Cyprus defends bailout deal amid recession fears 

Sunday, March 24, 2013 4:00:00 PM Categories: Europe

The government of Cyprus has defended a 10bn-euro bailout deal to save its banks from collapse, amid warnings the island faces deep recession. Laiki (Popular) Bank, the country's second largest, will be wound up, but small savers will be protected. Depositors with more than 100,000 euros ($130,000; £85,000), many of whom are Russian, face big losses.

Cypriot finance minister Michael Sarris said his country had avoided a "disastrous exit from the eurozone". But correspondents say Cyprus' economy will shrink sharply as offshore banking - its main industry - is effectively shut down.

President Nicos Anastasiades - who negotiated the deal with the "troika" of the EU, the European Central Bank and the IMF in Brussels - is to address the nation in the coming hours.

It is not clear when Cypriot banks will reopen, or when temporary restrictions on the movement of capital will be lifted.

Cyprus puts levy on bank accounts 

Sunday, March 17, 2013 4:10:00 PM Categories: Europe

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.  The controversial plan, negotiated with the European Union and International Monetary Fund, marks a radical departure from previous eurozone bailouts.

People with under 100,000 euros in their accounts would face a one-off levy of 6.75%, while anything above would get a one-time tax of 9.9%. Depositors would be compensated with the equivalent amount in shares in their banks. If it goes ahead, the levy would affect many non-Cypriots with bank accounts, including UK expatriates. However, depositors in Cypriot banks' operations outside the country would not face a levy.

If you have any concerns about this or would like to discuss it further please get in touch.

UK housing market shows sales lift 

Monday, March 11, 2013 3:28:00 PM Categories: Mortgages

UK house sales hit their highest level in more than two-and-a-half years in February, but the figures do not signal a housing boom, surveyors say. The Royal Institution of Chartered Surveyors (Rics) said nearly 17 homes were sold per surveyor in the three months to February.

The rise in sales was set to continue, Rics said, even though inquiries from potential buyers had failed to pick up since January's cold snap. Prices were also relatively unchanged.

The number of homes being sold at present in the UK is about half the total seen in 2007 before the financial crisis hit, according to figures from HM Revenue and Customs. The housing market has had little momentum in recent years, although a number of government schemes have assisted the market for new homes.

However, many borrowers have found it tough to raise the deposit required by lenders to secure a home loan.

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.

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