What the papers say- 19th and 20th March 2011

First time buyers were given a boost in this weekend’ financial press, with the Telegraph and Sunday Times reporting on the new Lloyds Local Lend a Hand pilot scheme. The deal allows First Time Buyers to put down a deposit of 5% while the Local Authority provides a further 20%. Experts welcomed the initiative as a good alternative to the ‘Bank of Mum and Dad’, but some expressed concern over its launch at a time of public sector cuts and falling house prices. Other options for struggling FTB’s who can access parental finances were also discussed, including guarantor mortgages and gifted deposits. The fixed versus variable rate dilemma surfaced once again, with experts in the Financial Times and  Observer discussing lenders such as Nationwide and Northern Rock, who reduced their fixed rates last week as fears of an imminent rate rise subsided. The common opinion among brokers is that most people will still be opting for a fixed rate in order to protect themselves against rate rises, but there are alternatives for those looking to hedge their bets. Switch to fix or ‘drop-lock’ mortgages allow borrowers to switch from a variable to a fixed without paying an Early Repayment Charge, although rates are likely to be higher at the time of switching. Accord have launched a new exclusive hybrid deal, which tracks the Bank of England for 2 yrs and then switches to a fixed rate for a further 3 years – the advantage of this being that the fixed rate is known at outset. Elsewhere the Telegraph looked at a new report which reveals that Britain has some of the lowest levels of state and private protection against ill health in the developed world, and highlighted the importance of understanding products such as Critical Illness and Income Protection.

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