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MORTGAGE NEWS
Tracker popularity set to fall
Homeowners soon having to remortgage are set to shun tracker deals as expectations rise of an increase in base rate. According to Santander, more than 880,000 mortgage deals will come to an end over the coming six months. However, only 13% of those due to remortgage said they would opt for a tracker mortgage, compared to 33% just two months ago. Meanwhile, the amount likely to go for a fixed rate deal has increased from 20% to 23% over the last month, half of whom said they favoured a two year fix rather than one for three or five years. The majority of respondents said a good rate would most influence their decision over which deal to take. One in ten said the opportunity to make under or overpayments was most important. Record inflation rise hits savers(Moneyfacts 25/1/2010)
SAVINGS NEWS
Savers have been struck another blow after UK inflation witnessed its biggest ever monthly rise in December. According to the Office for National Statistics, annual consumer prices index inflation leapt to 2.9% last month, up from 1.9% in November and the first time the rate has exceeded the government target of 2% since May last year. However, with savings rates seemingly having hit rock bottom, the rise represents further bad news for savers. Research from Moneyfacts Group suggests basic rate taxpayers currently need to find a savings account paying at least 3.63% in interest to prevent their savings pot being eroded, while for a higher rate taxpayer, the challenge is to locate an account paying 4.81%. However, there are currently no variable rate accounts paying interest above 3.63%, while the average rate on no notice accounts is hovering around 0.75%. The real return after basic tax and inflation on no notice accounts has dropped to minus 2.30%, the lowest level seen since February last year. "Inflation is starting to make its unwelcome mark on people's spending power and with savings interest rates stuck at their historical low, there is little that savers can do to fight back," said Darren Cook, spokesman for Moneyfacts Group. "Pensioners who may rely on their savings pot to subsidise their retirement are likely to be feeling the pinch the most." (Moneyfacts 20/1/2010)
Submitted by Kevin Kempthorne on Wednesday 27th January 2010