Loans and Finance

Loans and Finance


News and information about loans, money, debt, finance and business issues.

Wednesday, August 13, 2014

UK Unemployment Falls

UK unemployment has fallen by 132,000 between April and June to 2.08 million.

More people are working, but their incomes are being squeezed. The "good times" are but a faded memory!

Tuesday, August 12, 2014

First Time Borrowers Keep Borrowing

Despite the dire warnings about the cooling of the property market, in London at least, it seems that first time buyers are still desperate to borrow money to buy a house.

The Council of Mortgage Lenders (CML) recorded the highest number of loans (28,600) lent to first time buyers this June, since December 2007. This is an increase of 7.1% since May.

The amount borrowed in June was £4.2BN, up from May's figure of £3.8BN.

At some stage the  market will cool and rates will rise, the issue will then be can these borrowers keep up with their mortgage payments and are they in a position of negative equity?

Monday, August 11, 2014

London Property Market Has Peaked

Research from Hamptons, which specialises in selling houses in London and the South of the UK, appears to confirm reports of panic selling this year as homeowners try to cash in at the top of the market before a significant cooling next year.

This research will of course further fuel the "panic" selling, thus providing estate agents with a good fee income for the coming months.

Friday, August 08, 2014

China Recovers

The Chinese economy appears to be recovering.

As per Positions and Promotions, the official PMI, which samples 3,000 nationwide enterprises of various sizes, reached its highest level in more than two years at 51.7, up from 51 in June. The fifth consecutive month of recovery, was stronger than the market consensus forecast of 51.4.

The HSBC PMI, which samples 420 small and medium enterprises, showed similarly positive results reaching 51.7 for July. It indicates the strongest rate of improvement for China's manufacturing sector in a year and a half.

Wednesday, August 06, 2014

Bitcoin - A Nice Little Earner for Osborne

It would seem that the rise of Bitcoin has caught the Chancellor's gimlet eye, as a possible means of raising extra revenue.

Osborne has instructed the Treasury to assess how the UK could become a leading global centre for Bitcoin and other virtual currencies.

If it moves tax it, if it threatens other means of revenue generation regulate it!

A nice little earner!

Tuesday, August 05, 2014

HSBC Staff Turn To Unnecessarily Safe Activities

Douglas Flint, the chairman of HSBC, has expressed concern that increased regulation of the banking industry is pushing staff to turn to unnecessarily safe activities.

He is quoted by the Telegraph:
Unwarranted risk aversion threatens to restrict access to the formal financial system to many who could benefit from it.

There’s a creeping concern that staff are concerned about the penalties for getting things wrong and building risk aversion… getting to a state where there’s a zero risk tolerance.”
Flint expressed his opinion following HSBC's results, which saw a 12% fall in first half profits to £7.3BN.

As is the nature of any post binge clean up, the pendulum often swings too far the other way.

However, Flint may care to remember that these regulations (whether they are excessive or not) came into being because of the activities and risk appetite of the banks and their staff.

Monday, August 04, 2014

Pensions Costs

George Osborne has, from April next year, given people the right to access their pensions when they turn 55 rather than having to buy an annuity. However, pension companies will not be forced to apply these new rights.

In the event that companies are unable to release the cash, people can move their pensions. However, this might incur an exit charge.

Justin Modray, of Candid Financial Advice, is quoted by the Telegraph:
I think many policyholders will be very surprised to be told, come April, that they can’t have their money and there will be a big backlash.”
As with all financial schemes, the devil is in the detail!

Friday, August 01, 2014

The Bubble is Pricked.

European stock markets have fallen again for the third day in a row.

For why?

People are becoming very nervous about the knock on effects of the sanctions on Russia, and fears that interest rates may start to rise in the US.
Are these fears justified?


That being said, markets go up and markets go down. There will always be another bubble then another crisis to prick that bubble.

Wednesday, July 30, 2014

Bankers' Bonus Clawback

I note that the Bank of England has come up with a proposal to deal with errant bankers, that is a little more robust than the nonsense about making bankers swear an oath.

The Bank of England proposes that UK bankers guilty of misconduct could have their bonuses clawed back up to seven years from the time these were awarded, and could face hefty jail sentences in some cases.

The BBA won't like this at all!

Tuesday, July 29, 2014

An Oath for Bankers

ResPublica, a think tank, has come up with the bizarre recommendation that in order for public trust in the banks to be  restored bankers should swear an oath.

Director at ResPublica, Philip Blond, is quoted by the BBC:
"As countless scandals demonstrate, virtue is distinctly absent from our banking institutions. 

Britain's bankers lack a sense of ethos and the institutions they work for lack a clearly defined social purpose."
An extract from the oath says:
"I will do my utmost to behave in a manner that prioritises the needs of customers. 

It is my first duty to provide an exemplary quality of service to my customers and to exhibit a duty of care above and beyond what is required by law....

..I will confront profligacy and impropriety wherever I encounter it, for the conduct of bankers can have dramatic consequence for society."
All very well and nice, but to whom do the bankers swear this oath?

BBA executive director for financial policy and operations, Paul Chisnall, said:
"Restoring trust and confidence is the banking industry's number one priority.

But meaningful cultural change in an industry as complex and diverse as banking takes time....

..very well could be part of the answer".
An oath of course would mean absolutely nothing, and would entail a very small administrative burden. Hence the fact that the BBA rather likes the idea!

Friday, July 25, 2014

Back To The Future

The Office for National Statistics (ONS) reports that gross domestic product expanded by 0.8% in the April-June period.

Compared with the second quarter of last year, growth was 3.1%, the fastest pace since the end of 2007.

Total economic output was 0.2% higher than in the first quarter of 2008, its previous peak.


As Robert Peston wisely observes:

Thursday, July 24, 2014

Rates Will Rise When They Rise

Mark Carney, Governor of The Bank of England, is proving to be something of a Delphic Oracle.

He spoke at a business conference in Glasgow and expressed concerns about a housing bubble developing. Yet, in the same speech, he also noted that the Bank was not worried about the house prices themselves but was worried about household debt.

He noted that interest rates will be "materially lower" in the medium term than they have been historically.

When will rates rise?

Carney is quoted by the Telegraph:
The clearest indication of when rates will rise is when they rise.”
I personally do not see them rising before next May's general election.

Wednesday, July 23, 2014

A Nice Little Earner for Russian Oligarchs

Congratulations to those Russian oligarchs who currently own property in London.

Aside from making money out of the rising property prices, they are also guaranteed to make money from the declining rouble (as the sterling value of their UK properties appreciate against the rouble) as sanctions are ratcheted up on mother Russia.

A nice little earner!

RBS Executives Wilfully Obtuse

Andrew Tyrie, chairman of the Treasury Select Committee, is to write to Sir Philip Hampton, chairman of RBS, to complain about the evidence given by Chris Sullivan, deputy chief executive of RBS, and Derek Sach, head of the bank’s Global Restructuring Group (GRG) in June;accusing them of being wilfully obtuse.

Tyrie is quoted by the Telegraph:
If this is how RBS deals with a parliamentary Committee, how much can customers and regulators rely on it to be straightforward with them?

I will be writing to the Chairman of RBS about this, and the Committee will report on it after the summer.
The executives were originally summoned by the MPs to answer a number of allegations about the treatment of small firms by GRG contained in two highly critical reports on RBS.
One report by Lawrence Tomlinson, a Government adviser, alleged that the bank’s GRG division was forcing small businesses into administration so that the bank could take their properties and sell them for a profit.
Tyrie also said:
Following the Committee’s decision to write to Sir Andrew Large for clarification, RBS has now offered the Committee what it euphemistically describes as ‘additional comments’. 

In fact, they have done a belated U-turn. It’s not as if the facts have changed. 

So it now appears that RBS has been wilfully obtuse with the Committee.” 
The financial services industry in the UK is quite simply a crock of shite!

Tuesday, July 22, 2014

Forex Criminal Investigation

The SFO has launched a criminal investigation into whether a number of traders at top banks colluded to artificially fix rates in the £3 trillion-a-day foreign exchange markets.

London is where around 40% of foreign exchange trading takes place and traders are alleged to have colluded via online chatrooms with names such as the “Bandits’ Club” and the “Dream Team”.

The Telegraph reports that so far more than 25 traders working at a number of the world’s biggest banks have been fired or suspended while regulators around the world continue their investigations.

The forex scandal is likely to be as damaging to the "reputations" of banks as the Libor scandal.

The lesson to learn from this, and all the other scandals, is that all markets are rigged in favour of the "house".