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Marking three years of low interest rates

Last week brought a significant anniversary that many believed we would never see.

On March 5 2009, the Bank of England’s Monetary Policy Committee reduced the base rate to 0.5% following a 15-month run of reductions.

Although this has meant savers have endured three years of low rates, mortgage borrowers have benefited from lower payments, which has been a boost for them.

We estimate that by the end of 2011 over 2.5 million borrowers had reverted from a fixed rate to their lender’s SVR and may be paying less than their original deal.

We also believe that around eight million borrowers have a variable rate mortgage and, even if their rates rise a little, many will still pay less than they were doing before.

Arrears and repossessions, which rose in the aftermath of the credit crunch, never hit the levels seen during the recession of the 1990s.
In 2009, 48,300 properties were repossessed, compared with 75,500 in 1991.

Numbers have now dropped and are only slightly higher than they were before the 2007 financial crisis hit.

We do not know when the base rate will rise but in the meantime mortgage payments have stayed low when many needed it most.

This has helped keep people in their homes for longer, alongside lender forbearance, government help for borrowers in difficulty and home owners’ ability to prioritise important payments.

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Let’s hope the small positives consolidate

February has been and gone and for those of you running home and contents and general insurance books I think we can agree that 2012 has so far been okay, which should hopefully make it more likely that we’ll get profit shares from our providers. That said, one key issue emerging with our lender friends is that things are getting more difficult again.

Bob Young

Avoid past mistakes and B2L is a good bet

It is no secret that buy-to-let is showing strength at present and the latest data on rates from Moneyfacts.co.uk shows just how promising the picture is.

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“A rare picture of Buddy Holly and Tom Jones together found on the Antique Roadshow.”

Frexit & contagion risk in Europe

Many commentators have suggested that the UK’s exit from the European Union will trigger a domino effect, leading to its eventual break-up. Neptune’s Rob Burnett discusses the likelihood of this happening. Read more: Important information Investment risks Neptune funds may have a high historic volatility rating and past performance is not a guide for future […]