If you are a nervous British saver then you should know that Irish eyes are smiling on you.

If you are worried about more British banks going bust, Irish institutions such as Bank of Ireland and Anglo Irish Bank (which both operate in the UK) this week became some of the safest places to keep your cash.

And that is very good news for any of you who have money in a savings account run by the UK Post Office, which channels funds into Bank of Ireland.

• Irish Government increases compensation scheme

The Irish government has decided to beef up the country's "deposit protection scheme" (similar to the financial services compensation scheme that protects UK savers) so that it now covers savings up to €100,000 per person, per bank.

Roughly speaking, that is about £79,000; more than double the £35,000 protection the UK offers.

And there is some good news…this is a move that does not just benefit those living on the Emerald Isle!

You do not have to be resident in Ireland, or be an Irish citizen, to claim. As long as your money is held in a bank or building society that is part of the scheme, and your account is one of the types covered, you can make a claim.

What this means is that if you have, say, £75,000 stashed in an account run by a bank covered by the Irish compensation scheme, and that bank went bust, you would get £75,000 back. If you had £75,000 in a UK-based high street bank, you would only be guaranteed the first £35,000.

Previously, the Irish compensation limit was €20,000 (£15,800), which meant as a UK saver with money in accounts run by Irish banks, you would have had to claim this much in Ireland, topped up to a maximum of £35,000 by the UK Financial Services Compensation Scheme. Now, though, you would go straight to the Irish scheme.

The new rules apply to, among others, Bank of Ireland and Anglo Irish Bank, both of which are open for business in the UK.

If you are one of the thousands of people who has money in the Post Office's popular Instant Saver account, you may or may not know that this account is provided by Bank of Ireland, as are the Post Office's Growth Bonds and its Fiveyear Saver. Its recently-launched cash ISA,  paying 6.25%, is provided by Family Investments, but the deposits are held by Bank of Ireland and so, again, you are covered under the more generous Irish scheme.

The new regime is also good news if you are one of the 140,000 UK savings customers of Anglo Irish Bank, which launched savings products in this country five years ago and regularly features in the "best-buy" tables. Its most attractive offerings include fixed rate bonds paying 7% and the Easy Access Account paying 6.4%. Anglo Irish says the new higher limits are "great news" for all its UK savers.

The changes may mean that some of you with large-ish sums to invest will feel safer with an Irish bank than with a UK one. Legislation is being introduced to implement the new €100,000 limit, but the change will be backdated to September 20.

If you are enviously eyeing the gold-plated Irish scheme, then don’t be downhearted. There are proposals to raise the UK’s compensation limit to £50,000, which would apparently cover 98% of us with savings, and it has been suggested that this change could be made quite soon.

David Kuo, Head of Personal Finance at money website Fool.co.uk, said: 

“The Irish government has done the right thing to stand behind its financial institutions. Under the terms of the guarantee, savers and bond holders will be fully protected. 

“It is high time that Chancellor Darling stops dithering and safeguards the UK banking system too. The current Financial Services Compensation Scheme, which only provides limited protection per banking license, is not only out of date, but is unnecessarily complicated.

“Fool.co.uk has long called for a limitless guarantee to help restore confidence in our banks. To restrict compensation to just £35,000 while claiming that the banking system is robust is confusing for consumers. If UK banks are completely robust then Chancellor Darling must back them completely.” 

• Spread your savings around!

In the meantime, if you have got a fair bit of cash, spread your savings around a number of different savings institutions. And check who owns the bank or runs its savings operation, because in some cases you could be left out of pocket if you have your money in two or more savings providers that happen to be part of the same banking group, and this then went bust.

This can get complicated so we will try to do our best to explain it:

· Six HBOS-owned or run savings providers (Halifax, Bank of Scotland, Birmingham Midshires, Intelligent Finance, Saga and the AA) all share the same Financial Services Authority "authorisation", which means if you have money in two or more of these, you would, in the event of HBOS going belly-up, only get one helping of the £35,000 compensation. But Sainsbury's Bank, a joint venture between HBOS and Sainsbury's, has its own authorisation.

· NatWest, Royal Bank of Scotland, Tesco Personal Finance (a joint venture with the supermarket giant) and Coutts are all part of the Royal Bank of Scotland group, but each one is separately authorised. However, Direct Line (another arm of the group) shares its authorisation with RBS.

· Lloyds TSB and HBOS currently have separate authorisations, though it is unclear what will happen once the HBOS takeover by Lloyds TSB has taken effect.

· Alliance & Leicester is being taken over by Spanish bank Santander, which owns Abbey, though it looks like the two UK banks will retain separate authorisations. However, Abbey's online bank Cahoot shares Abbey's authorisation.

· The Derbyshire and Cheshire building societies are being taken over by the Nationwide in December, and they will then share the bigger society's authorisation.

Are your savings institutions part of the same banking group? Find out here.

So, with the level of security from the Irish banks much greater than UK  ones, are you going to switch your savings?

With mortgage rates set to rise, the wise heads over at Fool.co.uk are now urging us to grab cheap mortgages while stocks last!

It has taken six months for the interest rate that banks pay to borrow from each other to fall from 6% to 5.7%.

But following the recent turmoil in financial markets, it has taken just less than a week for those costs to be completely reversed.

In just four days, the London Interbank Offered Rate (LIBOR) has climbed back above 6%.

Since March, the fall in LIBOR has benefited those of us who are homeowners as mortgage lenders passed on their cheaper borrowing costs. Six months ago the typical Standard Variable Rate (SVR) was 6.74%, when LIBOR was 6%. Six months on, LIBOR rates fell to 5.7%, with typical SVRs dropping to around 6.49%.

However, with LIBOR rates on the rise, it can only be a matter of days before the cost of mortgages increases to reflect this.

David Kuo, Head of Personal Finance at money website Fool.co.uk, says:

“LIBOR is a better guide to the costs of fixed-rate and standard variable-rate mortgages than the Bank of England base rate. However, mortgage rates currently on offer do not adequately account for the recent surge in LIBOR.

“We therefore urge anyone whose fixed-rate mortgage deal is about to come to an end to apply for a new one without delay. Most lenders will let you to arrange a new mortgage up to six months before you need it.

“Unless suitable arrangements are made soon, homeowners may find that any attractive deals currently available could be withdrawn. A 0.25% rise in SVRs can cost almost £5,000 more on a £100,000 loan over 25 years.

“Opportunities in finance are rarely preceded by bugle and trumpet heralds. But the imminent withdrawal of attractive mortgage rates is deafeningly obvious.” 

Need mortgage help? Use an unbiased adviser who can put you in contact with a wide selection of mortgage lenders, to help you find the best mortgage to suit your circumstances.

10 tips to navigate the mortgage minefield!

(Please note that articles on Money Hospital do not constitute regulated financial advice. The articles are intended to provide general personal financial information, and are based on journalistic research. We urge you to consult an Independent Financial Adviser (IFA) before making any important decisions about your finances. All rates are correct at time of printing but are subject to change without notice.)

Source © www.fool.co.uk 2008

We all know that the media are fond of doom and gloom stories.

Apparently it helps them to sell papers because we reputedly prefer bad news to good!

But one of the doom and gloom stories that has appeared repeatedly this year is how much house prices are dropping by.  The latest figures from the Land Registry say that house prices are now 4.8% lower than they were this time last year.  Much more attention, however, has been paid to recent figures published by Halifax that suggest they are down even more, as much as 10.9%.

But is your house really worth that much less?

Here's an interesting opinion on the matter, by our Mortgage Matron's friend in the property business...

There are some circumstances that have not been discussed much in relation to house prices.  To read the press, you'd think that it's all over for the housing market, and that the general uncertainty over the stability of the banking system means that the only way is down. 

But like the stock market, or indeed any market, what people say—and how many people believe them—can have the effect of a self fulfilling prophecy.  Let's take a look at the situation from three different angles which, as far as I can see, not many people are currently discussing. 

1. The only people selling at the moment are those who really have to.

And by the very nature of the fact that they have to sell right now, they are more willing to lower the price of their house than maybe you or I who are not forced to sell in a hurry.

There is an argument that if the various media had not gone on and on about the fact that they thought house prices were going to fall this year, that actually they may not have fallen by that much!

It seems that all of us are very influenced by what the media say.  As early as September of last year there were reports that mortgages were going to be really hard to get and therefore people weren’t going to be able to sell their house and buy a new one with a new mortgage.  The reports said that interest rates would ‘soar’ and that ‘house prices were going to plummet’.

2. The only people buying are those that can't wait.

Of course if you were waiting to buy a house, the predictions of falling house prices were great to begin with—especially for first time buyers especially, many of whom were delighted by the thought of actually being able to get on the housing ladder.

But as talk of the downturn continued, buyers with no time pressure began to think: “Let’s not buy a house yet, let’s wait a bit and see if house prices really do come down”.

As people begin to cotton on to the strategy of waiting for the market to bottom out, this takes a huge number of buyers out of the market.  So all of a sudden there is less demand for house purchases.  Fewer people trying to buy each house means that the seller, instead of seeing people compete to meet or exceed the asking price, instead sees people wanting to pay less—so house prices start coming down.

This then becomes a self fulfilling prophecy: those who are still buying think they are on to a good thing; the media says that prices are coming down so you make the most of it and put in lower and lower offers.

3. The third angle to this is that most sellers want top dollar for their houses and because they think or see house prices are coming down, they decide not to put their house on the market yet

This brings me back to where we started—the people who don’t have to sell their houses, who would have done a year ago because they want to find a bigger property or just fancied a change, now aren’t selling. The people selling are the people who are relocating or have just got divorced or have other life circumstances that mean they have to sell now.  These people are forced to take the lower offers because they cannot afford to wait until things get better.

So the picture we have of current house sale prices are nearly all from those people who have to sell.  No, the figures are not lying—but they are also not representative of the population as a whole.

As things pick up—as they surely must do, be it in a year or three years—look to see a surge of houses going on the market as everyone who would ideally like to move, but is holding off doing so, puts their houses back on the market.

(And as this happens, watch the media trumpet the news and the pendulum swing back again!)

It was nearly bye bye to Bradford & Bingley…

With all the world’s banks looking a bit nervous, the UK's biggest buy-to-let mortgage lender has become the latest victim of the deepening financial crisis.

Banco Santander (owners of Abbey) agreed to pay £400 million in order to take control of £21 billion of deposits and 200 branches. B&B’s savers will be transferred to Abbey and B&B’s £50 billion of mortgages and loans will then be taken over by the Government, using the same powers employed to seize control of Northern Rock. Shares in the firm have also been suspended.

The Government decided it was no longer a viable bank, after the recent collapse in its share price, and a developing run on its funds by savers.

So, with all the upheaval in the banking world over the last few days, we examine how affects you.

• Is the B&B insolvent? 

Actually no!

Which is odd when you consider all the fuss about the bank's future, and now its nationalisation. 

Its assets still appear to be higher than its debts. But the lack of confidence in the B&B's ability to keep going was on the verge of becoming reality.

Banks rely absolutely on public and investor confidence to operate, because if all of us asked for our money back all at once, they would all be up the river without a paddle!

Then a bank would not have enough money to meet the demand as they lend a lot of it out and cannot recall it instantly.

• Why did B&B get into trouble?

It has been hit hard because it was badly exposed to the plummeting buy to let mortgage market. Its shares have plunged more than 93% over the past year amid fears that its buy-to-let and self-certified mortgages sector will generate huge losses in the midst of falling house prices and the credit crunch.

• Are any other banks in similar trouble?

Unless you have been living as a hermit in the Nullabor Plain, you probably know that the entire banking system is still in trouble!

But it appears, so far, that there are no other UK banks quite in the position that the Bradford & Bingley, and the Northern Rock, found themselves.

Even so, we can’t be sure what may be lurking in the financial undergrowth…probably something creepy and crawly.

• Quite a few banks have disappeared, haven't they?

Yes indeedy!

The past year has seen the Northern Rock, B&B, Alliance & Leicester and Halifax Bank Of Scotland lose their independence.

So what? Well, if you add in the smaller mortgage lenders who specialised in lending via mortgage brokers only, more than 40% of the mortgage lending capacity of the UK financial services industry that existed in 2007 has either evaporated or been swallowed up by rivals.

That is a big reduction in competition and means less choice and more expensive deals for most of us.

• Will my savings be safe?

If you are one of B&B’s 2.5 million savers, you might feel happier that the bank stressed that your cash is secure as deposits of up to £35,000 are covered by the Financial Services Compensation Scheme.

Any savings above this amount are not protected. However, if the government takes over the bank, it is most likely to guarantee deposits as it did with Northern Rock.

• What is the Financial Services Compensation Scheme?

FSCS is the UK's statutory fund of last resort if you are a customer of a financial services firms. This means that FSCS can pay compensation to you if a financial services firm is unable, or likely to be unable, to pay claims against it. This scheme used to cover just 80% of the first £35,000 but it was changed to 100% after the collapse of Northern Rock.

• What should I do if I have more than £35,000 in savings at B&B?

Many financial experts believe it is wise to spread your savings with a number of different firms in order to ensure that you are fully protected by the FSCS guarantee. This would mean spreading your savings around so you have no more than £35,000 in any one bank or building society.

Some experts now believe Northern Rock is the safest place to keep your money as it cannot go bust because it is backed by the Treasury.

• What happens if I have a joint account?

Each individual is entitled to the benefit of the £35,000 so for example, two people holding a joint account will have the first £70,000 of their savings protected.

However, if one of the account holders has a separate current account with B&B then it gets tricky.

Let's say Mr Smith has £20,000 in his current account, and also has a joint savings account with Mrs Smith with £40,000 in it. In the event of a failure, the FSCS will split the £40,000, giving £20,000 compensation to each partner. But it will only then compensate £15,000 of the £20,000 in Mr Smith's current account, as he has already enjoyed £20,000 of his £35,000 compensation limit.

• What will happen to my B&B mortgage?

Sadly, this is not a once in a lifetime opportunity for you to escape your debts!

If you have a mortgage or loan with the B&B you still owe the money and you must continue to make your regular repayments.  But you are now paying to a bank owned by the government, not a bank owned by shareholders.

Several experts believe that if the government takes over B&B, interest rates are likely to rise. Chris Cummings at the Association of Mortgage Intermediaries said:

“The Treasury will be under a lot of pressure to shrink the mortgage books as soon as possible. Therefore, B&B will push up mortgage rates in order to encourage people to remortgage with other lenders but other lenders have no appetite for lending so people will have nowhere to go and will end up having to pay higher interest rates."

Fool.co.uk responded to the takeover of Bradford & Bingley by saying that the Chancellor Alistair Darling must reassure savers at building societies and foreign-owned banks too.

David Kuo, Head of Personal Finance at money website Fool.co.uk, says:

“It is encouraging that the UK government has learnt from past mistakes. Its timely intervention at Bradford & Bingley has averted another potentially embarrassing run on a British bank.

However, questions have to asked as to whether correspondingly swift actions would be possible if a troubled financial institution was neither British nor a bank.

We therefore urge the UK Government to give similar assurances to customers at foreign-owned deposit-taking companies and also to savers at any one of the UK’s 59 building societies.

In these difficult times, consumers need to be confident that their investments are safe, regardless of whether their money is deposited in a UK bank, a foreign-owned bank or a building society”.

So are you a Bradford & Bingley customer? How has the nationalisation left you feeling?

Are you worried about what will happen to your money?

Let us know in the comments below.

Unfortunately it’s happened to many of us – seeing those blue flashing lights in our rear view mirror...

Whether you’re in a Murciélago or a Micra, occasionally you might find yourself in this situation.  Of course we don’t condone speeding, but when it could be the difference between a fine or just a warning, have you ever wondered what you might say?  For this reason, car website Jalopnik published a number of reader suggestions for getting off the hook!

Here are six of the best...

1. The Dramatic Approach

A woman crying is apparently the ultimate way to prevent a fine.  However, the sight of a man bawling his eyes out on the roadside is surely going to be even more effective.  Although rare in the past, perhaps this is something for the 21st century male?

2. The Humorous Approach

We all love a good joke, and perhaps police officers are no different. So why not tell a joke? Even if it is a poor one...

(On an empty country road)

Officer: Where are you going in such a hurry?
Driver: Just keeping up with traffic, officer.
Officer: I don't see any traffic.
Driver: That's how far behind I am, I was trying to keep up! (insert unfunny drum noise)
Officer: Just slow down... (walks back to car tutting and shaking head)

If they don't laugh, just say “What are you, the joke police?”

3. The Honest Approach

Occasionally you may be speeding with good reason.  You or your partner might just about to give birth. You're late for an important meeting. The police are people too, apparently.  They also hear a lot of nonsense (see above), so maybe the truth will impress them, if only for the novelty of it.  Here's an example:

“My line is true, and my plea is earnest. Officer, I'm in sales, I drive a company car for a living, and every point I get on my license is additional money docked from my paycheck. The consequences of the ticket you're about to give me are far greater for me than for anyone else... please reconsider this as I could lose my job because of a speeding ticket.”

Also, you could just admit to them you're a motoring journalist (if that's true, of course).

4. The Dishonest Approach

We’ve all been tempted to lie before, not to mention justifying it to ourselves as we go.  “White lies” may help us out occasionally, but would they work on a cop? How about something like this:

“Am I glad to see you! I was almost run off the road by this idiot in a [make, model, colour of vehicle that passed you]. This guy was definitely hammered.”

You are putting yourself on the side of "public safety" and the cop will not want to take a chance that this fictitious drunk won't kill someone.  It might work. Certainly wouldn’t be our choice!

5. Technical Difficulties Approach

Unless you're driving something like a Toyota Yaris, which has a digital speedometer, there’s always a chance that your dials aren’t reading correctly. In fact, if you're driving an old Corsa this could actually be quite likely (trust me).

"Do you know how fast you were going?" Perhaps you really didn't. Perhaps you can convince the cops that your speedo is bust.  Or perhaps you really did pull out the wires in anticipation of using this trick?  But beware; the police will themselves have properly calibrated readouts which is all they need in a court of law.

6. The Foreigner Approach

If none of the above work for you, you may be clutching at straws now.  However if you’ve ever seen “Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan”, you might remember his less-than-successful driving lesson. His supposed lack of understanding of basic English allowed him to get away with downright dangerous driving.

Feel free to try the same approach! Of course that’s assuming you have a funny name or look foreign. This does not work if your name is John Smith or Sarah Jones, but is great if your day job involves playing panpipes outside the local Debenhams.  The more obscure the better – how many cops are likely to have been to Turkmenistan before?

Conclusion

We at Money Hospital would suggest that perhaps the best method of avoiding speeding fines is to not speed in the first place! If you’re caught there’s no telling what the consequences may be, but we'd be interested to hear if you've ever given one of the above a try...

If you have any experiences with speeding fines, please feel free to add your comments!