Currencies

Dollar rises as markets turn eyes to Opec

European bourses are mirroring a tentative Asia session as the dollar continues to be supported by better US economic data and investors turn their attention to a meeting between Opec members. Sentiment is underpinned by US index futures suggesting the S&P 500 will gain 3 points to 2,207.3 when trading gets under way later in […]

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Banks

Basel Committe fail to sign off on latest bank reform measures

Banking regulators have failed to sign off the latest package of global industry reforms, leaving a question mark hanging over bankers who complain they have faced endlessly evolving regulation since the financial crisis. Policymakers had hoped to agree the contentious new measures at a crunch meeting held in Chile this week, but a senior official […]

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Financial

Travis Perkins and Polymetal to lose out in FTSE 100 reshuffle

Builders’ merchant Travis Perkins and mining company Polymetal face relegation from the FTSE 100 after their recent performances were hit by political events. The share price of Travis Perkins has dropped 29 per cent since the UK voted to leave the EU in June, as economic uncertainty has sparked concerns among some investors about the […]

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Economy

Eurozone inflation climbs to highest since April 2014

A welcome dose of good news before next week’s big European Central Bank meeting. Year on year inflation in the eurozone has climbed to its best rate since April 2014 this month, accelerating to 0.6 per cent from 0.5 per cent on the back of the rising cost of services and the fading effect of […]

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Financial

Wealth manager Brewin Dolphin hit by restructuring costs

Profits at wealth manager Brewin Dolphin were hit by restructuring costs as the company continued to shift its focus towards portfolio management. The FTSE 250 company reported pre-tax profits of £50.1m in the year to September 30, down 17.9 per cent from £61m the previous year. Finance director Andrew Westenberger said its 2015 figure was […]

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Categorized | Property

Homeowners could end up paying £2bn more if the bank rate rises


Posted on February 28, 2014

File photo dated 08/08/12 of the Bank of England. Inflation is set to dip below the Bank of England's 2% target for the first time in more than four years, thanks to retailers slashing prices and lower fuel costs. PRESS ASSOCIATION Photo. Issue date: Tuesday February 18, 2014. Many economists believe official figures today will reveal a fall in the Consumer Prices Index (CPI) to 1.9% last month from 2% in December, which will mark the first time inflation has dropped below the target since November 2009. See PA story ECONOMY Inflation. Photo credit should read: Yui Mok/PA Wire©PA

UK homeowners face a £2.2bn increase in mortgage repayments by December 2015 if the Bank of England raises interest rates, according to a report by Barclays Mortgages.

The increase is based on the bank rate rising three times to 1.25 per cent, which economists consider the most likely scenario.

    This is expected to mean that the average household would pay an extra 3 per cent on mortgage repayments, costing families £252 more a year.

    However the report, based on data from the Centre for Economic and Business Research, said UK borrowers could pay as much as £5bn more by the end of 2015 in the most extreme scenario.

    This “drastic but potential” situation assumes there are five rate rises between now and the end of 2015, taking the bank rate to 1.75 per cent.

    Andy Gray, managing director of mortgages at Barclays, said: “The overarching insight is that rates will rise in the medium term and so mortgage customers should be aware of the impact of any rises on their finances and review their mortgage arrangements accordingly.”

    Increasing rates could leave many homeowners at risk of falling behind on repayments.

    The Financial Conduct Authority last week published a report into mortgage lenders’ arrears management, asking them to identify customers who could fall behind on repayments if interest rates rise and have strategies in place to treat them fairly.

    AudioMortgage rates, investing in biotech, and with-profits

    When mortgage rates rise, how bad will it be? Jonathan Eley and guests also discuss whether the UK biotech sector is set for a boom, and whether with-profits policies are worth retaining

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    Yorkshire Building Society said earlier in the month that it will refund £8.4m to 33,900 customers in arrears, as many were incorrectly charged fees for falling behind on repayments.