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The good, the bad and the ugly (May 07)

Over the past month there’s been a surge of activity in the world of personal finance. Here’s our monthly review of the latest developments for savers, investors and borrowers….

The good news

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• HIPs U-Turn - In an embarrassing turn of events for the Government, the controversial Home Information Pack (HIP) scheme has been forcibly postponed until 1 August. Home sellers will breath a collective sigh of relief, as HIPs would have added at least £500 to the cost of us moving home. Looks like Gordon Brown won't be happy - because he'll charge us VAT on top of the added cost of getting a HIP, he'll have to wait before he can steal an additional £111 million a year!
• Store cards to carry a wealth warning - The rules around expensive store cards have changed - with the introduction of warnings on monthly statements that have to state that cheaper credit can be found elsewhere. Whilst this is a step in the right direction, we think the Office of Fair Trading could have gone further. Read our store credit cards article in full.
• The smoking ban can save you a packet! – With the smoking ban soon to come into force across England and Wales, there has never been a better time to quit smoking. Not only could it save your life, it can save you thousands of pounds. If you smoked 20 a day you’d save £150 a month, or £1,800 a year, which is incentive enough. If you put this towards overpaying a typical mortgage for example, you could save yourself £27,417 and shave over 8 years off your term.

The bad news

• Victory in court for a bank over charges - Lloyds TSB has become the first bank to win a court case after being sued by a customer for imposing unfair overdraft penalty charges. At Birmingham County Court, Kevin Berwick had his claim £2,345 thrown out after a judge ruled that the charges were a legitimate and fair fee for service, rather than a penalty charge. The plot thickens…
• Mortgage misery – In line with the Bank of England’s rate rise, many mortgage lenders have withdrawn their products and increased the rate on many of their fixed rate deals. For those with a fixed rate mortgage deal coming to an end, they’ll have to tighten their belts to cope with the higher repayments. There are still some competitive fixed rates available in the market, so don’t forget to check out Moneyfacts’ fixed rate Best Buys.
• The best ISA rates are disappearing - It’s just over 1 month since the new tax year began, and already leading Mini Cash ISA accounts are disappearing - Barclay’s 6.3% Tax Beater ISA and Alliance & Leicester’s 8.1% Premier ISA are no longer available. In addition, four other leading ISA accounts have gone and more are expected to follow. Why not check out our ISA Best Buys and bag one today, it may be gone tomorrow!

The ugly news

• Mortgage fees are on the up - Over the past 12 months, fees for arranging a mortgage have been rising steadily, and today they’ve hit new heights. For example, up front fees have hit £2,499, or could be as much as 3.5% of your mortgage advance. So don’t be drawn in by a headline-grabbing rate, it’s more than likely they’ll be a catch.
• Fee-free mortgages are just as bad - Not having to pay a fee to take out a mortgage may seem attractive, especially to first time buyers, but the reality is that you’ll pay much more in the long term. When searching for a mortgage make sure you look at total cost of the deal, as well as all the incentives.