Mortgage Groups Increase Rates

Two of the UK's biggest mortgage groups have increased their rates as lenders continue to pass on higher borrowing costs to homeowners the Press Association reported today. Halifax, which writes one in every five new mortgages, has raised the cost of half of its fixed rate products by up to 0.5%, while five of its trackers have been increased by 0.3%. Lloyds TSB has also increased its fixed rate deals, raising them by 0.3%, to give a two-year fixed rate mortgage of 6.44% for people borrowing 75% of their home's value, rising to 6.75% for people borrowing 90%.

The group's new rates, which came into effect on Saturday, leave a two-year fixed rate mortgage for someone with at least a 25% deposit who is paying a £1,499 arrangement fee at 6.99%, compared with 5.59% at the beginning of the year, despite the Bank of England base rate being cut twice since then.

For people borrowing up to 90% of the value of their home the rate is even higher at 7.29%.
The move by the two lenders is part of the latest round of price increases, which saw Nationwide increase its fixed rate loans and some of its trackers by up to 0.5% at the beginning of last week, while Bristol & West hiked its rates by up to 0.75% and the Woolwich increased its lifetime tracker by 0.25%.

Energy Bills Could Go Up By 40%

Energy bills could rise from £1,050 on average to almost £1,500. Household energy bills could increase by as much as 40% this winter, the BBC has learned, as oil and wholesale gas prices hit record highs.

The increases could mean households paying £400 more a year on average for their gas and electricity, senior industry sources have said. The increase is far more than analysts have predicted in recent months.

It would put more pressure on homeowners already struggling with higher food and fuel costs. Announcements are most likely to come in August, when energy bills are not at the forefront of people's minds, says BBC business correspondent Nils Blythe. There is a great reluctance in the industry to be the first to reveal a big rise, so the rises may be unveiled in stages, our correspondent adds. The prediction from senior sources in the energy industry is the highest yet. However, some analysts forecast the increases will be nearer 25%.
'Massive effect'

The news comes on the same day that Chancellor Alistair Darling called for restraint in pay settlements to prevent the UK falling into an "inflationary spiral". However, Dave Prentis, general secretary of the public sector union Unison, warned that a large rise in energy bills would have a "massive effect" on his workers and could lead to some pay negotiations being reopened. "We reached a three-year agreement in health at Easter when the retail prices index [measure of inflation] was much lower than it is now," he said. "If prices continue to spiral, that health agreement will be opened and if the government says we are not going to, then we will take industrial action," Mr Prentis said.

According to Capital Economics, a 40% jump in gas and electricity bills would add 1% to the Retail Prices Index measure of inflation, which currently stands at 4.3%.

Wholesale rises - Last month, Centrica - which owns the UK's biggest energy provider, British Gas - signalled that gas prices for customers could increase again in 2008, as it was being squeezed by rising wholesale prices. According to industry watchers Platts, the wholesale price of gas has risen 74% since the start of the year, with gas to be supplied in winter 2008 hitting a record high last week. The wholesale gas price is closely linked to the price of oil, which itself hit a record high of just under $140 a barrel this month. In January, a barrel of oil cost $100.

£90m Electricity Bill Shocker

MSN reported today of a barmaid who spoke of her disbelief after receiving a £90 million electricity bill!

Alison Turner, 50, of Cambridge, was stunned when the demand from npower arrived through the post. The mother-of-two, who lives alone in a one-bedroom flat, normally spends about £20 every two weeks to top up her pre-payment electric meter. An npower spokesman said it was "a human error"!!