As if familes don’t have too much on their plates already, research has revealed that 1 in 3 have been billed incorrectly for their power.

In the last two years more than 9 milllion people have had to deal with inaccurate invoices for the energy used in their home. And 6 million, a fifth of UK households, reported that they received inaccurate correspondence from energy companies. This is at a higher level than water companies, councils, banks, and even the tax people.

The survey of 2400 energy customers found that to resolve billing problems, it took an average of 2 months. The next worst for inaccuracy was your friend and mine, the taxman!

In third place came the communication companies – phones, broadband and digital TV companies.

If you have a problem with an energy bill what can you do? The best thing is to send in by phone, text or email, your latest meter reading. And then keep on chasing!

It is hoped that the latest “smart meters” which are being progessively introduced, will definitely help to sort out discrepencies between estimated and actual meter readings. Even if you don’t have one of these new meters, our advice is always promptly send in your actual meter readings whenever you get an estimated bill.

After three months of figures indicating improvements in the housing market, the latest statistics showed renewed falls in the number of approved new mortgages.

Approvals in March fell 6.8% from the previous month to 26,097. This also represented a fall of 25% over the figures from March last year. In terms of the value of mortgage approvale, £8.9 billion was approved but this still represents a 47% drop from March last year and is the lowest value of approvals since April 2001.

These figures also show that the size of the average mortgage has fallen considerably. Whilst first time buyers largely remain frozen out of a market which is frequently demanding deposits of 20 or 25%, it is clear that mortgages for the upper end of the market are also in very short supply. At one time bankers would hand out £500,000 mortgages like bags of sweeties – but no longer. And at the moment, apart from preditory purchases from distressed sellers, the buy to let market is dead in the water and this further hits the lower end of the market.

By a simple deduction, the overall picture suggests that the housing market is likely to move better in the middle price ranges and stagnation will continue at the top and bottom of the market. Properties will just stick on the estate agents books.

So how will house prices move? The British Bankers Association still believes that house prices will fall quite a lot further. “We have some way to go”, their spokesman commented.

I’m afraid we agree.

The Nationwide, Britain’s largest building society, yesterday announced an increase in its standard variable rate (SVR) from 2.5% to 3.99%. The SVR is the interest rate that borrowers pay when their existing mortgage deal ends, whether it be a tracker or a discounted deal and the rise will affect around a third of Nationwide’s borrowers.

For a homeowner with a Nationwide mortgage of £150,000 on the society’s SVR, this means that their monthly repayments will increase from £673 to £791, an increase of £118 a month.

The Society says that the change will enable it to promote better interest rates to its savers – but so far their rates to savers have not changed.

A spokesman for the Nationwide said, “This is about balancing the needs of savers and our borrowers, which has become increaingly difficult in the current economic climate. We feel that our 1 million mortgage customers have benefitted from a boost for some time now and this will give us chance to give something back to our 10.4 million savers”.

The Nationwide’s move has raised concerns that other lenders will follow suit.

One of their main competitors said, “At present we have no plans to increase our SVR but we will keep it under review.” For those that do not understand “bankers speak”, this means, “This has totally taken us by surprise. At the moment we have not decided what to do but we’ll have a meeting this afternoon and we’ll almost certainly follow suit”.

It is estimated that 1 in 3 pensioners still have to make mortgage repayments with an average debt of £43,069. This is partly due to the failure of endowment policies to repay mortgages as planned and partly through poor financial planning.

As a result many pensioners are investigating the possibility of releasing equity from their houses to make the repayment and provide surplus cash.

With equity release schemes, you take out a lifetime mortgage which releases cash from your home but there are no repayments to make. Interest is charged until you die, the current rate is circa 6%, and then the total is repaid from the sale of the property via the solicitor who handles your estate.

There is another form of equity release called a “reversion scheme”. Here you sell a percentage of your home to the reversion company and when you die, the company claims the percentage you sold from the proceeds of the house sale.

These types of schemes are becoming much more popular but you must take professional advice before entering one of them.

If you have paid a mortgage exit charge you may be able to reclaim the money back from your ex-lender. Theses days mortgage exit fees are charged under a number of different names, and the amounts charged similarly vary hugely.

When your lenders paperwork describes the exit fee as paying for “administration” or “the costs incurred by the lender”, then you might have a case for a refund. Your argument should be that the charges are in fact a penalty for exiting rather than a reimbursement of costs.

Ask your lender to detail how the costs have been calculated and see what happens. Someone from the Financial Ombudsman Service is reported as saying, “When people make claims for repayment of exit charges, it relates to the precise wording in their mortgage contract. If it states that their charge is based on the costs of administering the exit, then the lender should prove that this was the case.”

We understand that when claims are made on this basis, many lenders have simply paid out on a goodwill basis to end the complaint and avoid having to prove their costs.

A few years ago a large numbers of homeowners complained about the exit charges they had been charged. These charges came under scrutiny after mortgage lenders began increasing them part way through mortgage contracts. The Financial Services Authority effectively put an end to this practice by issuing guidelines to the mortgage industry. It said that lenders should not increase exit fees whilst the contract was still in place.

We have already commented on excessive executive bonuses. But once again the Americans seem to be pointing the right way to approach the issue.

A very large and influential US pension fund has threatened to take legal action against 29 financial companies in the USA unless the attempt legal action to recover more than £5 billion in excessive bonuses and pay.

Good on them!

The 29 nine companies threatened include AIG (who sponsor Manchester United), the merchant banks Morgan Stanley and Goldman Sachs and Citi-Group.

Like us, the pension fund is highly critical of top executives that reward themselves despite delivering losses. “It’s like these guys got a windfall payment for betting the family’s entire savings on the wrong horse”, a spokesman said.

Anger in the USA boiled over last month when AIG paid $165 million in bonuses – after the company had been bailed out no less than four times by American taxpayers. To date the bail out amounts to $82.5 billion, yes, billion!

The culture that seems to continue both in the US and here in the UK, of rewarding failure, MUST STOP.

Bonuses can only ever be paid for proven profit performance and bonuses incorrectly paid, must be reclaimable.

The Council of Mortgage lenders has published data provided by all the UK’s mortgage lenders which paimts a startling picture of how the recession is hitting families.

The figures, from last February, show that 565,000 homeowners only have 5 per cent equity remaining in their homes. And a further 10 per cent have between 5 and 10 per cent.

This is not the first time in the UK’s history that negative equity has cast a long shadow. Back in the early 80’s the same thing happened and most homeowners survived. Homeownership is a long term commitment and given time house prices will recover.

However, if you are faced with negative equity and want to move house you have problems. Unless you are in a position to pay off the deficit when you sell your house and then raise another deposit for a new home, then moving is simply off the menue. That probably rules out a move for 99.9 per cent of the homeowners affected. So in practice, those in negative equity are stuck. Their only option is to wait and hope that time and rising property prices will weave the magic.

Current figures from the Nationwide Building Society show that house prices have fallen by 17 per cent in the lat 12 months and the Financial Services Authority predict that 2.5 million homes could be in negative equity by mid 2010 if prices ontinue to fall.

Homeowners can now cap the maximim interest rate they could pay on a tracker mortgage.

The Coventry Building Society and the Woolwich now have a tracker that tracks the Bank of England’s base rate but also have guarntees that the interest rate on the mortgage will not be allowed to exceed a certain level.

Woolwich’s tracker is runs at 2.99 per cent above base rate with the maximum set at 5.99 per cent during the first 3 years of th mortgage. Coventry’s 3 year tracker is also set at 2.99 per cent above base but the maximim is capped at 4.99 per cent. This means that on a typical £150,000 mortgage the maximum monthly repayment with Woolwich tracker would be £966 and £876 with the Coventry.

But there are cheaper trackers available. 2.99 per cent over base is relatively high. For example, First Direct has a lifetime tracker at 2.39 per cent over base and HSBC has one at 2.89 per cent.

If you are looking for the securioty of a fixed rate mortage consider HSBC’s 2 year fixed rate. If you had a 40 per cent deposit the rate would be just 2.89 per cent. But watch out, you’d have a starting fee of £1,499.

After it was handed a multi-billion bail out by UK tax payers, the Northern Rock continued to grant 125% mortgages. A hard hitting report from the National Audit Office suggests that the bank lent 1.8 billion though high risk mortgages between September 2007 (the time when the Government had to step in) and February 2009.

In housing market where house prices were falling at about 20% per year, such massive mortgages start borrowers off in negative equity and market forces make that situation even worse.

Even just 5 months ago mortgages of up to 125% represented 30% of Northern Rock’s mortgage loan book. And 70% of the repossessions it made came from the same group of borrowers.

That means that whilst depositors were queuing up to get their money out and the government were pouring money in, the bank was still agreeing mortgages up to 125% of the property value.

And it is no as if the Government didn’t know! The Chancellor, Alistair Darling was challenged about the banks lending policies as late as February 2008 but nothing was done.

Thousands more borrowers may now be facing repossession because they were given excessive mortgages. But we should remember it takes two to tango. A person applied for the excessive mortgage and an irresponsible bank granted it.

It seems to me that whilst the banks were in the controlling seat by promoting these mortgages, the homeowners that took the mortgages must also bear some responsibility. What did they do with the “spare” 25% of the mortgage?

I presume they spent it.

As from 6th July this year the cost of registering your property at the Land Registry is increasing by as much as 300%. At the moment it costs just £50 to register a house costing £150,000 but from July it’ll be £200. How’s that for another blow against inflation!

Land Registry charges are paid whenever the freehold or leasehold of a property is registered.

There will also be increases in the fees for land searches and copies of documents. A postal official search fee is going up from £6 to £8. The official line is that these increases are required because of the decline in the number of properties changing hands as a result of the credit crunch.

What rubbish! The numbers of house sales are down 25 to 40% depending on the region and month you are talking about. How does that justify 300% increases in Land Registry fees?

A spokesperson from the Land registry is reported as saying,” We do not believe that this will deter a recovery in the property market, especially with interest rates at a historical low and lower house prices”.

These costs will hit all home buyers as all changes in the ownership of properties have to be registered. So you will not be able to escape these higher costs.

This is the second set of rising costs to hit home movers this month. Last week, those putting their house up for sale had to have a Home Improvement Pack available before the property went on sale. That’s a cost of about £300, plus or minus £100 depending on who supplies it.

Since chip & pin technology was introduced on Valentine’s Day 2006 fraudulent card transactions have leapt 43%. This surge comes as banks increasingly take a tough line with victims by refusing to make refunds.

To compound the problem the Home Office has decide that the police will no longer record and investigate card fraud. If you now phone the police about card fraud they’ll simply tell you to contact your bank – they have no remit to investigate.

Back in 2006, chip & pin was introduced with a big fanfare as the solution to fraud. The huge cost of the system was the effectively passed on to the banking public in charges. But it seems that every time the banking industry introduce something new the fraudster follow close behind snapping at their heels.

The reality is that chip & pin has precipitated a massive rise in the cloning of cards. Before the change, pin numbers were only used at bank cash machines but now even just in the UK, they are used at 900,000 tills in stores, supermarkets and restaurants. This has created untold opportunity for fraudsters to steal pins and the magnetic strip information which is essential to make copies.

The reality is that the chip & pin system is broken.

More than half us would consider taking out an Individual Voluntary Arrangement if we were faced with serious debt. 40% of people said they would only consider an Individual Voluntary Arrangement (IVA) as a last resort, but a further 11% said they thought that such arrangements were perfectly acceptable. So says a recent report.
At the same time, 17% said IVA’s were a good alternative to bankruptcy and 9% said they thought IVAs would help alleviate debt and should be made more widely available. Worryingly though, 49% of people said they didn’t know what an IVA really was. To us that’s not surprising. After all why would you go to the trouble of reading up about IVA’s if they were of no interest to you?
So for those that are interested, an IVA is a form of insolvency in which unsecured creditors agree to freeze interest payments on debts and write off part of the debt in return for a set amount being repaid each month for a term of usually 5 years. (Please note: In Scotland, their equivalent to an IVA is a Trust Deed.) But once entered into an IVA will demolish your credit rating for many years. Even getting everday credit such as a mobile phone contract, will be almost impossible.
For people suffering from over bearing debts, an IVA may be an ideal escape route. However, they are not something you should enter into lightly and without considered thought. You also need to take professional advice.
Government figures have showed a 55% jump in the number of people taking out an IVA in England and Wales during the start of this the year.

Barclays bank has decided to fight the ban on the sale of Payment Protection Insurance alongside credit cards and loans imposed by the Competition Commission. This is despite a damning report published earlier this year which accused banks of making 1.4 billion per year in excess profits from selling the insurance.

The insurance is supposed to protect borrowers who go off work through illness, an accident or redundancy by maintaining the monthly payments on their loans and credit cards. The problem has been that around 2 million people have been sold this insurance but due to the exclusions on the policies, they would never have been able to make a claim.

And who mis-sold these 2 million policies?

You’ve guessed it – primarily the banks! 99.9% of PPI policies sold to protect a personal loan were sold by banks and 98.5% of policies protecting credit cards were sold by banks. It is estimated that there are some 15 million PPI policies and Barclays was one of the top five sellers. The Commission found that a lender could potentially make a profit of 982% charging on average £1,200 for a policy that cost £20 to provide. No wonder they want the ban lifted. They want their cash cow back!

But can they be trusted to ethically sell PPI alongside loans and credit cards? Well if history has anything to go by, the answer is a resounding NO.

We say the Competition Commission is most certainly right.

Apparently last month Google’s super powerful indexing systems found a web site in Vietnam on which were posted the details of 19,000 UK credit cards. The list included the names, addresses including post codes and full credit card details of cardholders including Mastercard, Visa and American Express clients.

The web site was only viewable for a day or two before Google removed the site from its index but the very existence of such a site should make us worry.

A spokesman for the banking industry tried his best to calm the situation down by observing that “many of the cards on the list had been stopped and others had expired”. Does that make you feel much better? Not me!

And what did the credit card companies do? According to press reports, they “applied a warning flag to those cards which were still active so they could monitor any unusual activity”. And did the credit card companies send a warning to the account holders?

NO, THEY DIDN’T!

This hugely worrying. The fact that these details fell into criminal hands is bad enough, but for the card companies to fail to warn their clients is similarly “criminal”. Surely the credit card operators have a duty of care which they have largely ignored in respect of these customers?

This also serves to warn each of us to take care whenever we use our credit and debit cards. And that especially applies when we go abroad. Never let the card go out of your sight especially at petrol stations and restaurants.

The British public appreciate that it was necessary to bail out large portions of the UK banking industry. To not have done so, would have left us without a banking system – implying the inability to make or receive payments, savings deposits being lost, a collapsed stock market and a totally inactive economy. A hunter gatherer economy?

But having bailed out the banks and saved the country’s financial skin, we the tax payers, expect the banks to mend their ways. They cannot go back to the ways they operated prior to the big shake up. The banks must be straight about their mistakes and convince the country that they will never return to their previous excessive risk taking and excessive bonus culture (an issue I feel passionately about and have already blogged about on this web site). Those bankers who believe they can keep their heads down for a few months and then it will all be hunky dory – back to the gravy train – must think again! In fact any who are even tempted to think that way should be dismissed without adieu. The banks, and us the bank rolling taxpayers, will be much better without them.

The restoration of the public’s trust in the banks must start with a commitment that past mistakes will never be repeated and this implies a willingness to learn from the mistakes.

This also means that the culture of secrecy built into banking business has in part to change. I am not advocating that banks divulge the activities of its clients (unless required to do so for legal reasons), but regulators working on our behalf, must be much more hands on. For that to work, they have to get inside the banks operation and fully understand what is going on and how the banks are controlling themselves - and the risks they take.

The only problem then, is do the regulators have the necessary skill set to undertake that level of regulation? I suspect not as things sit now, but that will have to be corrected. I only hope they can.

When families are working out their budgets it’s going to be a good move to budget for an increase in the interest they pay on any mortgage, loans or credit cards that are subject to variable interest rates.

A spokesman from the Bank of England commented that whilst they had acted boldly to reduce interest rates to react to the recession, they would act equally boldly if inflation started moving up. This warning comes at a time when families are slashing their expenditure and building up their savings reserves in an attempt to ride the down turn.

At the moment prices overall seem to have stabilised thanks to falls in fuel costs and lower mortgage repayments. But food costs are rising largely due to the fall in the sterling exchange rate and the next move for mortgages, when it comes, will be up. The recession will help to put a brake on other prices but in my view all these are only short term situations.

We may well see a limited recovery in the value of sterling which will help with the cost of imported goods, but it’s unlikely that sterling will recover to the values seen only 9 months ago.

In conclusion, it is my view that within the next 18 months we will see inflation rising at a rate which alarms the Bank of England. In those circumstances and in their words, “we will be prepared to respond (by increasing interest rates) with equal vigour on the way back up”.

If you agree with my analysis, in your family budgeting please allow for your interest costs to increase, say 12 months from now.

Going to put your house up for sale? Then as from today new rules apply to Home Improvement Packs.

From today you can’t even put your house on the market until you have a Hips pack. That means delays as well as the cost which will be somewhere between £175 and £200.

According to the national Association of Estate Agents, 65% of estate agents believe that the changes would put people off selling their house. To me there is no doubt that the additional hurdle won’t help, but even before, a seller would have to get a Hip pack a some stage so it’s not extra cost - it just means that now you need a Hips pack to even start selling your house.

Don’t get me wrong, I’m not a supporter of Hips. I do not believe that the packs are anything more than the property version of political correctness. They supposedly show a buyer the energy efficiency of a house but there are doubts as to how reliable the reports are. And it is clear that very few buyers ask to see the report. So if they don’t want to see it surely it has no value?

Of course, a Hips would have had value if it included a worthwhile survey as it was originally intended. But there were legal complications with that proposal and the property survey part of the Hips got dropped. It seems to me that what’s left isn’t worth all the hassle.

Has any of you out there read a Hips pack? And have any of you used it to help you decide which property to buy? Now hands up all who want to kick out Hips …………

We believe there is going to be a boom in what are called offset mortgages.

The basic concept of an offset mortgage is simple. The homeowner has two accounts with his/her mortgage lender – a mortgage borrowing account and a savings deposit account. So for example, a homeowner may have a mortgage of £100,000 and savings o deposit of £25,000. Then rather than charging the client interest on his mortgage and then paying interest on the savings deposit, the lender nets the two balances off and only charges interest on the net balance – in our example, £85,000.

Why is this so attractive?

Well first of all interest charged on the mortgage is at a higher level than the interest received on the savings. So by offsetting the deposit against the outstanding mortgage, you are effectively receiving income from the deposit at the higher level charged on the mortgage. And to make things even better, because you don’t actually receive interest on your deposit – it’s offset to reduce the interest you actually pay on your mortgage - you don’t pay any tax on the interest you’ve in practice earned on your deposit monies. A double gain!

So will an offset mortgage suit you? Firstly you need to be aware that most lenders do charge a small premium for their offset mortgage facilities. This means that unless you have significant monies to deposit, an offset mortgage will end up costing you more!

An offset mortgage should be considered by homeowners who want to keep at least 20% of the value of the mortgage in a savings account. Why some of you will be asking, don’t you use this money to simply repay part of the mortgage? Well for some people that will be the best course of action. But if you want to have the same affect on the interest you pay as paying off the mortgage, and at the same time you want to be able to access your deposit monies, then an offset mortgage could be for you.

If you think an offset mortgage could be for you, we advise you to discuss your circumstances with an independent mortgage broker. They can check everything out for you and then find you the best offset mortgage offer on the market at the time.

Despite signing up to packages whereby Mr and Mrs UK have effectively lent the UK banks billions, the banks are not keeping to their part of the bargain. They signed up to the agreements on the basis that they would save the banks from going under and provide the liquidity the banks needed to resume bank lending.

What has happened? The banks are still keeping their hands and cheque books deep in their pockets. Mortgages are difficult to obtain and business, particularly small business, abound with stories of uncooperative bank managers more likely to call an overdraft in rather than extend it.

Unless banks get their fingers out, we are in for a deeper recession than anyone predicted. Modern western economies revolve on credit and without it everything grinds to a halt.

I just can’t believe that those on power are going to sit on their hands whilst all this happens. Better brains than me understand what is happening and know the repercussions of failure to free up credit.

At least Mervyn King, governor of the bank of England, says he shares my concerns about the low level of lending. Apparently over the coming months, he expects lending to increase.

I just hope he is right – we are all affected.