Why mortgage rates will rise
UK mortgage rates are about to rise, says the Telegraph. It says global financial factors are at work, the most important being interest rates in the US, where the cost of mortgages has risen by 0.4% since the presidential election. ‘Swap’ rates, which set fixed rates for UK lenders, fell sharply after the UK’s BREXIT vote but have risen since November 8th, from 0.4% to 0.7% for 2-3 year fixes. That implies an increase of about 0.25% on mortgage rates, though lenders may delay increases in new loan rates until January.
Black box opens up car insurance options
‘Telematics’ is about to get a boost, says the Telegraph. A new service is about to launch that collects data from a telematics box in the car through a mobile phone app and passes it onto several insurers, who then bid for the contract to provide the driver with insurance. Experts said that while good drivers might benefit from lower premiums, those with poor driving scores could be forced to pay more.
Student loans threaten home ownership ambitions
The high level of student debt is a major threat to home ownership ambitions, says the Mail. Surveys show that 60% of mortgage lenders and two-thirds of mortgage advisers are worried about the effects of student loans on young people’s ability to afford a mortgage to buy their first home. Recent research shows British students face the highest levels of debt in the developed world on graduation, currently averaging £44,000. Affordability rules introduced in 2014 mean repayments of student loans restrict the amount lenders will offer towards house purchase.
Read the numbers – then switch
A change in the rules from next April that will require insurers to show the premium that was paid in the previous year when they send out renewal notices should cause a surge in switching, says the Times. Insurers rely on inertia and often raise premiums each year, knowing that many people will renew automatically. But the average potential saving on car insurance from switching is put at over £100 a year by one comparison site, rising to over £300 for younger drivers.
Whiplash winners
A reduction on what a government minister described as an epidemic of whiplash claims could cut motor insurance premiums by an average of £40 a year, says the Financial Times. Proposed changes would cap the compensation people can claim, and also push more claims into court by increasing the compensation level that can be secured through the Small Claims Court from £1,000 to £5,000. That will result in claimants being forced to produce medical evidence, which will deter fraudsters.
BTL changes will hit larger landlords
The changes to BTL mortgage affordability rules next year will penalise larger landlords, says the Financial Times. The rules require lenders to check the affordability of existing loans as well as a new loan if the borrower already has four or more properties. This will raise costs and experts say it is likely such borrowers will have to pay higher interest rates on their loans.
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