Windfalls for NU policyholders

July 31, 2008 | posted by Pam Atherton in Insurance, Investments | comments (0)

A million Aviva policyholders in two of Norwich Union’s with-profit funds are to be made offers of windfall payouts of, on average, £1,000.
 
About 700,000 people could receive between £400 and £1,000, and another 220,000 could get a payout of between £1,000 and £3,500 if they accept. The payouts, worth a total of £1bn, follow lengthy negotiations between policyholder advocate Clare Spottiswoode and the management of Aviva (formerly known as Norwich Union).

The offer only applies to investors in two of Norwich Union’s oldest funds - CGNU Life and CULAC with-profits funds, who hold endowment policies, pension policies and with-profits bonds.
 
The payout will come from shareholders’ funds.  The company is effectively buying out policyholders’ rights to any future claim on the surplus of the two with-profits funds - known as the ‘inherited estate,’ or orphan assets.
 

The inherited estate has  largely built up over many decades because with profit funds reserve more money than they need to enable the fund to smooth returns, but also due to some policyholders failing to claim when their policies mature.
 
The amount offered to individual policyholders will be outlined later in 2008, and if accepted will probably be handed over next summer.
 
Policyholder advocate, Claire Spottiswoode, an independent expert appointed to represent policyholder interests, said: “This deal is good in all respects. It also provides a fair return to shareholders.”

About 70 per cent of the inherited estate is being transferred to policyholders in total, either as bonuses or cash and almost all of the cash payments will be tax-free.
 
That said,  individual policyholders can choose to turn down the offer, and retain their right to future claims on the inherited estate.  But Aviva warned that it does not intend to make any further payouts in the next few years.

The Financial Services Authority (FSA) said that its preliminary assessment was that Aviva’s offer was fair.

In June, the Treasury Select Committee criticised the FSA for failing to protect with profit policyholders, saying that not enough was being done to stop insurers from managing these funds in the interests of shareholders, rather than policyholders.

 But at least Aviva has agreed to make a payout, unlike Prudential which disappointed thousands of its policyholders last month when it changed its mind at the last minute on a proposed distribution of  its inherited estate.

Defaqto investment principal, Fraser Donaldson, commented: “One of the conclusions drawn from Prudential’s decision not to share its surplus with policyholders in the form of a windfall is that this may be of benefit to policyholders in the long term, and underlined Prudential’s commitment to this market for the foreseeable future.

“Norwich Union’s decision to pay out a windfall, could be viewed as the first step in backing away from the with profits market. Whether or not policyholders will be better off in the long term for accepting the windfall, only time will tell. At least the NU policyholders advocate and the FSA feel this a fair offer.”

“http://www.aviva.com/index.asp?PageID=55&Year=2008&NewsID=4249

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Performance related fees fail to reward investors

July 30, 2008 | posted by Pam Atherton in Investments | comments (1)

Performance-related fees fail to deliver out performance and simply impose extra costs on investors, according to a recent report by Grant Thornton.

The accountancy firm found that more than 45 per cent of mainstream investment trusts - companies which invest in the shares of other companies -  now charge performance-related fees, whereby the investment manager is rewarded for beating a certain benchmark or increasing a trust’s net asset value.

This is an increase from 2000 when only one in three investment trusts levied performance charges.

Although fixed annual fees tend to be reduced when incentive fees are introduced, Grant Thornton found that on the whole, performance fees had led to higher fees overall.

In addition,  the report found that investors received nothing in return for paying higher investment fees, indicating investment managers fail to generate higher returns just because they are incentivised.

Pascal Dowling, publisher of Trustnet (www.trustnet.com) says: “Obviously these vehicles have a reputation for being cheaper overall than unit trusts, so it is a shame if they spoil the goodwill they’ve got by upping their fees without producing the returns that justify those fees. But the same applies to any investment vehicle.”

A representative sample of trusts analysed by Grant Thornton between 2003 and 2007 found that, on average, trusts without performance related fees had produced slightly higher returns than those that did have them.

 Grant Thornton concludes that “the principal effect of performance fees has been to increase financial returns to the management  companies.”

In addition, two thirds of performance fee structures did not involve a so-called ‘high water mark ‘ minimum level of attainment,  meaning that the manager could be paid extra simply for returning a trust to its high point prior to a slide in its net asset value.

The only benefit of performance related fees for investors which Grant Thornton could identify was that they tended to help with the retention of certain fund managers. But otherwise, the report makes disappointing reading and Grant Thornton urged investment trust boards to ask themselves why they maintained performance fees  when they were failing in their original aim.

For more on investment trusts’ performance figures visit:
http://www.find.co.uk/my_find/pic/tn_investment_trusts

Read our guide:
http://www.find.co.uk/investments/funds&trusts/investment_trusts_guide

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How to get free euro bank transfers

July 29, 2008 | posted by Pam Atherton in Banking, Credit Cards | comments (0)

Europeans remitting funds back home or Brits with properties in the EU may be interested in Citibank’s fee-free euro transfer service to third party accounts across Europe.

Called SEPA (Single European Payment Area) transfers, the payments take three working days and can be made to any bank account in 31 European countries.

If you make the transfer from a Citibank euro current or savings account, it will be completely free of charge, but if from another Citibank currency account, there will be a conversion charge of up to 2 per cent.

UK banks  typically £9-£21 for cross border transfers, and those from sterling accounts will normally incur conversion charges as well. Cross border payments from UK banks can also be slow and often involve an intermediary, or ‘correspondent’ bank, with both banks deducting costs.

But the European-wide SEPA agreement, which came into force earlier this year, was designed to make cross border payments and transfers easier and quicker.

If you don’t want to pay any charges for such transactions, you will need a euro account with Citibank with a balance of at least €2,000.

The account also allows direct debits and comes with a debit card for overseas transactions. If the account has a balance of less than €2,000, you have to pay a £10 a month fee.   However, there is no charge on Citibank’s basic Euro Savings Account.

Fund transfers and payments made from a non-euro account with Citibank will incur currency conversion charges of up to 2 per cent and the receiving bank may also deduct costs.

For very large or regular foreign currency transfers or one-off payments, there are currency specialists such as Caxton and HIFX which allow you to hedge future currency transactions on payment of a deposit.

For withdrawing small amounts of foreign currency from cash machines while abroad, Nationwide’s debit card linked to its Flex Acccount, offers one of the best deals. There is no fee and no currency conversion charge. For purchases made while abroad, Nationwide’s Gold Credit card is similarly recommended.

For Polish nationals here are special UK bank accounts for Poles living in the UK. See our guide:

http://www.defaqto.com/consumer/current-accounts/polish-bank-accounts.aspx

Or visit:
www.citibank.co
www.nationwide.co.uk
www.caxtonfx.co.uk
www.nationwide.co.uk

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Tax refund change set to hit pensioners and higher rate taxpayers

July 28, 2008 | posted by Pam Atherton in Banking, Pensions, Savings, Taxation | comments (0)

Pensioners, non working spouses and higher rate taxpayers are all likely to be among the individuals to be hit by the Revenue’s move to shorten the time limit for tax refunds from six years to four.

Many elderly people could be left unable to reclaim hundreds of pounds of tax deducted at source from savings income and annuities, while higher rate taxpayers who are members of  company pension schemes, may be unable to claim the extra 20 per cent tax relief due on their pension contributions.

Cuurrently individuals can reclaim overpaid tax going back six years to the 2002-03 tax year. But as part of the Finance Bill currently going through Parliament, this time limit will be reduced to four years from 2010.

Many older people and those on PAYE often have their tax affairs reviewed only every few years and therefore may discover too late that they are eligible to  make a reclaim for overpaid tax or claim a tax relief. 

Retired and non-working spouses often find they have paid too much tax because of the banks’  requirement to deduct 20 per cent income tax at source on  savings interest. If your total annual income is less than your tax free personal allowance, you can register to receive interest gross by completing form R85.

But this isn’t possible if your income exceeds your personal allowance, in which case the bank or building society will deduct 20 per cent income tax automatically on all your savings interest, even if your circumstances change during the tax year.

This means that savers entitled to the 10 per cent tax band, which has been retained for certain low income groups, will have to make a reclaim for overpaid tax at a later date.

Higher rate taxpayers contributing to company pensions often assume that the higher rate tax relief which is payable on pension contributions is recouped by their pension scheme and added to their pension fund automatically. But this isn’t the case.

All pension contributions (whether to a company scheme or to any form of personal pension) are paid net of 20 per cent income tax.   Higher rate taxpayers need to reclaim the remaining 20 per cent tax relief they are entitled to via their self assessment tax returns.

Any overpaid tax will then be refunded, either by raising their tax- free allowance through PAYE (if employed), or used to reduce your tax bill, if you are self employed.

Employees who are higher rate taxpayers and who opt to pay their company pension contributions via salary sacrfice, don’t have to worry about this. Their contributions are paid gross, directly from their employer to the pension provider, so their pension funds benefit from higher rate tax relief automatically.

STOP PRESS: Self employed individuals who owe tax need to get their tax bills paid today if they want to avoid swingeing penalties and fines. The deadline foor second payments on account for the  2007-08 tax year is midnight on Thursday 31 July.

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Overdraft complaints put on hold for another six months

July 25, 2008 | posted by Pam Atherton in Banking, Loans | comments (0)

The long running dispute between disgruntled bank customers and the high street banks over unauthorised overdraft charges shows no sign of an early resolution.

At the beginning of July, Mr Andrew Justice Smith announced at the end of a three day hearing, that no immediate ruling would be made regarding banks’ historic overdraft charges.

The High Court case had heard arguments on whether charges going back for years can be challenged by bank customers.

In the meantime, tens of thousands of cases brought by bank customers for the refund of bank charges have been held in abeyance, since the Office of Fair Trading and eight banks agreed on a test case in July 2007 to clarify the dispute.
The OFT has been seeking legal confirmation that it can rule if bank overdraft charges of up to £35 per item are fair or not, while the banks are fighting to maintain the £3.5bn a year of income they generate from customers going into the red without permission.

The banks are already appealing against the judge’s initial ruling that the OFT can assess whether the banks’ current fee agreements with their customers are fair or not.

At the hearing at the beginning of July, the judge said he needed time to consider the arguments on whether the fees banks have charged historically can be assessed for fairness and did not give a time when he would announce his decision.

Meanwhile, the Financial Services Authority has  extended for another six months, pending the outcome of the High court case, the ‘waiver’ of its normal rules,  whereby banks are required to deal with complaints promptly.

The waiver means that banks are not required to handle complaints relating to unauthorised overdraft charges within the time  limits set out under the FSA’s dispute resolution procedure.

But the watchdog says it will review the waiver again before the end of January 2009.

The regulator has also issued guidance stating that banks should waive future overdraft charges and not enforce past ones in ‘hardship’ cases, defined as being where a customer’s debts consist largely of previous overdraft fees.

But campaigners have hit back saying that the further delay before the tens of thousands of county court cases can be heard is unacceptable.

David Black, Defaqto banking principal said: “The case is likely to drag on for years as it may be referred to the European Court.  The ultimate result is likely to be the end of free banking as we know it.”

In the meantime, disgrunted bank customers can always switch to another bank. Take a look at the Defaqto current account Compare Tool:

http://www.defaqto.com/consumer/current-accounts/compare-current-accounts.aspx

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Postcode annuities may penalise healthy pensioners

July 24, 2008 | posted by Pam Atherton in Pensions | comments (0)

It’s all change in the once sleepy world of annuities. And before you yawn with boredom, be aware that you may well have to buy one yourself, whether you like it or not.

This is because three quarters of final salary (defined benefit) schemes are now shut to new employees and more workers belong to group personal pensions or have some form of individual personal pension arrangement, such as a stakeholder or Sipp.

All these types of personal  pension require you to buy an annuity with your pension fund when you come to retire (unless you decide to do income drawdown instead, but that’s another story).

The cost of buying an annuity has soared over the last 15 years, as bond yields have fallen and longevity has increased.

In addition, whereas most insurers used to assess annuitants’ likely life expectancy based on gender, age and marital status, the business of rating how long someone is going to live is now a much more sophisticated.

This is because the difference in lifespans in different parts of the UK is quite stark. People living in Glasgow, for instance, have the shortest likely lifespans for anywhere in the UK, whereas men living in West Dorset have the longest.

Hence, the shift to what is known as ‘postcode annuities’ whereby insurers look at geographical, as well as health and socio-economic, factors when estimating life expectancy.

The idea is that if you live in an area with a history of people dying early, the insurer will pay you a higher annuity income because you are likely to die much sooner than someone living in a ‘long life’ hotspot,  such as Bridport in Dorset.

There are also strong correlations between blue collar workers living in the north of the UK and shorter life expectancy, and wealthy white collar employees in the south and longer life expectancy.

Norwich Union is to follow Legal & General and to start using postcode annuities from September this year. Annuitants will be divided into nine groups based on geographical life expectancy, with those with the shortest life expectancy receiving up to 2 per cent more than those with the longest expected lifespans.

NU admits that this will mean that around 30 per cent of ‘healthy annuitants’ will be worse off.

Defaqto pensions principal Matt Ward says: “This development is yet another sign that annuity rates are moving towards an individual pricing basis. The onus for consumers who view annuities as their preferred method for translating retirement savings into retirement income is to shop around to find the best annuity rate in the market for their individual circumstances, whether this be through their smoker status, health outlook or postcode.”   

Currently only one in three individuals approaching retirement bothers to seek out the best rate in the annuity market by using what is called “the open market option” - or the right to shop around, to you and me.

By doing so, you could obtain up to 16 per cent more than the standard rate if you are a smoker, and up to 30 per cent more if you have a life threatening illness or medical condition.

It is best to use an Independent Finacial Adviser when looking to purchase an annuity as it is a complex business and once you have bought an annuity you can’t change your mind afterwards. 

It really is a ’once-and-for-all’ decision which will affect your income for the rest of your life.

 You can get an idea of how much your pension fund might buy you  by using the Defaqto Annuity Calculator:http://www.defaqto.com/consumer/pensions.aspx

IFAs specialising in the annuity market include:
http://www.williamburrows.com/
http://www.retirement-partnership.co.uk/
http://www.annuitydirect.co.uk/
http://www.annuity-bureau.co.uk/

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Insurance myths fuel rejected claims

July 23, 2008 | posted by Pam Atherton in Insurance | comments (0)

Research by car insurer LV= has found that over half of all motorists don’t understand their insurance cover and, as a result, could be breaking the law.

The insurer has compiled a list of the  seven of the most popular misconceptions and urges motorists to bear these in mind when buying or renewing motor cover or risk in order to avoid suffering a rejected claim.

MYTH 1:  “If I have comprehensive cover, anyone can drive my car”
 
FACT: If you lend your car to someone else who is not named on your policy, you need to ensure they have comprehensive insurance in their own name that includes a “driving other cars” clause. Otherwise, they will be uninsured. 

Even if they do have comprehensive insurance in their own name, they will still be covered for third party only when driving someone else’s car and you will not be covered for any damage they cause to your vehicle. 

If they have no insurance in their own name, they could be convicted of driving while uninsured and receive up to six points and a significant fine.
 
MYTH 2: “Unless I am at fault in an accident, my no claims discount will remain the same.”

FACT:  It’s important to remember that a ‘no claims discount’ does not mean ‘no blame discount,’ so if you make a claim, your discount will be affected, even if you are an innocent party to the event. (The exception to this is where the other party admits liability in an accident). 

An example of where the innocent motorist is penalised is if their  car is stolen or  hit by another motorist whilst parked and they did not leave their details.
 
MYTH 3: “Third party car insurance is much cheaper than comprehensive insurance.”

Fact: Drivers who take out third party cover are more likely to make a claim on their insurance than drivers who take out comprehensive cover.

Emma Holyer, press officer at LV= says: “It is younger, higher risk, drivers who tend to buy only third party cover and because they make more claims, the difference in cost between the two type of cover is minimal. For this reason, some insurers, such as NU, have stopped offering third party cover altogether.” 

MYTH 4: “Restricting my car insurance policy to just myself will make it cheaper.” 

FACT: Adding a spouse or partner often reduces the premium, because married people or those living with a partner are statistically less likely to be involved in an accident.
 
MYTH 5: “If my car is being paid for with a personal loan, the insurance will cover the cost of paying back the loan if the car is written off in an accident.”

FACT: Your insurance will payout for the value of the car at the time of the accident. But because cars depreciate quickly, the payout may be substantially less than the original cost of the car and the size of loan taken out to pay for the vehicle.

MYTH 6: “If my car is a write off following an accident and I decide not to buy another car with the money I claim, I will get back the remaining insurance premium for the rest of the year.”

FACT: A car insurance policy is agreed at the outset for a period of 12 months and once you have claimed for a write-off, the insurer has fulfilled its part of the contract, so no balance of premium will be returned  to the insured. 

However, if you replace the written-off vehicle with another car with the same insurance rating, then your premium will remain the same, and any no claims bonus will remain in place, for the rest of that policy year.

MYTH 7: “Courtesy cars come free with most car insurance policies and are provided in the event of the car being written off or if the car is stolen.” 

FACT: Many policies offer a ‘free courtesy car’ but it is often provided by the garages on their network and you may only receive one if your car is being repaired, and not if it is written off or stolen. 

Other insurers offer a courtesy car as an optional extra, in which case, you are guaranteed a car in the event of any claim.
Mike Powell, Defaqto insurance principal comments: “If you couldn’t manage without your car, it is best to go for this option. If you have a high class vehicle, some insurers offer  ’enhanced courtesy cars.’ Other extras to check out when purchasing cover  are child seat cover and legal expenses.”
 
Take a look at the Defaqto car insurance Compare Tool which enables you to analyse policies in detail:
 http://www.defaqto.com/consumer/insurance/motor/compare-car.aspx

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Rush to find inflation beating savings accounts

July 22, 2008 | posted by Pam Atherton in Banking, Savings | comments (0)

With Consumer Price Inflation hitting 3.8 per cent and Retail Price Inflation 4.6 per cent  in June, savers need to invest in the top paying accounts, just to beat the rise in prices.

But savers also need to factor in the effect of tax.  Most UK savings accounts  automatically deduct 20 per cent income tax (unless you are registered for gross interest) and higher rate taxpayers are liable for further 20 per cent tax on their savings.

Even though a few fixed term accounts are paying 7 per cent gross interest, Defaqto’s banking  principal, David Black, warns: “Higher rate taxpayers will now have to obtain a gross rate of interest of  7.67 per cent,  just to keep pace with inflation.”

National Savings & Investments’ three and five year index linked savings certificates pay 1 per cent over RPI, giving a current pay rate of 5.6 per cent.

As these are tax free products, this equates to 7 per cent for higher rate taxpayers and 9.33 per cent for basic rate taxpayers.
 
If you have £3,600 to spare, there are few better places to put your money at the moment than an index-linked Cash Isa. National Counties Building Society is paying RPI plus 2.6 per cent annually for three years, equating to an annualised return of 7 per cent (assuming that RPI remains at 4.6 per cent rate for the next three years),  the society says.

The inflation return is measured by the change in the RPI from October 1 to September 30 2011. Before that, deposits earn interest of 6.75 per cent tax free.

Another Cash Isa worth looking at is Leeds Building Society’s Inflation Buster ISA which guarantees to pay RPI, plus 2.5 per cent. If the RPI were to  average 4.3 per cent over the period of investment, this would give a tax free return of 6.8 per cent.

Elsewhere, Northern Rock’s one year fixed rate bond is paying 6.75 per cent, which while taxable, may be attractive to nervous investors because Northern Rock deposits are effectively guaranteed by the Government.

Bradford & Bingley is paying 6.51 per cent gross. Savers worried about the future of B&B should bear in mind that only the first £35,000 of savings with a financial institution (and any of its linked subsidiaries) are protected in the event of a bank going bust.

Meanwhile, there are a number of taxable accounts which top the best buy tables, but only because they include bonuses which last typically for one year. These are fine providing you are prepared to switch accounts when the bonus expires.

For instance, Derbyshire Building Society’s online account is paying 6.55 per cent, but with a bonus of 1 per cent for the first year.

Another example is Alliance & Leicester’s Premier Direct Current Account, currently paying 8.19 per cent gross for the first year, after which it falls to base rate less 1 per cent (or 4 per cent if  base rate is 5 per cent in a year’s time). The 8.19 rate is only available if you deposit at least £500 a month.

If you prefer a branch-based account, Abbey’s Instant Access Saver 2 provides a rate of 6.39 per cent, including a 1 per cent bonus for 12 months.

For more information, visit  Defaqto’s best buy tables:

http://www.defaqto.com/consumer/savings-accounts/cash-isas.aspx
http://www.defaqto.com/consumer/savings-accounts/regular-savings-accounts.aspx
http://www.defaqto.com/consumer/savings-accounts/instant-access-accounts.aspx
http://www.defaqto.com/consumer/savings-accounts/term-accounts.aspx
http://www.defaqto.com/consumer/savings-accounts/notice-savings-accounts.aspx

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LV= offers guarantee on drawdown plan

July 21, 2008 | posted by Pam Atherton in House prices, Mortgages, Pensions | comments (0)

With soaring inflation and pensions proving to be disappointing, an increasing number of retirees are looking to release equity from their properties as a means of bridging the gap between their actual income and their financial needs.
 
And the equity release market is becoming increasingly flexible, with more and more schemes allowing pensioners to draw down  small sums of money from their property, as and when they need to.

This is more cost effective, as the homeowner only has to be pay interest on the amount drawn down, rather than on a large lump sum which might be more than the pensioner needs at the start of their retirement.

The mutual insurer, LV=, has recently launched a Flexible  Lifetime Mortgage that allows homeowners to access funds,  as and when they need to, together with a 15-year guarantee on the maximum loan amount that can be drawn down.

This means that whatever happens to interest rates and property prices, homeowners have the peace of mind of knowing that throughout this period they can access the total amount agreed at the outset.
 
The product comes at a time when research commissioned by LV= indicates that 6.5m people over the age of 50 admit they are more concerned than ever about their income in retirement.

On average they would need £20,400 a year in retirement, but believe they would have a real income of only £17,200 a year.
 
With the LV=’s plan, homeowners between the ages of 60 and 95 can draw down a minimum amount of £10,000 and subsequent additional withdrawals of at least £2,000, up to the maximum loan agreed at outset.

The rate of interest is 6.95 per cent, or 7.1 per cent APR, fixed for the lifetime of the loan.

As an example, a couple aged 70 and 75 years respectively, living in a property valued at £325,000 could take a starting loan of £15,000.

At the same time, they could agree a maximum loan giving them access to a further £30,000 which they could draw on any time.
 
The initial application fee of £695 includes the cost of two further property re-valuations throughout the lifetime of the loan.

The scheme also comes with an all-important ‘No Negative Equity Guarantee’  which means that both the customer and their beneficiaries will never have to pay back more than the value of their home on death or permanent entry into long term care.
 
Other insurers offering similar equity release drawdown products include Just Retirement and Prudential.

David Black, banking principal at Defaqto comments: “If house prices fall significantly, equity release providers will fear potential liabilities as a result of their no negative equity gurantees. But LV=’s  guarantee that it will honour its initial drawdown offer for 15 years should give customers some reassurance.”

For more on equity release, see the Defaqto guide:

http://www.defaqto.com/consumer/mortgages/equity-release.aspxase

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Good and bad news on the mortgage front

July 17, 2008 | posted by Pam Atherton in Banking, Mortgages | comments (0)

Many mortgage advisers are failing to do their job properly,according to an undercover investigation by Which? Money researchers, with only four out of 50 advisers found to be giving acceptable advice.

80 per cent of them failed to provide one or more pieces of key information and 35 failed to do proper checks on the applicant’s ability to repay the mortgage.

Two out of three of advisers tried to sell the mortgage applicant insurance at the same time, often for an unsuitable product, and many failed to tailor their advice to the individual’s needs.

Which? Money editor, Martyn Hocking, said: “With mortgage costs soaring and the spectre of negative equity returning to the property market, it’s important that people get help to find the right deal.

There are still more than 3,000 mortgage deals out there, and the difference in cost can be thousands of pounds a year, so it’s vital people do their homework and chose the right adviser with care.”

The good news is that Nationwide is to cut the cost of mortgages for new borrowers from tomorrow, with rates falling by up to 0.46 per cent on some of its fixed rate and tracker home loans. 

Mortgage rates have fluctuated during the credit crunch due to the cost of wholesale borrowing for lenders. Swap rates, the rates at which banks lend to each other and which influence mortgage rates, have been stubbornly high until recent weeks, when they started to fall.

Nationwide is cutting the rates on its two year fixed rate deal (75 per cent loan to value with a £599 fee), from 6.48 per cent to 6.18 per cent. For 90 per cent LTV mortgages, the rate drops from 6.88 per cent to 6.58 per cent.

On its Lifetime Tracker mortgage, Nationwide has reduced its rates to 5.98 per cent (on up to 75 per cent LTV) and 6.38 per cent (for 75-90 per cent LTV).

Ray Boulger of mortgage broker, John Charcol, commented: “Swap rates peaked in mid-June at 6.5 per cent, but are now 5.82 per cent. Nationwide has also aligned its purchase and remortgage rates making it possible for existing customers to enjoy the same deals as new customers.”

Nationwide attracted a great deal of criticism a few years ago for limiting its best deals to new customers only.

But the mortgage market is expected to remain difficult and volatile in the coming months as the credit crunch continues to take its toll and the outlook for interest rates remains unclear.

Take a look at Defaqto’s uniuqe mortgage calculator to see how much you can afford to borrow:

http://www.defaqto.com/consumer/mortgages.aspx

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