Monthly Archives June 2008

Consider the Facts About House Prices Before Panicking

I’ve just read an article on popular UK personal finance site with the headline ‘The House That Lost 40% in Four Months‘.

Sounds ominous doesn’t it.

The headline suggests that a house has decreased by 40% in value in just four months.

But it hasn’t!

Firstly, house prices you see in estate agents are not usually the prices buyers pay.

Estate agents will always inflate the true value of the property slightly so that after some negotiating the vendor gets the price they actually wanted and the buyer thinks they’ve got a good deal.

Someone I know recently paid £205,000 for a house that was on the market for £230,000. That’s over 10% less and surprisingly when the house was valued by the mortgage lender the figure came back as £205,000.

Reading further down the article on it is clear the original asking price of the ‘40%’ property was excessively optimistic.

I would suggest it’s possible the original asking price was 20% more than the actual value and house prices may have dropped by up to 20% in some areas which would lead to a figure 40% lower than the original asking price.

So when an established and much read website suggests such a drastic decline in the value of a London property it’s tantamount to scaremongering.

The article also mentions: ‘Dozens of other London properties have had 20 to 30% carved from their original asking prices after failing to attract interest. ‘

This does not mean they have suddenly lost 20 – 30% of their value, it just means they were overpriced and people just didn’t think they were worth the money.

What this suggests is the house prices could be moving back into the buyers playing field with vendors forced to be much more realistic with their expectations.


Free Budget Planner – I’m Spending How Much?!

PIN money’s great isn’t it? That surplus bit of money you have each month you know you could quite happily fritter away on needless expenses, just because you can.

As long as the bills are paid the rest is the hard earned cash that makes it all worth while and we use it to enjoy ourselves.

But sometimes, it’s just not there. I could have sworn there was another £100 in the bank…. Sound familiar?

When you’re certain you had more than there is, do you know where it went?

Open the Free Budget Planner

Have you been spending beyond your means now and again and felt the sting of unlawful bank charges ?

It’s even possible you may be spending more than you earn each month and not even know about it.

Want to know the simple secret to not getting charged and always having a bit of spare cash each month?

Although it’s not always easy the solution is to keep a close eye on your money and don’t spend more than you earn.

I repeat, sometimes it isn’t easy but the best place to start is with a ‘budget planner’.

Write down what’s coming in and what’s going out and the difference is what’s left.

Or not.

If you’re concerned or just want to know where your money goes here’s a budget planner in PDF format (you need Adobe Reader) to print and fill in.

The final calculation on the budget planner is the amount of disposable income left after all the bills are paid.

It’s fairly comprehensive and will take a few minutes to complete but hopefully it covers most of today’s everyday expenses.

Open the Free Budget Planner


Save the World – Eat Less Meat & Cycle More

I’m what is known as a ‘pescatarian’. I don’t eat meat apart from fish. I’m not a vegetarian or a vegan but I do try to only eat fish from sustainable resources or farms (if you shop at Waitrose, that’s all they sell…).

I don’t make a fuss when I go to friends BBQ’s and I don’t ever try to force my way of eating or thinking onto anyone else.

Strangely, it’s the other way around. My friends often offer me meat and make little jokes about it. After years of outwitting them though, most of my friends leave well alone for fear of being made to look stupid.

Generally I feel good. Healthy, happy, balanced etc. I do exercise regularly and drink plenty of water which most definitely helps (just 2% loss in body water can lead to a 20% reduction in energy!!)

Where is this going? You may ask…

Most Omnivores I know would fight for their right to eat meat. They couldn’t imagine life without it and think it’s just odd for someone to not eat it.

Is this because their mothers fed them meat and two veg for every meal and so they are now adamant it must be the right way to eat?

Is it because Vegetarians have often been portrayed as tree-hugging 9st weakling hippies and no ‘real man’ should be a veggie?

Is meat eating a kind of penis extension?

Hunter gatherers/Neanderthal cavemen may have once been celebrated for ‘bringing home the bacon’ in the form of some giant dead prehistoric beast that was able to feed their families for weeks but in this day and age, there’s nothing big or clever about picking up a slab of beef from a fridge! (OK, shopping is a nightmare and a battle at times but not on the same page as killing for food).

If you research eating meat and the health implications there are plenty of arguments for and against it.

There’s the issue of red meat rotting in the body whereas others claim meat encourages good digestion. Some say we’ve not fully evolved into carnivores whereas others have evidence to the contrary.

One REALLY good argument however, for eating LESS meat is the effect livestock farming is having on OUR WORLD.

Not MY world, not THEIR world but OUR world. Yours and mine and every other bugger under the sun.

If by eating half as much meat as we (as a species, not a race) do now we could help eliminate food shortages and reduce global warming.

Livestock farming is responsible for nearly 20% of greenhouse gas emissions.

Of the 2 Billion tonnes of grain produced each year globally (in a good year) 760 Million tonnes are used to feed animals! That’s not far off HALF of ALL the grain produced! 

100 Million tonnes has now also been diverted for the production of Biofuels.

‘It turns out that growing corn in the American Midwest takes about as much energy – for making fertilisers and processing the crop – as is saved by replacing petrol on the forecourt.’ (Telegraph)

In fact, I encourage you to read the Telegraph article. It’s quite frightening the double standards in play over biofuels and emissions.

Peat Bogs are being cleared to grow crops for biofuels. By clearing these Bogs, more CO2 is being released than will be reduced by the use of the subsequently produced biofuels burned in engines but because it’s only car emissions that are measured and not the release of CO2 in the process, this absurd practice continues!

For short trips, ride a bike!


Up, Up and Away

More movement in the mortgage market sees more rates rise and some disappear (for the time being).

Newcastle Building Society has increased all fixed rate products by 0.3%

For each £100,000 borrowed that equates to an extra £25 per month in interest charged.

Lloyds TSB has increased all Buy-to-Let fixed rate mortgages by 0.3% increasing the amount of rental required by the same £25 per month.

If the estimated rental potential of a buy-to-let property purchase can’t support this increase then fewer proposals will fit the required model and Lloyds TSB are likely to do less business.

Platform (the intermediary lender of Britannia Building Society) on the other hand, has withdrawn all buy-to-let products.

Lenders are repeatedly using the justification that due to increased demand they are forced to put up rates making their products less attractive and giving them time to deal with backlogs and maintain high service levels for customers.

The only drawback with this is that their customers coming to the end of an existing offer still need a mortgage.

The number of people purchasing has decreased but existing borrowers are currently seeing a large number of 5 year and 10 year fixed rate offers on the market at increasingly high rates.

Is it fair of lenders to make these long term commitments more attractive than shorter term offers and get consumers tied into high rates for a long time? 

It does give certainty and stability but many experts predict interest rates will drop back to levels comparable to 2006 in just a couple of years.

On a slightly lighter note, Abbey has reduced the rates on some of its variable rate trackers by up to 0.15% (£12.50 per month per £100,000 borrowed).

The Eye of the Mortgage Storm or the Aftermath?

Imagine deciding to pursue a career in the mortgage industry…. A few months of studying, revision and exams followed by several weeks of ‘feet-finding’ and ‘on the job’ learning.

Only to end up in an industry bearing the brunt of the now infamous ‘credit crunch’.

Why do these thing always happen to me!

OK, I know, there are lots of people facing adversity in a changing marketplace and every mortgage broker, every homeowner and every prospective buyer has had to re-think their position and change tack.

But are things starting to settle? It’s been a few days now since any lenders have withdrawn from the UK market and some lenders have even stated to reduce their rates (slightly).

Does this mean we’ve seen the worst of the rate rises or is there more to come?

Higher rates mean that people re-mortgaging now are experiencing higher monthly repayments causing some to feel a very nasty pinch and put off spending on other things.

First time buyers are struggling because many lenders have reduced their maximum lending ‘loan-to-value’ which means bigger deposits are needed.

People with slightly checkered credit histories are now limited to a drastically reduced number of lenders to choose from compared to 6 months ago and like everywhere, rates are higher.

Brokers are struggling because some lenders have opted for ‘dual pricing’ policies which means customers going direct may be able to get better rates than if they apply through a broker. A prime example of lenders biting the hands that used to feed them and a bone of contention for many brokers.

This isn’t new news, more of a summary of where things are at the moment but what does it say about the future?

Yes, there may be more repossessions as people who were already stretched find themselves unable to make their repayments.

Some brokers may find themselves seeking alternative sources of income and many first time buyers may shelve their plans in the hope that house prices will fall into their budget range. But that’s another story….