Cover yourself when raving in a field

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Money news, advice and predictions for savers and spenders. This week: Insuring your festival belongings.

By Jeremy Gates

An army of about 180,000 music fans heads for the Glastonbury Festival in the West Country at the end of June, and many won't notice they have gaping holes in their insurance policies as they set off.

That's the warning from price comparison site uSwitch.com, which reckons 128,000 festival goers - around three-quarters of the crowd - will go by car. Many think that goods carried with them, possibly worth several million pounds, are safe so long as they are locked away in cars.

Not so, says uSwitch.com, which warns that few insurers are likely to stump up much towards the replacement cost of Apple iphones (worth up to £391.50), SatNavs (up to £391), ipods, mobile phones, sunglasses and other gadgetry which could go missing, because more than 60% of car insurance policies offer a maximum £100 cover on valuables left in vehicles.

Then there's the question of cash: the average consumer at Glastonbury spends about £300 over the weekend; uSwitch fears another £52 million could be vulnerable to loss and theft because few house insurance policies are likely to cover items kept away from home in a tent.

Finally there's the drive to the West Country and back - nearly a quarter of motorists admit allowing friends or relatives to drive without being named on their policy.

In fact, only motorists over the age of 25 with fully comprehensive insurance are covered under their own policy to drive someone else's car. Several insurers allow Third Party Only cover to under-25s.

An event such as Glastonbury creates an insurance minefield for both providers and policy holders, according to Mark Monteiro at uSwitch.com.

"Placing all your valuables in a car or tent could very well exempt you from cover with every insurance policy you own," he warns.

"Our advice to motorists is to check all policy details before getting into the car, and then enjoy the music with peace of mind."

Limits to cover for items left in a car are low on most policies: usually £100-£250 for items locked away and kept out of sight at all times.

Ian Crowder at AA Insurance says: "Although some car insurance policies cover SatNavs, equipment must always be locked away out of sight. The best advice is to take as little as possible to Glastonbury: a few CDs for the journey, and a camera kept with you at all times."

Standard AA home contents insurance policies covers items lost outside the house to a maximum £5,000 per claim, with an unspecified single-item limit of £1,500, on payment of an additional premium which might add 50% or more to the standard household premium. This provides cover anywhere in the world, so might entitle you to a discount on travel insurance.

Will Thomas at finance website Confused.com says: "Home contents insurance may offer cover up to £5,000 on items taken outside the home, but you must specify high-value items when you arrange cover."

Insurance broker John Portwood at Essex-based Portwood & Co adds: "The 'all risks' extension of home contents insurance policies offers contents cover anywhere in the UK automatically, subject to terms and conditions, and also covers items in caravans. Cover is usually new for old, with a single article limit and an overall maximum.

"Travel insurance, usually much cheaper, usually relates to the contents of a suitcase, rather than high-value items, with cover on an indemnity basis anyway, meaning deductions are made for wear and tear, and the policy excess also deducted before settlement."

Travel insurance, in fact, has limited benefits at a 'rave' in full swing.

Steve Williams at Confused.com admits: "No travel insurance policies that I know will touch pop festivals with a barge pole. They simply won't cover your contents while you are there."

:: Information: uSwitch.com (0800 093 0607); AA Insurance (0800 107 0680 and www.theAA.com); www.Confused.com; Portwood & Co (01207 509 446 and www.portwood.co.uk) is also a specialist in arranging travel cover for over-75s.

Fixed rate mortgages are set to rise

As summer holidays loom, this might be the moment to fix your mortgage rate so you know exactly how much you will have to pay each month if the recession deepens in 2009-10.

There are fears that rates could be rising again soon, even as Lloyds Banking Group closes all 164 branches of its Cheltenham and Gloucester network to take a famous brand out of the High Street.

Louise Cuming at Moneysupermarket.com says: "Lenders are benefiting from the fact that demand for mortgages outstrips the supply of mortgage deals, and when supply is limited, it causes prices to rise."

Savers are already seeing the benefit. With Rothschild offering a two-year fixed-rate deposit account of 4.35% on minimum £20,000 deposits (open until June 24), there is a possibility that savers willing to lock money away for at least 24 months might soon be offered savings rates of around 4.50%.

Santander two-year fixed-rate bonds offer tiered rates up to 4.15% gross, with a monthly income option.

Higher rates for investors usually means higher rates for borrowers.

Gross mortgage lending by banks and building societies in 2009 could be barely £145 billion, against £356 billion in 2007. New lending this year might amount to little more than money paid back by existing borrowers, either in monthly repayments or when loans are redeemed, in many cases by repossession.

As the gap between supply and demand of mortgages starts to widen, rates on some fixes could start to rise, possibly within days.

For borrowers on Standard Variable Rate (SVR) mortgages, possibly after the expiry of their fixed-rate deal, the need for action may be even more urgent.

Ray Boulger at leading broker John Charcol says there was another sharp rise in swap rates on Monday, following closely on other recent increases.

"The scale of the increase was large enough to be the straw that breaks the camel's back and, as a result, I expect several lenders to increase the cost of at least some of their fixed-rate mortgages over the next few days," he says.

"With more borrowers - currently around 80% of our clients - choosing a fix, if interest rates continue to rise, then the current recovery in the housing market, based primarily on much-improved affordability as a result of both lower house prices and lower rates, may well wobble.

"The message for borrowers is clear: get in now or miss out on the current relatively low rates."

Boulger thinks that imminent rises are less likely on tracker mortgages, although the cheapest trackers could soon cost more. Woolwich upped the cost of one of its trackers by 0.5% this week - though it's a market-leading, offset lifetime tracker at Bank base rate plus 1.99%.

Martin White, chief executive at Email Mortgages, says: "Borrowers often ask: 'Why fix when it means a rise in monthly repayments?'.

"We understand borrowers want to pay as little as possible on a monthly basis. However, what might seem a 'no brainer' at present needs to be looked at in closer detail, preferably with a mortgage advisor.

"All the market needs is for Bank base rate to begin inching up, and lenders to act accordingly, before any short-term gain turns to long-term pain."

Borrowers going for a fix right now will find a wide variation on rates; Market Harborough BS has a 2.89% two-year deal, with a £1,500 fee.

Nationwide BS has a 7.58% fix - more attractive than it looks because of its LTV limit of 95%.

Cheapest fixes are effectively reserved for borrowers with a substantial amount of equity in their home. A Chelsea BS five-year fix at 4.50% allows maximum loan-to-value limit (LTV) of 65%.

At around 90% LTV, fixes mostly cost 6-7%-plus. Yorkshire BS lifted all fixed-rate loans this week, with Nationwide and all brands in Lloyds Banking Group set to follow suit. Northern Rock raised all five-year fixes on June 12.

"The housing market is at a delicate stage. Over the next few days, lenders could push up rates, but if they go too far too fast it could nip a recovery in the bud," Boulger says.

"Rising rates could trigger a second wave of recession, and further trouble in the housing market."

There are serious implications for the Government, too.

"Having pushed Bank base rate down to almost zero, the strategy is to boost the economy by reducing the cost of longer-term borrowing. This sharp upward movement in rates demonstrates the Government is impotent in this area and has lost control of rates except at the very short term end," Boulger warns.

:: Information: Charcol (0800 718 191 and www.charcol.co.uk); www.emailmortgages.com; Rothschild Reserve (0800 0778 555 and enquiries@rothschildreserve.co.uk).

Poundnotes

:: From June 15, Abbey - which also includes the Alliance & Leicester and Bradford & Bingley brands- will rebrand all its credit cards as Santander for all new and replacement cards. The Santander Zero targets travellers, being the only card on the market with no foreign exchange fees or cash advance fees, offering 0% on balance transfers for 12 months and on new purchases for three months.

Another best buy is the Santander Credit Card, offering 0% on balance transfers for 15 months, 0% on purchases for three months and a competitive APR of 15.9%.

Enquiries online at www.santandercards.co.uk.

:: Savers unwilling to lock their money away for a long period are increasingly looking to online accounts to boost returns. Barnsley BS offers 2.50% gross on its Online Saver (min £1 deposit), while Sainsbury's Internet Saver promises 2.6% AER on all balances opened by June 30.

Meanwhile Coventry BS launched Poppy Save on June 5, to mark the D-Day anniversary: it offers a competitive 2.50% AER gross, with four penalty-free withdrawals per year.

Enquiries: www.barnsley-bs.co.uk; www.sainsburysfinance.co.uk (0500 405 060); www.thecoventryco.uk (0845 766 5522).

:: Getting a credit card on good terms has become much harder in the past couple of years, so Paul Harrison at Moneysupermarket.com says great care needs to be taken in applying for them.

As a rejection can push applicants further down the queue, the financial website has devised a new tool called SmartSearch to help applicants sift through the many options to find products they are most likely to be accepted for.

:: Many older workers have not realised that the earliest age at which they can take an annuity to provide a pension income rises from 50 to 55 in April 2010, which means anybody born since April 6, 1960 can't take a pension until after April 6, 2015.

Steve Hunt at Rockingham Retirement says: "People currently aged 50 with a fund of £100,000 could expect to receive an annuity of £5,478 per year if they retired today.

"But if they delay until April 2010, they won't be able to retire until 2014.

"If their fund only grows by 10% over the next five years, it will be worth £110,000. If annuity rates fall by 10%, which is quite likely because of deep recession and increased longevity of life, they might expect an annuity paying £5,771 per year.

"By having to delay their annuity by five years, their income has increased by only £293 per year - but they will have lost five years's income at £5,478 per year, which equates to total income of £27,390".

Information: Rockingham Retirement (0800 1444 144).

:: High-five Savers:

Phone No Rate Account Period Deposit Interest paid

AA 0845 603 2295 4.50% (F) Telephone Fixed Rate Bond Five Years (T) £500 Yly

ICICI Bank UK www.icicibank.co.uk 4.40% (F) HiSAVE Fixed Rate Five Years £1,000 OM

Halifax www.halifax.co.uk 4.40% (F) Web Saver Five Years £500 Yly

United Nat Bank 0800 218 2266 3.50% Three Month Gold Deposit Three Months £1 Half-yearly

Secure Trust Bank 0121 693 9111 3.11% 60 Day Notice Issue 2 60 day £1,000 Qly

:: Top-five Borrowers

Phone No Rate Period Max% Adv Fee Incentive

HSBC 0800 494999 2.49% discounted for two years 60% £249 Yes

First Direct 0845 610 0100 2.89% variable for term 75% £799 Yes

Market Harboro' BS 01858 412250 2.89% to 30/9/11 75% £1,594 Yes

HSBC 0800 494 999 2.95% variable for term 75% £799 Yes

Co-Op Bank 0800 633 5286 3.24% to 31/09/12 75% £ 995 Yes

Code:

*F - Fixed

*P - Operated by Post

*B - Operated by Post/Telephone

*T - Operated by Telephone

*W - Operated by Internet

*H - Operated by Internet/Telephone

*S - Available only to those aged 50 or over

*R - Available to those aged 60 and over.

:: Source: Money£acts - Tel: 01603 476 476 (All rates subject to change without notice).