What the papers say- 29th and 30th January 2011

Lenders were accused in the Sunday Times this weekend of profiting by raising their rates despite a drop in swap rates last week, with brokers suggesting that the recent panic by borrowers wanting to secure a fixed rate has been a gift for banks. The Telegraph looked at the high arrangement fees charged by some lenders, and experts advised borrowers to do their sums to check how cost effective a deal really is, especially in the case of smaller loans. Debt charities in the Observer expressed concerns that homeowners who took out a mortgage in the last 2 years have been lulled into a false sense of security by a record low base rate and many could find themselves struggling when rates do start to rise. Brokers here suggested that despite a recent small increase, fixed rates are still the right choice for anyone worried about a rise in costs. The subject of strict lending criteria reared its ugly head again, with the Sunday Telegraph revealing that banks and building societies have tightened up on affordability in light of the FSA’s market review, and as a result couples with children are finding their lending capability reduced further than those without. At the opposite end of the spectrum the Independent on Sunday reported on recent research showing that more and more people are retiring with credit card and mortgage debt, and looked at solutions including downsizing and equity release. Elsewhere the Guardian discussed the new Equity Support Scheme, to be launched by Lloyds Group next month, which allows borrowers to move home without increasing their level of borrowing, while the Mail on Sunday found that more than 3 million ex-smokers are paying over the odds on their life and critical illness cover every year because they have not informed their providers that they have quit.

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