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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to http://pennystockpaycheck.com for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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first direct Cuts Rates Across Mortgage Range

Category : Stocks

Majority of 65%, 75% and 90% LTV mortgages reduced by up to 50bps

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Shortfall fears for mortgage holders

Category : Business, World News

More than a million people with interest-only mortgages face a financial crunch when they have to pay them off, the regulator warns.

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Shortfall fears for mortgage holders

Category : World News

More than a million people with interest-only mortgages face a financial crunch when they have to pay them off, the regulator warns.

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Thousands to complain about trackers

Category : Business, World News

Thousands of borrowers who took out mortgages through Bank of Ireland and Bristol and West are to complain about a sudden increase in their mortgage rates.

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Mortgage lending ‘fell in February’

Category : Business, World News

The number of people taking out mortgages last month fell, according to the UK banking industry.

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No credit due to husband who hid debt

Category : Business

Husband’s credit rating to blame for two mortgage rejections

We tried to remortgage in August 2012 but we had two applications rejected, so we checked our credit scores. Mine was OK, but my husband’s was poor.

My husband took out a Lloyds TSB personal loan in 2008 and has never missed a repayment. However, the credit file showed he had missed numerous payments, which cut his score. We tried to put it right with many phone calls to Lloyds TSB, where he was variously misinformed and fobbed off. He paid off the loan in full in November and was told that this would resolve the issue, to no avail.

We put our complaints in writing to Lloyds in December 2012. My husband received a phone call from the complaints department the same month, accepting responsibility for the error, offering £100 as an apology for the inconvenience, and assuring him the matter would be resolved quickly. This has not been the case.

This is causing significant financial stress – I am expecting a baby, and we are stuck on a high SVR mortgage. JN, London

You wrote to us on behalf of your husband but, unfortunately, you did not have the full picture. Once we became involved your husband admitted to you that he had run into some problems paying off his debts two years ago. He had not told you

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Trapped in negative equity with nowhere to go

Category : Business

Negative equity and a dearth of first-time buyers have trapped many families wanting to upgrade to a bigger home

Tom Green and his wife, Keira, bought a flat in Solihull, near Birmingham, in February 2008 as the property market reached its peak. “We took on a 125% mortgage from Northern Rock – at that time it was sold as ‘your property will increase in value, so it’s no problem’,” he says. However, just a couple of months later the market collapsed. “It’s a big flat and there were just the two of us, so we decided to stay put and wait it out. We thought after a couple of years things would pick up,” he says.

Instead, five years on, Tom Green thinks it is still worth less than the £122,500 they paid. They have watched as the neighbourhood has become less desirable and nearby properties have hung around on the market for years. “There are no first-time buyers left – they’ve all vanished, certainly at the level we want to sell at.”

The couple are among a large number of would-be second movers trapped by negative equity and a scarcity of first-time buyers whose plight is highlighted in two new pieces of research.

Yesterday, Lloyds TSB’s third annual Second Steppers report said that 61% of those who wanted to move up the property ladder in 2012 were unable to do so, while research published tomorrow by website Rightmove, will show that 40% of people hoping to buy their second property this year are living in homes their families have outgrown.

One in 10 told Rightmove they were trying to trade up despite living in a home worth less than they paid for it.

Of the 500 people interviewed by Lloyds TSB, 25% were in negative equity, while the same number reported a lack of offers on their home. Around a fifth thought it was harder to move up the housing ladder than it had been to get on it in the first place.

The lack of new buyers is underlined by Rightmove’s research, which found that in six out of 10 regions of the UK the proportion of people saying they hoped to buy for the first time in 2013 was below 20%, less than half of the 40% associated with a healthy housing market.

Of the 4,000 would-be second movers who responded, 40% said their families had outgrown their homes, while 7% said the size of their property had made them put plans to start a family on hold.

Tom Peirson and his family are among those who are squeezed into a smaller space than they would like, but can’t find the way to buy a bigger home.

Peirson, a firefighter, and his wife, Emma Jane, who runs a hairdressing salon, live with their two daughters in a two-bedroom home near Brighouse in Yorkshire. It is worth less than the £82,000 they paid in November 2005 and has been on the market since their youngest daughter was born four years ago.

He says: “We had an offer last year but they pulled out,” he says. “We’ve just had another offer, but it’s for less than we owe and, with all the other costs, we are not sure that we can afford to buy anywhere.

“If you are a young couple and can live at home you may be able to raise a deposit, but we are really struggling.”

Government initiatives to kickstart the housing market have predominantly focussed on new-build property, to help the construction industry. But there are hints that the Budget could include measures to extend the NewBuy scheme, which allows buyers to take 95% mortgages on new homes (with some of the loan guaranteed by the government and developers) to existing properties – a move that could free up some of those trying to sell.

Rightmove says although second-time buyers made up 29% of those looking to move, their needs were not often considered. “Second-steppers are the ugly duckling of the housing market,” says the website’s director, Miles Shipside.

“Overlooked for government incentives, struggling to protect their equity if they bought near the peak, and now crammed into a home that is too small.” He added: “It appears many second-steppers have had to shelve their family planning and home-moving ambitions since the onset of the credit-crunch over five years ago.”

Psychiatrist Clare Gabriel (not her real name) lives in a two-bedroom flat in Glasgow with her husband and two children and runs a business from there. It cost £155,000 in 2005 and was recently valued at £120,000. “We have tried trading in with developers but they won’t touch our flat,” she says. The couple are trying to get their lender’s permission to rent out their home so they can use Scotland’s Mi new home scheme to buy somewhere bigger. “It is difficult because we want to live where there are decent schools and that means prices start at £265,000 … Even if we did succeed we’d be taking a risk having two mortgages.”

Back in Solihull, the Greens have family reasons for moving, as well as financial ones. They had a child in November, and rather than live in a second-floor flat with no lift, they moved in with Tom’s parents. “If we sold now we would lose £10,000-£15,000 and we would need to find another £5,000 in fees – the last five years would have been a waste of time and money,” he says.

Fortunately, the property was easy to let and since the start of the year they have had a tenant. “We realise we are lucky to be able to live with my parents while we save money and in 12 months we will be in a much better position.”

Why low interest rates are not the answer

Category : Business

We’ve had four years of low interest rates and the medicine is not working. It’s time the Bank changed the treatment

It is four years since the Bank of England cut the base rate to 0.5% and started its £375bn money-creation programme, quantitative easing.

The Bank’s 2009 actions helped avoid a deflationary financial catastrophe. Subsequent monetary measures pushing lending rates lower in order to revive the economy have failed, merely resulting in stagflation. Yet, still the Bank believes the problem is that rates are not low enough, even floating the astonishing possibility of “negative” interest rates.

Good doctors, whose patient is not recovering, would not just continue prescribing more of the same medicine, they would look for a different cure. Yet the Bank is steadfastly sticking to the old treatment that has failed for four years. We are no longer in an economic emergency. True, the economy is weak and unemployment is too high, but a further interest rate reduction could just pile on more pain, without generating growth.

I believe the damaging side-effects of the monetary medicine may actually be undermining recovery. Yes, those with large mortgages have had a bonanza, and banks have benefited hugely, but ultra-low interest rates are hurting important sections of the economy. Savers’ and pensioners’ nominal and real incomes have fallen sharply, while companies providing pension schemes have had to pour billions into their funds rather than their businesses, as low rates push up deficits.

Since 2008, Bank of England policy has focussed entirely on bringing down interest rates in order to boost growth. Academic models predict lowering rates will boost bank lending and increase access to credit for purchases of homes or other goods and services, ensuring economic recovery. However, this hasn’t happened here.

Rather than rushing to spend their extra money, over-extended mortgage borrowers have taken advantage of lower rates to accelerate repayments and clear their debts. Meanwhile, older savers’ and pensioners’ incomes have been squeezed by falling rates and soaring pension costs, leaving them poorer. Savings rates have lagged behind inflation, reducing real incomes, eroding the real value of savings and lowering consumer confidence. Fearing for their financial future as their current or prospective income plummets, many have cut spending.

Of course, no one wants to see home repossessions, but artificially propping up house prices locks future generations out of the housing market, distorts rental costs and delays the banks and building societies recognising their losses. Around four in 10 mortgages are interest-only – with many having no strategy for capital repayment – so low rates are just a politically expedient short-term sticking plaster, not a solution.

Furthermore, although low official rates have reduced mortgage rates, other borrowing costs have risen, as lenders have increased margins. Overdraft, loan and credit card rates are higher now than in 2008-09.

Low interest rates act like a tax increase on savers and pensioners, by reducing their income. This quasi-tightening of fiscal policy has transferred national income from older savers, to younger borrowers and banks. For example, since 2008, borrowers with a £100,000 mortgage are over £2,400 better off every year. However, savers with £100,000 in Cash Isas or fixed-rate bonds are over £2,750 a year worse off.

If the Chancellor were to announce a huge tax increase on older workers and pensioners, particularly to help people who had borrowed or lent too much, there would be uproar. But, by doing this via monetary policy rather than fiscal policy, there has been no democratic debate. Hardly a wonder that younger people have lost confidence in saving.

Economies, especially those with ageing populations, need to encourage saving. If the self-reliance culture is lost, people will reach old age in debt, or with little private income to support themselves. More will fall back on the state, placing extra burdens on younger taxpayers, undermining economic growth.

New thinking is urgently required. We don’t need to create new money. There are billions in pension and insurance funds which, with a contingent government/Bank of England guarantee, could be used to fund construction or infrastructure programmes and even direct lending to small firms. The transmission mechanism from low rates to growth is broken, we need to bypass the banks to generate recovery, rather than hoping that bringing rates down further will do the trick.

Mortgage rates fall to new lows

Category : World News

Interest rates on some new mortgages fixed for five years have fallen to the lowest levels on record.

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Negative equity plagues homeowners

Category : Business

Council of Mortgage Lenders estimates there are 719,000 households with mortgages worth more than the property

In autumn 2007, in the days just before Northern Rock began to crumble, Nick Scott and his fiancee Hayley Thomas bought a three-bed semi in Warrington, Cheshire. It cost £100,000 but needed another £8,000 for renovation. The words “credit crunch” were yet to enter common usage, and lenders were still being easy with mortgages. The couple managed to obtain a 100% interest-only mortgage on the property, which set them back £450 a month in repayments.

Nearly six years on, the property is worth substantially less than the couple paid for it. At best, Scott thinks they could get around £70,000, which would leave them £30,000 out of pocket, an amount he says there is no way they can afford.

While London and much of the south-east has seen prices largely recover to their pre-credit crunch peak, the forgotten victims of Britain’s housing market rollercoaster grow in number as you travel north.

The Council of Mortgage Lenders (CML) estimates that there remain 719,000 households in the UK with mortgages that are worth more than the property. Worst hit is Northern Ireland, which hitched a ride on the Celtic Tiger but has come down with a painful bump. It is estimated that around one in three households in the province is in negative equity.

In Glasgow, one debt adviser describes the city’s negative equity problem as an “epidemic”, though across Scotland as a whole the percentage of households with problem loans, at 11%, is smaller than the north-west, Yorkshire and Humberside, where the official figure is 15%. That compares with 5% in London.

Overall, the CML estimates that negative equity has reduced across the UK from a peak of more than 800,000 households, and says it is significantly below the levels during the early 1990s property crash, when it peaked at 1.6m homes. But despite talk of households paying down their debts and improving personal balance sheets, for those who bought at the top of the property boom and have suffered salary freezes since, debt worries have only increased.

Figures from the Office for National Statistics reveal that debt levels increased everywhere in the UK, except London, between 2006-08 and 2008-10. Total debt outside of mortgages reached £94.7bn in 2010, at the same time as the opportunity to “consolidate” debt on to a mortgage has virtually disappeared.

Lucy Haughey of PlanBPartners, a social enterprise in Glasgow specialising in financial advice for charities, retirees and what she calls “the working poor”, says negative equity is at epidemic levels. “A lot of clients are self-employed and professional and in their 40s. They did something a little naive, like remortgage upwards a few years ago. Now they’re in negative equity.”

Haughey’s firm has up to 10 clients a week registering with credit card or other personal debts. “If they had homes, I’d get them to remortgage to clear higher-interest debts, but now that’s not an option as so many are in or close to negative equity,” she says.

Land Registry figures this week revealed that although prices across England and Wales rose by 1.7% in 2012, they remain 11% below the peak level reached in November 2007.

In most of London, prices have surged ahead, but in other parts of the

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