UK GDP for the fourth quarter of 2011 dropped by 0.2%, a worse than expected figure that will heighten fears of a double-dip recession.

Economists had forecast a fall of 0.1%. On a year-on-year basis GDP rose by 0.8%, as expected.

The ONS said the public sector strike seen on 30 November likely “had some impact” on the figure but said it was not possible to measure the effect directly and suggested the direct impact was minimal.

The ONS said production activity was down 1.2%, manufacturing falling 0.9%, construction down 0.5% and flat activity in the services sector.

Sterling moved fractionally up to $1.5555 on the news, having fallen to $1.5543 just ahead of the figures from an overnight three-week high of $1.5629

Could be interest times ahead! Mark

Monday, November 07, 2011

Published by MILLIE DYSON

The UK is a cost-cutting nation with 92% of homeowners currently trying to reduce their monthly outgoings.

Yet new research from Barclays is warning that Brits are ignoring how they could cut one of their biggest monthly outgoings – their mortgage.

Instead they are focusing on cutting back spending on takeaways, clothes and using discount vouchers at the tills missing what could be their biggest savings opportunity.
The research shows that there is a clear disconnect with people failing to realise how much they can actually save by swapping their mortgage.

A staggering 58 per cent of homeowners say they have never remortgaged outside of moving home but the majority (74 per cent) said that if they could save up to £50 a month they would consider doing so.

Those polled thought swapping a mortgage could save them around £10 a month, but Barclays calculations show remortgaging could save homeowners much more.

With homeowners living in their homes for on average over 16 years, they are potentially missing out on years worth of decreased mortgage payments.
In fact, Barclays’ data shows its range of fixed and tracker rate products could save homeowners £346m over the next two years alone.

Andy Gray, head of mortgages at Barclays, said:
“The fact that around six in 10 homeowners have never changed their mortgage outside of moving house, suggests that they simply don’t realise the levels of savings to be had by remortgaging.

“As monthly outgoings rise, and Brits fight to cut their costs, it’s important that they consider addressing their mortgage.”

Nearly half of those surveyed (44 per cent) say they spend more time on cost-cutting over the past 12 months – with three quarters of homeowners (76%) spending up to three hours a month on reducing their monthly costs which demonstrates that every £1 is important.

Barclays is encouraging people to make their time, as well as their money, work hardest to ensure they prioritise which costs could achieve the greatest savings.

Andy Gray adds:
“Since launching Great Escape a year ago which is a cost free way to swap a mortgage, we have saved homeowners £40m but there are still millions the nation could be saving.

“The fact that the majority of people would remortgage to save £50 a month, demonstrates that homeowners consider these potential savings to be worthwhile.

“There are an increasing number of good mortgage deals to be had so we are urging homeowners to act now and look at the rate they are paying, to allow them to get more out of their hard earned cash.”

Let me know if you would like to review your mortgage? – Mark Bugden

FROM PA Analysis OCT 18 2011 BY: GARY CORCORAN

The inflation figures reported this morning make for grim reading but they are not a surprise as even the consensus from economists was for a hike in CPI to 4.9% from 4.5%.

The hike through the 5% barrier – to its highest level (5.2%) since it was set up in 1997 – was largely thanks to a healthy rise in utility prices, with electricity up 7.5% and gas up 13% year-on-year. RPI, that includes mortgage interest payments, also shot up from 5.2% to 5.6%, reaching its highest level since the end of 1991.

The mainstream news will highlight the bare numbers and the increased cost of living with the prices of essential goods going up far more than wages or interest rates. Savers and those, such as pensioners, on a fixed income will undoubtedly suffer the most.

But investors and their intermediaries should be able to take a longer-term view and see inflation coming down over the next 12 months and more, to zero if Trevor Greetham, director of asset allocation at Fidelity is to be believed. In his calculations he strips out the VAT increase in January this year (inflation falls to 3.5%) and then food and energy rises (down to 1.7%) and if commodities turn negative inflation reaches zero. If only it was that easy…

The picture, however, is much better for investors as the numbers have been very well reported and a rise in inflation is not a surprise. The impact on sterling and the gilt markets, certainly at the beginning of today, is minimal and gilt yields still offer relatively unattractive returns by comparison, with ten-year gilts at -3.1%.

As long as yields – and interest rates for cash – remain below inflation investors will see real returns fall. Instead, as Ana Armstrong, managing partner at Armstrong Investment Managers, suggests investors should look to high-yielding equities (not cyclical equities), agricultural commodities, Asian currencies and inflation-linked bonds.

It wasn’t that long ago that some were saying a little bit of inflation would be a good thing to help ‘inflate away’ some of the UK debt. Instead, investors are having to put risk back on the table to get past a 5% return as anything less is in effect loss-making.

Consensus though is that inflation will start to come down from early next year – maybe not quite to zero, but a sustained fall will follow a lower VAT rate and the slowdown in the rising prices we have seen again today.
Savers will lose out, investors still have the opportunity not to.

This is a view I heard from a few investment seminars – Mark

The last rate change was on March 5, 2009, when it was reduced from 1 per cent to 0.5 per cent. On the same day, the Bank of England initiated a £75bn QE programme.

The most recent change to the size of the programme, on November 5, 2009, was an increase of £25bn, bringing the total to £200bn.

Legal & General Mortgage Club managing director Ben Thompson says: “We expect rates to remain unchanged for a long time with QE kept under constant review and this will be tremendous news for borrowers but quite the opposite for savers, many of whom have had to dig deep into their savings to boost their income and cover costs.”

The Bank of England’s Monetary Policy Committee has voted to keep base rate at 0.5 per cent for the 30th consecutive month.

The committee also voted to keep its programme of quantitative easing at £200bn.

If you want to discuss your mortgage options just contact Mark.

As reported by Investment Week

04 Aug 2011 | 12:06 Kyle Caldwell

The Bank of England’s Monetary Policy Committee (MPC) has left interest rates on hold at 0.5%.

The MPC has now left rates frozen for nearly two and a half years – the longest period of inertia since World War Two.

The committee has also decided not to implement further quantitative easing, leaving the asset purchase programme unchanged at £200bn.

The move to keep interest rates at an all-time record low for a 29^th consecutive month was widely expected.

A survey conducted by the BBC, which polled 32 economists, indicated the majority do not expect interest rates to rise until next year at the earliest.

Twenty-six of the economists said rates will not rise this year, and three predicted no rate increase until 2013.

AEGON Asset Management’s head of international rates John McNeill said the low interest rate is justified against a brackdrop of weak economic activity.

"Inflation is likely to continue to rise as the impact of the recently announced rise in utility prices is felt," said McNeill.

"However, with economic activity remaining weak, evidenced by the dip in the manufacturing PMI below 50 and lack-lustre GDP data, the majority of the MPC believe that the current very low interest rate remains justified."

Read more: http://www.investmentweek.co.uk/investment-week/news/2099451/bank-leaves-rates-unchanged#ixzz1U4Qsmrgm
Investment Week – News and analysis for investment advisors and wealth managers.

From www.myinteroducer.com

Wednesday, June 22, 2011

Published by MILLIE DYSON

95% of mortgage lenders failed to fully pass on cuts in the Bank of England base rate to their standard variable rate customers, according to new research by Which? Money.

And, with many borrowers trapped on SVR mortgages, as they no longer have enough equity in their homes or a high enough income to switch to a better deal, a rise in interest rates could leave thousands of households in financial difficulty.

A 1% increase to their interest rate would add over £50 to the monthly repayments of someone with a £100,000, 20-year mortgage. More than a fifth of lenders have increased their SVR since the base rate hit an all time low of 0.5% in March 2009.

Cheltenham & Gloucester and Lloyds TSB Scotland were the only lenders from the four biggest banking groups to pass on the full cut. See the table below for the current standard variable rates of the big mortgage lenders.

Highest interest rates

At 6.08%, KRBS – formerly Kent Reliance Building Society – has the highest SVR on the market at more than 12 times the base rate. The five other direct lenders with the highest SVRs are all building societies.

The average SVR is now 3.48% above the base rate, compared with 1.95% in September 2008. If you are struggling to pay your mortgage, visit our guide to avoiding repossession.

Visit our mortgage deal finder to see if you could save money by switching your mortgage.

Big lenders’ standard variable rates:
- Barclays/Woolwich: SVR 4.99%
- Northern Rock: SVR 4.79%
- Britannia: SVR 4.24%
- Santander: SVR 4.24%
- NatWest/RBS: SVR 4%
- Cheltenham & Gloucester: SVR 3.99%
- Halifax: SVR 3.99%
- Nationwide BS: SVR 3.99%
- HSBC: SVR 3.94%
- First Direct: SVR 3.69%

Commenting on market conditions for lenders, CML director general Michael Coogan said:

"Lending rates are fundamentally driven by the cost of funds, not the base rate, although the two were more closely correlated before 2008. But this apparent historical relationship has been blown apart by the move to an unprecedented low base rate since March 2009.

"Since the onset of the financial crisis, firms have been operating in lending and funding markets that have changed dramatically, and we have been reinforcing the message that base rate is not a proxy for the funding costs for lenders.

"For borrowers anticipating difficulty, however, the message remains unchanged. They should speak to their lender as soon as possible if they are struggling to meet their repayments, and lenders are committed to helping them wherever they can do so."

AS reported from from IFAonline.co.uk

Author: Owain Thomas Cover| 20 Jun 2011 | 16:07

Read more: http://www.ifaonline.co.uk/cover/news/2080242/consumers-aware-protection#ixzz1PzadooVL

Consumers are more concerned about protecting their family since the financial downturn, research suggests.

Women are the ones leading the way as they become increasingly aware of the need to do this, it also found.

The study conducted by Hannover Life Re and the Protection Review saw 1,000 adults interviewed by pollsters ICM.

It revealed a significant increase in the number of people wanting to protect their family’s income and health.

When asked if this was less or more of a priority since the financial downturn half (49%) said it was of greater importance, more than double the 2010 figure (22%).

Women were more likely than men to see this as a priority with 55% responding positively compared to 43% of men.

When asked who or what people would rely on if they were off work for a long period due to illness or accident, responses were;

• 54% savings,
• 46% partner or spouse,
• 35% family or parents,
• 36% State benefits,
• 31% employer cover,
• 19% protection products.

Many still believe that their savings will see them through, with 31% believing their savings would allow them to manage to pay their bills without a regular income for more than 12 months.

The reinsurer suggested that the increase in the number of people taking more responsibility for their own and their family’s income and health could be an indication that many feel the recession starts here.

Stuart Paton Evans, general manager for business development at Hannover Life Re UK, suggested the findings indicated that many consumers still have unrealistic perceptions of surviving financially for more than 12 months.

"The reliance on State benefits has decreased which points to people picking up on austerity messages from the government," he said.

"However, for the life insurance industry, this has yet to have a positive impact on protection sales although 38% of those surveyed did not believe they could count on any help from the State.

"The message that selling a home or car, relying on partners, employers or the State are insufficient long-term solutions to protection needs appears to be filtering through to consumers.

"People are aware of the need for adequate protection and many are now saving more to build a nest egg, but are still failing to translate this awareness into action," he added.

I hope this helps.

Mark

21st June 2011

With Wimbledon here and the Olympics coming up, London residents are being encouraged to serve their best shot and let out furnished rooms in their home for spectators.

By taking advantage of the government’s Rent a Room scheme, potential landlords can earn up to £4,250 per year without incurring any extra tax – a sure way to score in these credit-tightened times.

Anita Monteith, the Institute of Chartered Accountants in England and Wales’ tax faculty’s technical manager, explained: "The Rent a Room scheme provides a welcome tax break to help you maximise your income without incurring tax. Major sporting events such as Wimbledon and the Olympics next year are perfect opportunities to participate in the scheme and you can save even more if you are diligent with keeping detailed records of income and outgoings.

"If you take in a lodger, you must tell your mortgage lender or landlord and your buildings and contents insurer to make sure you aren’t breaching the terms of your mortgage, lease or insurance. Your insurance company may need to arrange extra cover."

It is also important to note the following to avoid falling foul of the umpire:

• You can take advantage of the scheme if you let furnished accommodation in your only or family home to a lodger
• The tax relief does not apply to rooms let as an office or for other business purposes.
• A lodger can occupy a single room or an entire floor of your home
• The scheme does not apply if your home is converted into separate flats that you rent out. In this case you will need to declare your rental income to HMRC and pay tax in the normal way
• If you provide meals and laundry services and make an additional charge for these, you will need to add this income to the rent to work out the total receipts. If this is more than £4,250 a year in total, you will need to pay tax on the excess, even if the rent itself is less than that.

• Anita added: "If you use the scheme, you cannot also claim any expenses relating to the letting, for example, wear and tear, insurance, repairs, heating and lighting. Therefore, you need to work out whether you will be better off joining the scheme or declaring all of your letting income and claiming expenses on your tax return. You may also need to arrange some liability cover which will protect you against accidents and injuries when someone is staying in your home."

http://www.mortgageintroducer.com/mortgages/240523/5/Industry_in_depth/Game%2C_set_and_match_when_you_let_your_spare_room.htm?utm_source=AMNL&utm_medium=email&utm_content=textlink&utm_campaign=dailynewsletter

As report by Money Marketing 14-06-2011

The consumer prices index of annual inflation remained unchanged at 4.5 per cent in May, according to figures from the Office for National Statistics.

The retail prices index – the measure of inflation which takes account of mortgage interest payments – also remained unchanged at 5.2 per cent.

The ONS says that although the CPI and RPI figures remained unchanged there were significant upward and downward pressures at a more detailed level. The ONS highlighted downward pressures from transport, furniture, household equipment and maintanence. By contrast, the largest upward pressures came from non-alcoholic beverages, which rose 1.3 per cent between April and May this year, as well as fruit and meat prices. Upward pressure came from alcohol and tobacco as well as miscellaneous goods and services.

The ONS says that with CPI at 4.5 per cent, the UK is markedly higher than the average for the European Union, which stands at 3.2 per cent.

Last month, Bank of England Governor Mervyn King warned energy prices could push inflation up to 5 per cent by the end of the year.

In King’s letter to the Chancellor, King said inflation would “probably” be below the Government’s inflation target of 2 per cent if it was not for increases in VAT, energy prices and import prices.

Currency Solutions forex broker Max Johnsen says: “So the Bank’s game of Russian roulette with the economy continues. If it raises rates to control inflation, it will be putting another bullet in the chamber.
“From an interest rate perspective, the monthly inflation data is almost irrelevant given the embattled state of the economy. Unless inflation starts to rise again materially, by around another basis point, we can disregard any notion of a rise in Bank Rate during 2011. Martin Weale may argue that a rate rise now, however nominal, will give us a head start on inflation and obviate sharper potential rises in the future, but we don’t have the luxury of preparing for the future. In these highly precarious times, there’s only the present. And the present isn’t looking great for UK Plc.”
“Sterling hit a week-high against the euro on Monday but this was as much to do with ongoing eurozone debt issues as the likelihood of rising inflation.”

Author: Laura Miller

IFAonline| 12 Apr 2011 | 09:43

Inflation fell by 0.4% to 4% in March as the cost of food and drink lowered, but it is still double the Bank of England’s target.

The fall in the consumer price index (CPI) is the first for eight months and marks a drop from the 28-month high of 4.4% in February.

Jeremy Cook, chief economist at World First foreign exchange, says March’s lower inflation figure leaves “no illusion” of an interest rate rise before August.

By far the largest downward pressure to the change in CPI came from food and non-alcoholic beverages, where prices fell by 1.4% between February and March this year.

Sterling dropped as much as 0.5% against the dollar on the news. It was at $1.6249 as of 9:33am in London, down 0.6% from yesterday.

The fall in CPI will give a boost to Bank Governor Mervyn King, who has resisted increasing pressure to raise the base interest rate from its record low to curb rising inflation.

The Bank held fire on rates this month, keeping them at 0.5% and opting to wait for clearer signs of recovery before following the European Central Bank (ECB) in a hike.

Earlier this month the ECB increased the cost of borrowing by 0.25% to 1.25% in its first rate rise in three years, despite the EU having a much smaller inflation problem than the UK.

Cook says the drop in CPI will come as a welcome relief for homeowners and businesses worried about the cost of a borrowing, but the UK could now be looking at a second consumer slowdown as austerity measures bite.

“It shows the UK consumer is tightening its purse strings in the face of price increases, a trend backed up by the horrific British Retail Consortium numbers we received overnight that showed sales down by 3.5%.”

Emma Wilson, of forex specialists Currency Solutions, says the currency market’s reaction to the CPI data shows a shift in expectations following the financial crisis.

“The fact we’re breathing a sigh of relief that inflation has fallen to just double the Bank’s target shows how the economic landscape has changed in recent years.

“There’s a feeling that in the new world order the role of the Bank is to manage chaos rather than steer the UK economy through calm waters.”

Still hard to tell what may happen to interest rates but hopefully this will help. Mark