5/4/3/2% respectively in each of the years you are locked into the deal.

Cons: Available up to 60% loan-to-value, £1,300 completion fee up to £500,000, and 1% of the loan above £500,000. Have to take the lender’s home insurance to qualify for this best-buy rate.

Any exclusions? Anyone needing to borrow more than 60% of the property value.

Alternatives: Yorkshire Building Society 4.69% fixed until May 31, 2015, then SVR (currently 4.99%). Available up to 75% LTV, Booking fee £195, arrangement fee £300. Redemption penalties 5/5/5/4/3 respectively.

Further reference: Speak to a mortgage adviser Related: Latest mortgage news, Remortgage for a better rate

Pros: Great headline rate of 6% APR on this account. Minimum deposit £1,000. One notice and penalty free withdrawal allowed in the term.

Cons: You cannot add to the account once opened. Your money is tied up – with the above exception of one withdrawal – until June 30, 2011. You must meet a Legal & General adviser in the branch, and also invest at least £5,000 in a longer-term investment bond with L&G.

Alternatives: Alliance & Leicester’s Premier Direct Current Account is currently paying 6% on amounts up to £2,500 deposited in it, providing at least £500 is deposited into the account each month. We recommend you withdraw this afterwards if you already have £2,500 in the account though.

This is a much better deal if you can put the money in upfront. On £2,500, you would get £150 in a year.

Further reference: Compare current accounts Related: Latest news

HSBC is offering a crazy low mortgage rate – a 1.99 per cent discounted for two years mortgage that will appeal to thousands of borrowers.

If you can get it, then this is a great deal for you. But be quick. This rate is unlikely to hang around for long, so get in touch with a broker as soon as you can.

Lowest rate available

It is currently one of the lowest rates available on any product, and even beats the previously low standard variable rates (SVRs) of 2.5 per cent from lenders such as Lloyds TSB and Cheltenham & Gloucester. If you are still on those SVRs or higher – Chesham Building Society is currently charging 6.45 per cent – then you should take a look at remortgaging.

There are some catches:

• The HSBC deal is discounted by 1.95 percentage points for two years from its standard variable rate, so the rate can go up or down, although up is more likely from where we are starting, if rates change.

• You have to have 40 per cent equity in your property to qualify for the deal, which will rule out many borrowers, and pay £999 to secure it. So on a £200,000 property, you would need to be looking to borrow just £120,000.

• Since the deal is so good, HSBC is likely to be able to cherry-pick the borrowers it wants. If you have any kind of credit problems, you could be refused the loan, which impacts on your future borrowing. So check your credit rating before you apply.

Save up to £6,690 a year on a £150,000 mortgage

If you can jump over all the hurdles, and you can bear the risk of rates rising, this would be the deal for you. If you have a £150,000 mortgage, and you are paying the lowest standard variable rate available at 2.5 per cent, then you would be paying £3,750 a year in interest – or £312.50 a month. Moving to this HSBC’s deal of 1.99 per cent would mean you are paying £2,985 a year in interest – or £248.75 a month. That is a tasty saving of £765 a year, or £63.75 a month, and that is on the lowest standard variable rate.

If you are on the Chesham Building Society’s 6.45 per cent rate, then you would be paying £9,675 a year on £150,000 interest only. Changing to this HSBC rate would save you a massive £6,690 a year – or £557.50 a month.

Aimed at those remortgaging

This is the second time HSBC has come up with this deal – it offered the same rate in September last year, although this time the fees are £200 lower. Then, there was a flood of remortgage borrowers who were tempted to pick it up. This is the target audience again, although anyone who has a chunky deposit of 40 per cent as a first-time buyer or home mover could also benefit.

What else is out there for those who cannot get this rate?

Many borrowers interested in this would be turned down, as you need at least 40 per cent equity in your property to qualify.

For anyone who cannot get this rate, there are some other good rates on offer. First Direct is offering 2.39 per cent variable for anyone owning at least 35 per cent of their property. You can offset savings against this mortgage, and the arrangement fee is £499.

ING Direct is offering 2.89 per cent variable for those who own 25 per cent of their property. This has an arrangement fee of £500, and a booking fee of £195. This is a tracker mortgage, so any changes in the Bank of England base rate will be reflected automatically in rate changes on this mortgage.

Fixed rate mortgages

If you want a fixed rate mortgage, then one of the cheapest deals on the market at the moment is from Britannia. Its two-year fixed rate mortgage is at 3.19 per cent and is open to those who own 25 per cent of their property. It is expensive though, with an arrangement fee of £849 and a booking fee of £150.

Depending on how much you are borrowing, you might be better off with the 3.29 per cent two-year fix from Hanley Economic Building Society. It has an arrangement fee of £649, and a booking fee of £100.

Three in four people are asking for debt help while owing less than 20 times their net monthly income – the traditional trigger point measure for identifying debt as a problem. In addition, just a quarter of those getting advice are eligible for a repayment plan. New figures from the Consumer Credit Counselling Service (CCCS) suggest that more people are struggling to repay debts relating to small amounts of money. This all implies that people who are not addressing their debt concerns early on are falling into a spiral that becomes harder to break. Put very simply, this survey points to the fact that the sooner you seek help with problem debts the easier it is to get them sorted and get life back on track.

Follow our three top tips to get your debts sorted and see if a repayment plan is right for you.

1. Get a better rate on your loan or credit card

Credit card debt is some of the most expensive debt you can have. So borrowing on your credit card is going to be costly unless you have the best deal you can get.

Credit cards accounted for the highest proportion of debts, according to the CCCS, at just over 46 per cent, followed by personal loans at 39 per cent of enquiries.

If you are paying 16 per cent a year on a debt of £10,000, you would be paying £1,600 a year in interest.

So getting a 0 per cent deal if you can will give you at least that much to actually eat into the debt you have built up.

The Barclaycard Platinum card is currently offering 0 per cent on balance transfers for 15 months, with a fee of 2.9 per cent of the amount transferred charged. The rate then reverts to 15.9 per cent.

The Virgin Money credit card is offering 0 per cent on balance transfers for 16 months (offer ends Wednesday 17th March!), but charges 2.98 per cent of the amount being moved. At the end of the term, it reverts to 16.6 per cent.

In both cases, you would need to use the interest savings and any extra cash you can lay hands on to reduce the debt on the card to maximise the benefit of the 0 per cent rate.

2. Reduce your loan rate with a lower interest loan, a 0 per cent card, or using a 0 per cent overdraft.

If you can get a better rate for your loan than you currently have, then do it. You do not even have to transfer the whole loan to the same place.

For example, let’s say you have a loan of £5,000 outstanding. If you can transfer your loan to a 0 per cent credit card deal, then that would be best, and the Barclaycard Platinum or Virgin Money card would be ideal for this.

However, if you cannot get these cards, or any other 0 per cent card, then you have other options. Check out the 0 per cent overdraft from Alliance & Leicester.

You can get an arranged overdraft up to £2,000 on this account, and you would not pay any interest for the first 12 months. After that, the most you would pay is £5 a month to use this overdraft, or £60 a year. On £2,000, that works out to an interest rate of 3 per cent – still much lower than you can get on either a personal loan, many mortgages or credit cards.

Of course, that would not clear your total loan, but it will make a dent in it. So get the lowest rate you can for the remainder.

Existing Nationwide customers can get 7.6 per cent with the building society for loans of £500 or more.

If you needed to borrow £3,000, then many loans would be closed to you as the amount you need is too small for the minimums. So be wary of getting into loans that start to become much more expensive.

For example, a search on Moneyfacts came up with a loan rate of 10 per cent with Zopa on £3,000 borrowed over three years. A debt advisor can help you decide on the right course of action.

3. Speak to a debt advisor now

Debt problems are easier to sort out the sooner you address them. You may be embarrassed about the position you are in, but it will only get worse if you do nothing. Reputable debt advisors will speak to your creditors on your behalf with a view to freezing interest on existing debts and encouraging the writing off of payments you can’t afford.

Virgin Money’s Charity Credit Card IS a good idea – if you pay off your balance in full every month and don’t plan to transfer a balance to the card. If you’re not borrowing, the 1 per cent cashback on your spending, which includes a Gift Aid boost of 20p per pound donated, is a pretty good deal. For a non-borrower, even this can be beaten by a card giving more than 0.8% cashback, making your own donations and ensuring you’re taking advantage of Gift Aid.

If you borrow get a less expensive card and donate the money yourself

With a typical rate of 12.9 per cent APR (variable) and a lifetime balance transfer rate of 8.9 per cent, you can do a lot better by getting a different card if you ever plan to borrow on the card and giving the money you are saving to charity.

This card charges a 2 per cent balance transfer fee if the transfer is made within 60 days of the account opening, and a 2.98 per cent fee applies otherwise.

Providing you are within your credit limits, you would not pay interest on the balance you had on the Barclaycard Platinum card in the first 15 months from your balance transfer. But you would have to pay £87 to transfer a £3,000 balance.

You would also not pay any interest for the first three months on purchases, so you would be saving some serious money in interest. You and/or your charity would be better off if you gave the saving in interest rather than the cashback you’d send via the Virgin Charity Card.

Charity cards with better deals – if you must

If you really want to give this way, and plan to borrow on the card, there are some better charity credit card options, providing you are interested in giving to these charities: National Trust, Breakthrough Breast Cancer, British Heart Foundation, and the World Wildlife Fund.

The National Trust credit card has 0 per cent interest on balance transfers for 12 months – you pay a 3 per cent fee for the privilege – and 0 per cent on purchases for three months.

The World Wildlife Fund card, British Heart Foundation card and Breakthrough Breast Cancer card offer the same deal.

Lose the card as soon as you start paying interest

As soon as you start paying interest though, ditch these cards and get another 0 per cent deal, and give the money you would have paid in interest to your chosen charity.

Believe it. Alliance & Leicester’s Premier Current Account is paying 6 per cent on up to £2,500 deposited in the account – providing you pay in at least £500 a month.

Play the bank’s rules and you will be quids in. Any amount over £2,500 will earn a paltry 0.1 per cent, and you have to pay in £500 a month.

So to maximise your return, deposit the full £2,500, and then deposit £500 a month, but take it out again so it is not sitting on such a low rate. The bank only needs to see the account is being used regularly, and we have checked with it to ensure this would keep you within the terms. It will.

Don’t waste double the interest

You need to think beyond the best buy tables to get the best deals on savings. Topping these tables at the minute for instant access is the Alliance & Leicester Online Saver paying 2.75 per cent on deposits of £1. While this rate is a tasty one, you can get more than double the interest on that money with the same institution by looking further than the savings accounts on offer.

You would be taxed on this interest – if you pay tax – so usually you would expect to hear the advice that you should use your individual savings account (Isa) allowance first. But this rate is so much higher than you can get on the Barclays Bank Golden Isa at just 2.58 per cent, you are better off using this ahead of your Isa to get the maximum benefit, even if you are being taxed.

For example, on £2,500 over a year at 2.58 per cent, you would get £64.50 in interest. On the Alliance & Leicester Premier Current Account at 6 per cent, you would get £150 gross, or £120 after basic rate tax of 20 per cent. Even if you are a higher rate taxpayer at 40 per cent, you would still have £90 in your pocket after a year, half as much again as the best paying instant access Isa.

Get paid even if you are overdrawn

If you can’t manage to keep that much in a single account, then Bank of Scotland is willing to pay you £5 a month for the privilege of having you as a customer in its Reward Current Account. You have to deposit £1,000 a month into the account – which most of us could cover with our salary – and then whether you are in credit or overdrawn, you will still get your fiver.

The overdraft is interest free – but you do pay a fee for each day you are overdrawn, which could become expensive if you are overdrawn a lot in a month. The arranged overdraft up to £2,500 a month costs £1 a day, and if you arrange an overdraft beyond this, you would pay £2 a day. Going into an unauthorised overdraft would cost £5 a day – wiping out your reward for the month.

Use up your Isa allowance

If you have any spare cash before April 6 make sure you use your Isa allowance to shelter any extra money from tax. But check you are getting the best rate. As the Alliance & Leicester Premier Current Account shows, the best rates are not always the most obvious ones.

You can put £7,200 into a mix of cash and investment Isas, or £10,200 if you are over 50 – this will be the level for everyone after April 6.

1. Use your individual savings account (Isa) allowance to make the most of your tax break. You can put £3,600 into a cash Isa before April 5, or £5,100 if you are over 50, and you will have all of your interest paid to you tax free. Shop around for the best deal, but you can currently get 2.65 per cent with Standard Life Bank on balances of £1 or more, on a no-notice Isa.

2. Choose the top paying account

If you have used your Isa allowance for this year, then look at the best paying alternative accounts. If you do not want to give any notice before withdrawals, then Alliance & Leicester’s Online Saver is paying 3 per cent, on just £1 deposit.

Get a notice account

Tying your money up, even for a short time, can help to raise the interest you can get. Investec Bank is paying 3.32 per cent on balances of £25,000 or more, with a notice period of three months for withdrawals.

FirstSave is paying 3.25 per cent on deposits of £100 or more, with a 90 day notice period.

Fixed term bonds

By tying your money up for longer, you will get even more. Nationwide has a series of e-bonds, with the highest rate available at 5 per cent on a five year bond. The minimum deposit is £1.

3. Consider regular savings but watch the catch

Regular savings accounts often pay more than many other accounts, but don’t be fooled. The banks pay higher rates on these because they usually have a fixed term, and that rate is only paid on one portion of the overall deposit.

At the moment, you can get 4.5 per cent with Principality Building Society, and you can deposit a minimum of £20 – £500 a month. Depositing £500 a month, with the rate fixed at 4.5 per cent a year, means you will get that full rate on the first month’s deposit only.

The next month’s deposit you would get 11/12ths of that amount, then 10/12ths and so on.

4. Teach your children about money

Use any Christmas money your children have left over to teach them about how to save. Any child born after September 1, 2002 will have a Child Trust Fund, which can be topped up by family and friends to the value of £1,200 a year. This grows tax free, and can only be accessed by the child at age 18, although they can decide how the money is managed from age 16.

If that has already been done, then get them a children’s account to help them learn to save. Halifax is paying 6 per cent on the Children’s Regular Saver, and the minimum deposit per month is £10, with a maximum of £100.

5. Make sure you are not paying tax if you don’t need to

If you are not earning or you are earning too little to pay tax, then tell your bank or building society. You need to fill in form R85 so that your interest is paid gross, rather than net of savings tax – currently 20 per cent. This applies to children’s accounts too.

If your spouse is a non-taxpayer, or is a 20 per cent rather than higher rate taxpayer, then it may be worth putting your savings into his or her name. It is perfectly legal, and is a good way of reducing the tax you pay on your interest.

First Direct has announced that they are presently experiencing an influx of mortgage applications that have caused a massive backlog.  Until the backlog has been cleared, they will not be accepting new applications.  The move was announced as an alternative to discouraging new business by raising interest rates to an uncompetitive level, and is expected to be temporary.

First Direct is the latest in a long line of mortgage lenders who are turning their backs on new business.  NatWest, Scottish Widows, Nationwide and the Norwich and Peterborough Building Society have all tightened their belts in the last couple of weeks – along with countless others over the past six months – raising interest rates and withdrawing products traditionally popular with first time buyers. 

As a result of this shift, the number of new homebuyers entering the property market has fallen by 40% in the last 24 months.  Concern is growing that first time buyers will soon find it almost impossible to get onto the property ladder as their borrowing options dry up and the future of the property market grows increasingly uncertain.  Those that do wish to brave the current market turmoil are finding it harder to find affordable borrowing options as lenders increasingly demand larger deposits.  Those with impaired credit ratings are also finding themselves being squeezed out of the market as lenders look to cut risks by lending only to those with impeccable credit records, leaving more people with fewer avenues of credit available. 

The First Direct Tracker mortgage was one of the most competitive tracker mortgage products on the market.  A good alternative worth considering still currently available is the Halifax 3 year tracker rate mortgage.  This product allows you to borrow up to £500,000 at the start rate of 5.78% (0.53% above current base rate 5.25%).  Minimum deposit of 10% required.  Speak to an independent mortgage advisor for advice on this and other products available.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.

This presents a frustrating contradiction for first time buyers.  If the property market does in fact experience this sharp correction, house prices will fall back somewhere into the realm of the affordable for young first time buyers.  Unfortunately though, pickings are becoming increasingly slim for these would-be borrowers.  Banks are passing the growing gloom cast by the state of the markets onto consumers with increasing vigor; within the last 2 weeks, two of the UK’s biggest mortgage lenders raised their interest rates in order to deter high-risk borrowers.  Nationwide raised their 2 year tracker product rate by 0.57%, and the Norwich and Peterborough Building Society followed suite with alarming speed, announcing their own rate rise of half a percent on some products.

As first time buyers present a higher than average risk to lenders, their collective inability to obtain mortgages is beginning to make an impact.  The number of first time buyers entering the market has fallen by as much as a third, even as interest rates fall.  But don’t be disheartened.  Take note of the plight of those who stretched themselves to the absolute limit during the last five years in order to get onto the property ladder, some taking out mortgage 5-6 times their incomes.  Many of these people are now in the highly precarious position of trying to find new deals as their fixed rate deals come to end, while they watch the growth in value of their property fall. 

Instead, best advice for hopeful first time buyers is to sit tight and save as big a deposit as possible before making the leap to homeowner.  Presenting a sizable deposit lessens your associated risk in the eyes of the lender, which will open many doors.  Don’t be too quick to dismiss the value of renting in the short term; in most areas of the UK renting is not the money-drain it is often believed to be.  The difference between renting and paying the mortgage on a particular property is becoming more marked in favor of renting, and you also don’t have to worry about missing out on capital appreciation in the meantime – the most common cause of rental-angst – because prices are falling. 

A product worth considering is the Cheshire BS 2-year discounted variable product.  Remember that time is on your side in a falling market, but have your affairs in order and be ready to leap at the first sign that there is a bargain to be had.  Speak to an independent mortgage advisor for advice on this product and others available for your requirements.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.

The main effect of this is that many consumers are seeing their disposable income shrink, which is putting pressure on the economy as they adjust their behaviour to reflect this. This issue is being compounded by the credit crunch, which has seen lenders tighten their belts with regards to consumer credit; lenders are staying as far away as possible from high-risk lending, and fewer loan, mortgage and credit card applications are being accepted as a result. Those that are being accepted may find that they are unable to obtain headline interest rates as lending criteria are tightened; even good credit customers are being penalised as banks offload low profit credit card customers in an effort to boost profits. Consumers with mortgages, or personal debts in the forms secured or unsecured loans may have found that the Bank of England interest rates cuts over the past few months have not eased the strain on their finances, as many lenders are failing to pass on the rate cuts to consumers. Many financial groups that saw large chunks of their capital disappear virtually overnight as a result of the US sub prime mortgage lending crisis are attempting to rebuild their balance sheets, and increasing their margins on consumer lending is a fast way to increase profits as the BoE interest rate falls, and compensate for higher lending costs among the banks themselves.

The outlook may seem unrelentingly grim, but don’t lose heart! There is still a great deal of competition between lenders and suppliers as they vie for the customers who are looking for a better deal, so there are still savings to be made for those consumers who are proactive enough to vote with their feet. If your utility bills are rising or you are finding it difficult to obtain credit at an affordable interest rate, don’t just accept it without doing your research; there is nearly always going to be a better deal available elsewhere, and finding it does not have to be a difficult and time consuming task.

If you are interested in finding a better deal elsewhere, on loans, credit cards or even mortgages, use an independent online comparison site to compare deals – see ours here; if you make an application that is declined, or is offered at higher interest rate than you wanted, pick up the phone and ask for a better deal. You may be surprised by the result, as quite often a lender will drop the interest rate or turn a decline into an acceptance, particularly if mistakes have been made during the application process.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.

Today’s decision should move to buoy consumer confidence, and will be welcome news for homeowners with mortgages linked directly to the Base Rate.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.

Egg, owned by Citibank, claims the move was in order to offload ‘high-risk’ customers, which, in light of the heightened strain on lenders as a result of the credit crunch, appears to be a responsible action. Banks throughout the UK are tightening their belts when it comes to unsecured lending in general, and customers with a poor credit history are sure to be the first to be affected where their access to credit is concerned, whether it be in the form of credit cards, loans or mortgages. However, reports have surfaced that many customers with good credit profiles, having never missed any repayments, have also had their Egg cards cancelled. This has prompted speculation that Citibank has moved to reduce the number of risky borrowers on their books, while dumping low-profit customers at the same time.

Over the past 12 months there has been increasing pressure on credit card users who manage their finances carefully and as a result do not pay interest charges. Many consumers are taking advantage of the influx of credit cards offering interest-free balance transfers and lengthy interest-free periods on new purchases that have flooded the market in the last 24 months as providers have fought for increased market share. However, with more and more customers avoiding interest charges altogether, credit card providers have been finding other ways to increase profitability – a trend started by Lloyds TSB last year, when they introduced a ‘no-use’ charge in the form of a £35 annual penalty for customers who were not using their credit cards.

Similar attempts to squeeze profit from their low-profit customers include providers increasing rates and fees on their products. Most notable is that these rate increases don’t apply to the headline purchase rates or balance transfer rates that are the most common way to compare credit cards, but are hidden away below the fold. To list a few, a large number of lenders have increased interest rates on cash withdrawals by half a percent or more; many have increased foreign usage loading by up to a quarter of a percent; as well as increased annual fees and raised handling fees on balance transfers. In fact, according to research by moneyfacts.co.uk, in the last five months over 125 credit card providers have increased their charges in this way.

Egg is clearly taking this trend to the next level by cancelling the credit of low-profit customers altogether, and the question now being tackled by analysts is whether other lenders will follow suite. If so, more and more consumers will be pushed onto secured forms of borrowing such as secured loans, which is good news for lenders, but not such good news for customers who don’t wish to borrow at the risk of losing their home. The best advice for customers who find themselves in this position is to vote with their feet; one of the best cards on the market at the moment is the Capital One Platinum MasterCard, which offers the competitive APR of 9.9% with competitive introductory offers. When looking for a new card be sure to not just compare cards by their headline rates; check all the associated fees and charges and do your sums to make sure your credit card is working for you, not just your provider.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.

What does this mean for consumers? First and foremost that the cost of borrowing remains unchanged. A quick look at any number of online financial forums reveals a largely negative response from consumers at the decision, with many claiming themselves on the brink of financial disaster thanks to their near-unmanageable mortgage costs. What strikes me most about this, is that many people seem to believe that it is up to the government to step in and drop interest rates in order to keep them from toppling into the void due to their own levels of over-indebtedness.

Homeowners who have bitten off more than they can chew during the property boom should not expect this sort of support from the government, whose main focus is maintaining the economy as a whole. Dropping interest rates dramatically can have an equally negative effect on the housing market in the long term; as borrowing becomes more affordable more people enter the market, demand eventually outstrips supply and the result is increased prices and inflation – something that is already worrying many experts.

While interest rates remain high, homeowners struggling with their repayments should look to cut their outgoings in other ways, such as through remortgaging for an option that will allow them to take better advantage of an interest rate drop when it eventually comes. Check out the range of tracker mortgages available from your lender and compare them with other options available in the market – I think one of the best buys at the moment is the Lloyds TSB 2-year tracker mortgage. Another option is to consider consolidating other high-interest forms of borrowing such as credit cards onto an interest-free alternative – such taking advantage of interest-free balance transfer credit cards. Secured loans also offer a relatively cheap option in comparison to unsecured lending, providing another opportunity to cut the interest you are currently paying on existing debts. All of these options are widely available, and as a homeowner you are more than likely already a prime candidate and in a better position to obtain more affordable credit than many others. Use a free comparison service that compares the whole UK market and find the product at the price that suits you best in order to grab a bit of breathing space until the interest rate drop finally does arrive.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.

My advice for homeowners in this position is to remortgage sooner rather than later. Indecision may result in your missing out on the best deals, as many lenders may have already pulled their best products from the market by the time it is clear exactly what will happen. Possibly the best course of action may be to consider the range of tracker mortgages available, as these will allow you to take advantage of base rate drops to a greater degree than those with other ‘safe’ mortgage products. When interest rates are predicted to rise, tracker mortgages are seen as a less desirable option, due to their inherent instability; but when rates look set to drop, they can prove one of the most competitive products in the market. At the moment one of the most attractive products available is the Lloyds TSB 2-year tracker; it is also worth speaking to an independent mortgage advisor for impartial advice tailored to your requirements – many brokers also have access to exclusive reduced rate options that aren’t available directly from the lender.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.

In a practical sense this means that at the moment the APRs advertised by lenders is becoming more difficult to obtain, particularly for potential borrowers with less than perfect credit ratings; only prime candidates with a very high credit score will be deemed eligible by banks to borrow at advertised APRs in order to protect their interests. For consumers looking for a solution to their Christmas spending hangover this will make secured consolidation loans a less accessible option with approval rates falling, meaning that unsecured lending such as credit cards may offer a more affordable alternative. Credit cards that offer interest-free balance transfers can allow you to cut the interest you will pay on your current debts by offering a period during which no interest will be charged on the balance. Not all the deals are as attractive as they may appear at first glance; use an independent comparison service for impartial advice and go for the card that offers the longest interest-free period and the lowest transfer fees.

Please note: This website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.  For more please refer to our terms and conditions of use.