Banks reduce loans, in spite of Funding for Lending 

Sunday, March 03, 2013 11:14:00 AM Categories: Economy Mortgages

The number of loans being offered by banks has continued to fall in spite of the Funding for Lending Scheme (FLS). The scheme, which began in August last year, was designed to encourage banks to lend more money, both to individuals and businesses.

However, the Bank of England has announced that net lending fell by more than £2.4bn in the final quarter of last year. Lloyds was amongst the banks that lent less, while Barclays lent more.

In total, £80bn is being made available to banks at reduced interest rates, but only if they guarantee to lend that money on to Britain's small and medium-sized businesses, as well as individuals.

Moody's downgrades the UKs AAA credit rating 

Tuesday, February 26, 2013 11:27:00 AM Categories: Economy

The UK has lost its triple-A credit rating for the first time since the 1970s. Moody's, one of the three biggest credit rating agencies in the world, has downgraded its assessment of the outlook for the UK economy.

Moody's now expects that economic growth will be "sluggish" into the second half of the decade. This means it will take longer for the government to reduce its budget deficit - the amount it has to borrow every year because it is spending more than it receives in tax revenue.

The lack of growth makes cutting the deficit more difficult because when an economy is not growing, less tax is coming in from companies and individuals, while the government has to spend more on welfare payments, such as unemployment benefit. And as the UK's debt problem will take longer to get under control, there will be a deterioration of the country's "shock-absorption capacity".

In other words, it will make it harder for us to cope with any external problems, such as a worsening of the crisis in the eurozone, our main trading partner.

UK residents are the worst at saving for retirement 

Wednesday, February 20, 2013 10:20:00 AM Categories: pensions

The UK is the worst country in the world at saving for retirement, data from a new report into global savings shows. In the HSBC report, “The Future of Retirement: A New Reality”, the average Briton is found to spend 19 years in retirement but with savings that will run out after just seven. It means the average Briton’s savings only covers 37 per cent of their retirement income with the rest being covered by other income such as the state or employment.

On average globally people are storing up enough to pay for 56 per cent of their retirement which is an average of 18 years, leaving an eight year shortfall.

In the report, HSBC group head of wealth management Simon Williams says: “There are, of course, many obstacles to saving, including the lack of a regular savings habit and the financial impact of unexpected life events.

“Unfortunately, the impact of saving too little or too late will only become clear in later years, when people find they are retiring without the necessary income to support an active and fulfilling retirement.”


Long-term mortgage rates fall to record lows 

Sunday, February 10, 2013 4:43:00 PM Categories: Mortgages

Interest rates on some new mortgages fixed for five years have fallen to the lowest levels on record. There are currently 16 lenders offering mortgage loans at less than 3%, if borrowers can put down large deposits.

Rates below 3% were first launched last summer, typically at either 2.95% or 2.99%. Even cheaper deals have now emerged, thanks to the Bank of England's Funding for Lending Scheme (FLS), which was launched last August. This is offering up to £60bn of cheap funds to banks and building societies, if they then lend the money to individuals and businesses.

Ray Boulger, of mortgage brokers John Charcoal, said that FLS was definitely driving greater competition among lenders. "The number of very cheap deals has been rising for the last few weeks," he said. "We have also seen lenders cutting rates for people with just 20% or even 15% deposits."

If you would like to discuss this further please get in touch

George Osborne backs bank break-up powers 

Sunday, February 03, 2013 11:41:00 AM Categories: Economy Regulations

The UK's big banks will be separated if they fail to follow new rules to ring-fence risky investment operations from High Street outlets, Chancellor George Osborne has announced.

He has said taxpayers are angry at banks' behaviour and will never again be expected to bail them out.

His speech comes on the same day the government introduces its Banking Reform Bill in Parliament.

Customers will also be able to switch bank accounts to a rival within a week.

Mr Osborne also said the banking system was not working for its customers, particularly small businesses and individuals.

Pension scheme closures speed up 

Sunday, January 27, 2013 4:40:00 PM Categories: pensions

The closure of private sector pension schemes accelerated in 2012, says the National Association of Pension Funds. Its annual survey found that only 13% of final-salary schemes were open to new joiners, down from 19% in 2011. Meanwhile 31% were now closed to existing staff as well, up from 23% the previous year.

The NAPF said new staff in the private sector now had "next to no chance" of joining a final-salary scheme and the decline would continue.

Joanne Segars, chief executive of the NAPF, said: "The pressures on final-salary pensions have proven too great for many businesses. The growing liabilities fuelled by quantitative easing will have been a factor behind the record hike in closures."

"What was once the norm is now a very rare offer. And those who are currently saving into one may find it gets closed," she added.

The NAPF survey covered 1,018 schemes run by 280 private sector firms.

Emergency funds: Are you using yours? 

Wednesday, January 23, 2013 4:19:00 PM Categories: Economy

Families are being left financially vulnerable as interest on existing debts is eroding money set aside for emergencies, a charity has warned. The StepChange debt charity suggests that UK households face debt interest payments of £189 a month on average. It suggests this is eating into their financial buffer for unexpected expenses, such as a broken boiler.

A separate report suggested that one in five people were set to retire in 2013 still having outstanding debts. The survey, for insurer Prudential, found that the proportion of potential retirees with debts was the same as 2012, but the amount that they owed had fallen by about £7,000 to £31,200.

If you are being affected by this or would like to discuss setting up an emergency fund please get in touch.

Happy New Year..... same old problems 

Wednesday, January 16, 2013 2:58:00 PM Categories: RDR

Happy New Year to all of our clients at Whichers IFA Ltd. We hope you had a great break and enjoyed the festivities.

Hopefully you are all now well aware of the new world we entered on 1st January 2013, which is due to the Retail Distribution Review (RDR). Unfortunately this new world feels like the end of the world at the moment due to the wide range of issues the new changes have brought about. We are working hard to resolve these issues but continue to be open for business.

If you have any questions about RDR or any other areas you would like to discuss please get in touch.

Confidence low for first-time buyers 

Monday, December 17, 2012 11:39:00 AM Categories: Mortgages

One in four prospective first-time buyers believe it will take them at least 10 years to have a deposit in place, a survey has suggested. The report from the Building Societies Association (BSA) said that pessimism in the market remained.

The quarterly property tracker conducted by the BSA found one in five first-time buyers believed they would still be renting or living with family in 2022. It said that before the financial crisis of 2008 hit, 88% of first-time buyers were able to raise a deposit in five years of less, but at the end of 2012 just 62% felt they would be able to save for a deposit in five years.

However, while it said raising a deposit was still the biggest barrier for all UK home buyers, the survey also pointed towards a small improvement in sentiment.

Around 59% of respondents said saving for a deposit was a barrier to buying a property in December, down from 62% in September and 64% in December 2011.

The Autumn statement 

Friday, December 07, 2012 10:42:00 AM Categories: Budget Economy

A summary of the key points

• The Office for Budget Responsibility cut growth forecasts for 2012 down from 0.8% to -0.1%. Next year’s estimate was revised down to 1.2% from 2%.

• Borrowing in the current financial year has been revised lower to around £80bn, thanks mainly to the coupon transfer from the Bank of England’s gilt holdings. It is expected to rise to £99bn in 2013-2014.

• The DMO has announced a cut in the number of Treasury bill auctions of £15bn in the current financial year following the downward revision to borrowing. This has benefitted the short-end of the yield curve, but 30 year yields have risen. This afternoon, 10 year yields are at 1.76%.

• The Chancellor announced a number of fairly significant tax changes: the 3p rise in fuel duty planned for January has been scrapped while corporation tax will be cut in April 2014 from 22% to 21%.

• Mixed news on pensions - the annual tax free allowance will be cut to £40,000 from £50,000 in 2014 while the lifetime allowance will be reduced to £1.25m from £1.5m. However, the capped drawdown limit for pensioners is being increased from 100% to 120%.

• For higher earners, the threshold for paying 40% income tax is being increased by 1% in both 2014 and 2015 but still at a slower pace than inflation. Capital Gains Tax and Inheritance tax exemptions will also be increased by 1%. The basic income tax threshold is to be raised by more than previously announced, to £9,440.

• The Chancellor hopes to raise £5bn over the next six years in tax from undisclosed Swiss bank accounts through a treaty with Switzerland. There were also a number of measures announced designed to combat tax evasion including 2,500 more inspectors.

• The ISA limit will be increased in April to £11,520 while the government plans to consult on allowing investments in small and medium scale enterprises equity markets like AIM to be held directly in ISAs.

• A number of infrastructure investments were announced for road, rail and broadband services.

If you would like to discuss any of these changes please get in touch

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