IVAs double in 2006

According to the Daily Telegraph, 2006 saw the number IVAs (individual voluntary arrangements) double to 45,000. In the process a total of £1.4 billion in debt was written off.

IVAs are a mechanism for individuals to regain control of their indebtedness without going through the process of personal bankruptcy. With debts, loans and credit card borrowing at all time highs, the IVA has become a significant feature on the lending landscape.

To read more, click on the post title.

Mergers and Acquisition Boom

According to a report in today's Daily Telegraph, 2006 M&A activity will exceed the levels reaches in the 1999/2000 dotcom boom. The total value of takeovers has reached $3,611bn (£1,836bn).

The largest UK transaction was the takeover of British Airports Authority (BAA) by Ferrovial of Spain worth $30.2 billion. The largest global deal was valued at $89 billion. This was the takeover of Bellsouth by AT&T.

To read the full story, click on the post title.

UK High Street in Christmas Slump

Retail sales are falling on the UK high street. That's not exactly news. The problem is that many retailers were hoping that Christmas shopping would signal a reversal of the decline.

Obviously traditional retailers are being hit by the growth of the Internet based competitors. But large retailers from ASDA to John Lewis are reported to be concerned. Most blame two factors; the recent quarter point rise in interest rates and the debt overhang suffered by many British families.

To read the full story, click on the post title.

US Dollar nudging towards $2 to £1

The US Dollar continued to slide yesterday. At one point sterling was worth $1.967. The US is reeling from a series of bad news shocks. Confidence is falling and there is a growing belief that interest rates may have to be cut. The problem is that the US is running a current account deficit equivalent to 6.5% of GDP.

To read the Daily Telegraph's version, click on the post title.

2 Dollar Pound Approaching

Yesterday sterling hit $1.95 as the US economy appears to be faltering. A number of indicators show that the US economy is under pressure. These include house prices down 3.5%, industrial orders down 8.5% and a fall in the Consumer Confidence Index. US interest rates have been on a steady rise over the past two years. However, it appears that they are now pressuring the economy into a serious risk of deflation. To read a full report of the figures, click on the post title.

Farepak - From an economist's point of view

Leading economist John Kay, who writes a regular column in the Financial Times, has criticised the management of Farepak for blaming the banks for its demise.

The collapse of Farepak has deprived thousands of lower income families of their Christmas savings. Without naming names - parent company Chairman Sir Clive Thompson being the most famous - Kay has suggested that it was poor strategy rather than the banks which were to blame.


To read John Kay's article, click on the post title.

Debts - Individual Voluntary Arrangements

This is a follow-up to the earlier post on debt.

One way out of debt is to sign up to an Individual Voluntary Arrangement (IVA) which acts as a legally binding agreement between you and your creditors.

There are a number of benefits of to an IVA:

1. The interest rate spiral is brought to a halt

2. The unpaid balance of your debts is effectively written down

3. This could be as much as 75%

4. You replace this with one monthly payment

5. If you stick to the revised payments you are protected from further legal action

6. You avoid bankruptcy and therefore no need for embarrassing notices in the press

2 million people in debt

According to a report in the Daily Mail (20th November 2006) as many as 2 million people are so far in debt that they have no hope of repaying. For some people the debt mountain is now so large that interest payment absorb all their spare income. A boom in consumer spending aided by credit card and other loan facilities has seen many UK households overload with debt. The recent rise in interest rates, coupled with rising costs for energy will place many people at risk of bankruptcy.

The UK is now the debt capital of the world. And you only have to watch daytime TV to witness the growth of a burgeoning debt management industry. Providing management solutions is the latest growth area for financial advice.

To read the Daily Mail article, click on the post title.

First SIPP sales reported

French ski property Hotel des Deux Domaines has reported its first S.I.P.P. (Self Invested Personal Pension) sales. Property investments are only eligible if they are for commercial properties. Hotel des Deux Domaines is a ski hotel located in La Plagne.

UK Interest Rates rise

On Thursday 9th November the Bank of England Monetary Policy Committee raised interest rates to 5%. The increase was widely signalled. The increase has been brought about by fears regarding the level of domestic inflation, now in the region of 3%.

Inflation is very much a mixed bag. Factory gate prices are steady, energy costs are falling from their winter 2006 highs and oil is much lower following the reduced tension in the Middle East.

However, much of the UK domestic index is dominated by public sector items. Council Tax, which has almost doubled since 1997, and the introduction of higher levels of University Tuition Fees are driving up average household bills.

One area where costs are not only under control but falling is the electrical goods sector. This is impacting on everything from ipods, to flat screen TVs, to mobile phones. Technology is benefitting from the experience curve economies enunciated in Moore's Law, whereby the costs fall by 50% every 18 months. Apart from the manufacturing aspects there are also the benefits of a more competitive retail market. This is principally led by a move away from the high street to online retail. Online specialist retailers such as 121 Electricals can offer a leading model of flat screen TV at prices sometimes 10-20% below their high street equivalents. Prior to the rise of the Internet, the high street had become almost a duopoly of Dixons and Comet. Now online competition is providing both choice and lower prices.

Housing market to plunge

The Motley Fool has an article that claims to show why the next house price recession will be much worse than the last. The 1990s recession saw prices fall by around 11% over a 6 year period. A period when general inflation averaged 3 to 4% per annum. The article is written by Chris D'Arcy. D'Arcy sold his house last year and now lives in rented accommodation.

D'Arcy list 10 reasons for his views.

1. Consumers are overspending without care. On average 10% more than they're earning.
2. Household bills are soaring. Gas, electiricty, council tax etc are rising by 7%.
3. Mortgage debt has risen by an average of 8.5% per year over the last 9 years.
4. Non-mortgage debt has exploded. Rising by 11% per annum over the same period.
5. Mortgage equity withdrawal has soared.
6. Wage inflation has average just 4.2% over them same period. An average house now costs 6 times the average salary.
7. Meanwhile the savings rate has plunged.
8. Interest rates remain historically low and can only go up. Another 0.25% rise is probably due very soon.
9. The social security net for home owners has disappeared.
10. Private insurance to cover mortgage debt is, in his words, pants.

I would also add two more factors.

1. Much of the early part of the house price boom was fueled by the buy to let market. As soon as novice landlords realise they're onto a loser they will bail out in droves.
2. Speculation versus panic. Sentiment is very important in markets. For many years people have talked up the market and the market responded. Now people are talking the market down.

Another jump in UK house prices

A report in the Financial Times shows that UK house prices continue to rise. This despite the threat of higher interest rates. The report is from Nationwide, the UK's largest building society. According to the Nationwide, prices rose 1.3% in September and now stand 8.2% above a year ago. This rise compares with a 3% inflation rate and may tempt the Bank of England to raise rates a further quarter point.

To read the FT report, click on the post title.

UK housing worth £3,575 billion

The Office of National Statistics has reported that the value of UK housing is now £3,575 billion. This figure represents 59% of the nation's total wealth, and is up 4% on the year before. As many economic observers have already commented, housing's rise has led to a huge increase in personal wellbeing. The downside is that a small rise in interest rates could have a major impact on overall economic activity.

To read the Financial Times take on the subject click on the post title.

Adverse credit mortgages

Having seen what's been happening in the wider property, I've just written a post on the pay per click advertising market for adverse credit mortgages. This is a relatviely new and highly specilised category within the UK mortgage market. Top bids today, are approaching £12 per click. To read the post, click on the post title above.

North vs. South property divide widens

An article in today's Financial Times reveals the gap between property prices in the north and the south of England continues to widen. The article is based on a report by the Royal Institute of Chartered Surveyors - RICS.

London property prices showed their biggest monthly gain for 6 years. In the year to June 2006, London properties showed a price rise almost twice the UK average of 5.6%. In Scotland, the North, the West and East Anglia property prices were almost static.

Ian Perry of RICS, describes London as a property rich "city state". To read the full Financial Times article, click on the post title.

House prices in steep rise

According to a report in today's Daily Telegraph, June saw a major jump in UK house prices. The Telegraph report is based on figures from property website RightMove. RightMove recorded average asking prices rising by £6,000 per house against the month before. The increase in the south of the country was even higher, with average prices rising by £12,000.

To read the full report, click on the post title.

Eurotunnel refinancing stalemate

The refinancing deal to save Eurotunnel appears to have reached stalemate. Representatives of various debt holders cannot agree on who gets what share of the resturctured business.

The company's boss Jacques Gounon has claimed that the business has a value of £4 billion. However outstanding debt is £6.2 billion. Something has to give. Meanwhile Gounon is asking the French courts for Chapter 11 style protection.

Read more in the Daily Telegraph by clicking the post title.

Buy to let mortgage market 10 years old

The Financial Times carries a report on the buy to let mortgage market. Apparently the market for specific buy to let mortgages got underway in 1996.

For many years the mortgage market had been highly regulated. Lenders were conservative and buy to let was perceived to be a high risk form of lending. In the event, with properties rising in price, the risks to date have been minimal.

To read the article, click on the post title.

UK online housing market

I have just taken a look at the online search market for house sales.

Two terms stick out.

1. Sell my house. This has 110 thousand searches each month.
2. House for sale. This has 137 thousand searches each month.

The question is how viable is a search site that focuses exclusively on the value of advertising houses online?

FSA to look at sub-prime mortgages

According to the Financial Times, the Financial Services Authority is to look into the surge in high risk mortgages. A number of institutions have been entered the market, attracted by the higher margins. The FSA is concerned that a down turn in the economy could lead to the risk of defaults.

To read the full article, click on the post title.

UK house prices slow

A report in today's Financial Times, shows that UK house prices rose just 0.1% in May. The figures from the Halifax house price index show that the average house is now worth £178,997.

Year on year price growth is now 9.1%. The spring of 2005 was also fairly sluggish.

To read the article click on the post title.

Stock market woe continues

The FTSE 250 had its biggest fall for 10 years yesterday. The main FTSE 100 index is down around 5,500 - about 10% off its peak of last month. There used to be an old adage about "sell in May and go away". It seems that a lot of bad news is building up to deflate market sentiment. A difference between now and previous down-turns is the unknown impact of hedge funds.

Click on the post title to read the Daily Telegraph report on the subject.

FTSE Continues Downward Trend

The FTSE continued yesterday's downward trend when it lost 20 points on opening this morning. The current level of the index is now around 5820.

Financial Markets Braced for Turmoil

The financial markets are looking forward to a day of turmoil. The London Stock Exchange fell 129 points on Friday and to US Dollar looks under pressure from both the Yen and the Euro. The underlying fear is that interest rates need to rise to choke off inflationary pressures in both the US and Europe. Long term bond yields are now rising on both sides of the Atlantic.

To read the Daily Telegraph report on the subject, click on the post title.

London Property Prices Stagnate

Accordign to the Financial Times, the rise in London property prices has slowed. The FT has its own house price index. This shows higher average prices, but lower annual increases, than the more usually quoted indices from The Halifax and The Nationwide. Click on the post title to read the FT report.

Housing Boom Stuns Estate Agent

According to a report at Telegraph.co.uk, the strength of the current housing boom has even stunned one of the leading estate agents. Countrywide, which operates a range of retail brands has seen its fees rise by 40% in the first half the year.

For the full report click on the post title.

According to other sources, UK house prices have risen by 8% in the year to April. This news increases pressure on the Bank of England to raise interest rates.

House prices rise by 2% in April

A report in today's Financial Times states that UK house prices rose by 2% in April. This takes the annual rate of house inflation to 8%. The average house is now worth £178,992. The information comes from the Halifax house price survey. To read the full article, click on the post title.

Surge in bank complaints

A report in the Financial Times shows that complaints about high street banks have risen by almost 50%. Most of the complaints concern high interest charges and excessive penalties levied fpr overdrafts. To read the full report click on the post title.

Bank dashes hopes of rate cut

The Bank of England has dashed hopes of a cut in interest rates. Sterling rose to a 3 month high against the dollar after hawkish words included in the latest minutes of the rate committee. The pound reached $1.7925 and Euro1.2386.

For more information click on the post title.

IMF warns of fall in house prices

A report in today's Daily Telegraph has a warning from the International Monetary Fund. According to the IMF Britain runs the risk of a house price correction. In IMF speak British property is "richly valued". To read more click on the post title.

Standard Life Members to get £1,700

According to the Daily Telegraph, insurance mutual Standard Life has announced that members are to get windfalls of around £1,700. The firm is in the process of sending out demutualisation details to their 2.4 million policy holders.

Click on the post title to read more.

GPs now earn £100K

An article in today's Daily Telegraph shows that an average general practitioner in England and Wales earns almost £100k per annum. According to various sources, some GPs are earning between £200k and £250k.

GPs were given new Government contracts in 2004.
The high earnings of GPs are being blamed for the financial crisis in the National Health Service. to read the article click on the post title.

French Ski Property

UK Money has come across a novel scheme for investing in a French ski property. Hotel des Deux Domaines is a new hotel being built in La Plagne in the Tarentaise valley. The hotel developer has launched a scheme whereby individuals or companies can purchase the freehold of individual rooms or suites. To visit the Hotel des Deux Domaines website click on the post title.

London house prices surge

A report in today's Financial Times states that London house prices rose 7.2% between November 2005 and February 2006. Click on the post title to go to the Financial Times story.

Credit card charges to be capped by OFT

A report in today's TIMES says that the Office of Fair Trading is to cap credit card penalty charges to £10 or £12. Typically these penalties are £25 to £35 and are levied whenever a payment is late. Sometimes a payment could be 1 day late, or the minimum payment may amount to just £5. Nevertheless the small print in credit card contracts allows the card companies to level such high charges.

Recently, as blog readers may know, I underpaid Halifax by 10p and was levied £78.70 interest.

For more on the story click on the post title.

House Price Data Shows Rise

A report in today's Financial Times seems to indicate that the housing market is on the way to recovery. Average March prices rose 1.1% in March and are now 5.3% above a year ago.

The report is based on data supplied by the Nationwide Building Society. Click on the post title to read the Financial Times report.

Mortgage Products

Yesterday, 28th March, I had a meeting with AIMS financial of Ashford to discuss opportunities in the financial services markets. We discussed the number of searches on the Internet for terms such as "Bad credit mortgage", "Spanish mortgage" and "Secured loans". I was astounded to hear that there are a total of 19,000 different mortgage products available in the UK.

Halifax credit card - Charges you extra

As a first recommendation, don't ever get a Halifax credit card. They've just ripped me off for £74.70, when I mistakenly underpaid my monthly bill by 10p. I have tried explaining via telephone, but the usurious company will only offer me a £30 refund. Not a bad return - £44.70 for 10p. I've since written to the Halifax to explain that they can say goodbye to my custom for good.

UK Money Launch

UK Money blog launches today.

UK Money will cover personal and small business finance. We will talk about mortgages, secured lending, credit cards and unsecured lending.