The Financial Services Authority (FSA) claims that
46% of households have little or no money left each month after paying mortgages and bills
Even if you’re lucky enough to be in the other 54% this announcement will still affect your financial future because the FSA are using it to justify their clampdown on excessive mortgage lending.
This will mean, regardless of the complaints by builders and lenders, that mortgages will be harder to find which will take us back about 40 years when people had to save for years with a lender (nearly always a building society then) before they could contemplate buying a house. Lending requirements were strict – borrowings were normally limited to three times the salary of the main earner + half the other applicant’s salary.
Whether or not this is good or bad for the housing market is irrelevant because if you’re going to buy a house in the future you’ll have to show you’re suitable. You’ll have to save as large a deposit as possible which although difficult will make applying for a mortgage far easier. Gone are the days when you could just buy a house with easy finance.
The sooner you start saving the better.
The global retail banking chief executive of Barclays, Antony Jenkins, has been accused of living in a “parallel universe” after he defended the banking sector against charges of mis-selling and high-pressure sales tactics.
After all we all know that banks don’t try and sell us something we don’t want!
He made an interesting comment later in the interview saying his staff are “very keen to get the customer the right product”. I would be a great deal happier if they were as keen to offer the customer the right advice!
His attitude is the reason why I refer people to articles like this.
Peter Rogol of Goodman Jones Chartered Accountants has written the best article I have read in years on deciding if a pension policy is the best way to save for retirement.
I have added a comment to the article which is worth repeating here:
this is advice and not as in the case of most articles merely selling dressed up as “help”
The Government’s 100% guarantee of investments in Northern Rock will end in the next few weeks according to the Daily Telegraph.
Deposits will still be covered under the Financial Services Compensation Scheme. In simple terms, an investor has £50,000 of their investments covered in the event of the failure of a bank or building society.
The increase in ISA limits for those aged 50 and over although very welcome is not as straightforward as it first seems.
The ICAEW Tax Faculty has highlighted some pitfalls.
Yesterday’s Sunday Times published a warning to savers about withdrawing money from their savings accounts and “investing” the money in corporate-bond funds.
P.S. If you want to assess the safety of these “investments” it may be worth counting the number of times “risk” appears in the above definition.