The Month in Review: Our Top Industry News
We bring you this month's most important stories in credit and finance.
Another month has gone by and the UK’s financial situation looks very different again. Below, we discuss the most important stories from the month of July concerning you and your finances.
The month began with the unsettling news that over three million mortgage borrowers are paying £1,272 extra a year on their repayments because they are on a standard variable rate (SVR). Many borrowers become trapped in these rates as stricter lending assessment means they no longer fit the criteria to reapply for a mortgage. Lenders will often want to see your credit score when assessing your credit worthiness. It’s essential that you have a good credit score to ensure there are no complications when re-mortgaging or applying for the first time.
It isn’t just credit scores that many Brits are in the dark about, apparently we find all of our finances a bit baffling. When asked how much the average cost of raising a child is, many guessed £50,000. The actual cost is over four times this amount at £229,000. Even more concerning is that Brits believe their pension pots will get them much further once they retire, estimating that a £124,000 pension pot will generate £25,000 a year in retirement. In actuality, they would need over £300,000 to receive an annual pension this size. Being aware of your financial situation and planning accordingly is essential in ensuring a good quality of lifestyle, especially in retirement.
According to the Mail on Sunday, financial apathy costs Brits nearly £17 billion every year. Brits overpay for many financial products, for instance a whopping extra £4bn is being spent on mortgages because people are sticking by poor deals. Confusing and inaccessible credit reports and scores only add to this problem – it’s no surprise there is apathy when it’s so difficult to control your finances.
In more encouraging news, the Financial Conduct Authority (FCA) announced that it will be ensuring banks and other ISA providers make the interest rates offered clearer. It is worried that savers who remained with the same provider were missing out as they were not being offered the most attractive deals. It’s important that people do not become complacent about their financial situation. This means not only looking for the best deals on the market, but checking and improving your credit score to make sure you can apply for those deals successfully.
Despite the apparent financial apathy prevalent in the UK, it was reported that consumer confidence is at a ten-year high as the economic recovery improves living standards. It’s fantastic that people are feeling confident, but it’s important not to simply accept the first offer when taking out credit. Although it may look good, there could be better deals on the market and people can unlock more of these by being on top of their finances and maintaining a good score.
And finally, on Thursday it will be announced whether the Bank of England will increase the interest rate. It has also been reported that many homeowners are rushing to re-mortgage their homes ahead of this potential rate rise. For these homeowners with fixed term mortgages, the effects on their repayments will be delayed for a few years. However, borrowers on tracker mortgages must prepare for increased repayments much sooner. To absorb the increased mortgage costs, borrowers need to ensure they are getting the best deals across all of their financial products.
Last month highlighted the need for Brits to take more of an active role in their finances. Unnecessary spending is high and only further reinforced the need for borrowers to arm themselves with the right information to get the best deals. That’s why we’ve removed one of the hurdles for borrowers, providing free, accessible and clear credit reports and scores, so getting a great deal is one step closer.