Posts belonging to Category Debt Crisis



Carney- UK annual debt is spinning out of control

Mark Carney, Bank of England Governor, has issued a warning to all UK households that the annual debt may be spinning out of control.

 Mark Carney, Bank of England Governor, has issued a warning to all UK households that the annual debt may be spinning out of control.

Credit cards and other forms of unsecured debt are at their highest level for a number of years, as consumers carried on using false money for purchases. After releasing Stress Test results, he pointed out that Q2 for 2016 has shown an increase as high as 133% per household, and he was keen to see a more logical approach from consumers to spend their capital wisely.

Failed stress test and increasing car prices

In other news, The Royal Bank of Scotland failed the Bank of Englandís stress tests yesterday, plummeting share prices for the already poorly performing Bank. The PRA, who govern major Banks and companies, will now be watchful of future moves by RBS, who now have to boost their balance sheets by reducing costs (potentially jobs) and cut any assets which continue in the red.

Car prices could be set to increase, as the President of the SMT has suggested that the price will rocket if access to the Single EU Market is not kept. Tariffs and import prices could rise to unprecedented levels which could be passed onto consumers, almost a given. With nearly 80% of British car being exported, companies would be keen to pass costs onto buyers rather than cut costs, such as jobs and factory downsizing.

Oil price rises as the production is cut

The Organization of the Petroleum Exporting Countries have agreed to cut the production of oil for the first time in 8 years, sending the price of oil through the roof, moving up 8.6%. The production will be cut from currently 1.2million barrels per day down to a figure of 32.5m barrels per day, making the cost a at the close of play $50.36 a barrel. Non-OPEC members will meet on the 9th December, and if they agree to their word on their respective cuts, the price could increase further.

Wise money market’s data to come

Todayís data from the UK solely relies on Nationwide House Prices, with the Eurozone hosting a number of manufacturing figures with the Unemployment rate to boot. The US also has a busy day after a superb end of a trading day for the S&P Index, with ISM manufacturing out to view alongside Initial Jobless Claims, plus a number of key note speakers commenting this afternoon.

Second charge secured loans by Wise Money

The improving economic climate and general house price increases have led to an increase in of second charge secured loans following their virtual disappearance after the financial crisis of 2008.

The changing face of second charge secured loans

The changing face of second charge secured loans

Traditionally, second charge secured loans were seen as a last chance saloon product.  Rates were much higher than mortgages and redemption penalties were fairly hefty.  But as rates started to drop off in 2006, the pandemic of self-certification of income led in part to the financial crisis of 2008 and a £6 billion a year secured loans industry quickly became a £150 million industry, a trickle of its former self.

Today however, the market is once again robust with packagers and lenders are back in full swing, albeit at a much more sensible £1 billion a year. Interest rates (starting at 4.55%) are much lower than ever, redemption penalties are extremely low and coupled with no set-up fees for the vast majority of secured loans, they are a very attractive solution in a variety of circumstances.

Second charge secured loans can be used for any legal purpose but are mainly used for:

  • home improvements
  • consolidation of credit cards, store cards and unsecured loans
  • purchasing vehicles
  • paying for a wedding/honeymoon
  • injecting cash into businesses
  • paying for school fees
  • paying tax bills
  • cosmetic surgery

How do second charge secured loans work?

As the name suggests, a second charge secured loans works very much in the same way as a first charge mortgage in that it is a sum of money lent out, secured against UK residential or investment property via a second charge behind the first charge registered by the main mortgage lender.

How much can be borrowed?

For a loan secured on a residential property, the minimum loan size for a second charge secured loans is just £5,000 and we arrange loans all the way up to £2.5 million.

For buy to let properties, we can arrange loans up to £500,000 but should the requirement be there, we would be able to refer the loan amount if more than this was required.

How long can a loan be taken out for?

Typically a loan is lent out between 3 and 25 years.  There are some lenders who offer 30 year terms.

The term of a loan is dependent on several factors, depending on the purpose of the loan.

The second charge secured loans process

Although not set in stone, the process with most packagers is fairly simple:

You provide your basic enquiry details (loan amount, purpose, term and contact) by telephone, email or sourcing system.

Once the client is happy with the deal, a mutually convenient time is agreed upon for a document courier to collect signatures and evidences.

Following receipt of client’s signed documents and evidences at the packager’s office, references and valuations are organised.  Case is re-checked for compliance.

With references and valuation received, the case is packaged and once a final compliance check is completed, case is sent to lender for final packaging and offer.

Once the offer has been made, it is sent out to the client by post and/or email to you.  You then have a 7 day reflection period in which to think about and return the signed offer and in doing so accepting the terms therein.

Interested? Then please call Keely McKay Wise Money’s Second Charge Secured Loans Advisor on 02921 670418 for a free, confidential, no obligation chat. NOW.

Buy To Let BTL finance difficult or complex situations

Buy To Let (BTL) finance for people in difficult or complex situations

Buy To Let (BTL) finance for people in difficult or complex situationsWhen the high street says no, it doesn’t mean the case can’t be placed. Wise Money specialises in difficult and complex BTLs and can place the following unusual application types:

  • Ex-patriots
  • Complex corporate structures, Ltd’s, LLP’s, partnerships, trusts and SIPPs
  • First-time landlords
  • Adverse can be considered
  • HMO’s, light refurb properties, holiday-lets, multi-lets, commercial, etc.

We have many products to suit:

  • Up to 85%
  • Rates from 2.89%
  • Interest only products
  • England, Scotland & Wales

If you have any BTL, Commercial or bridging enquiries, please call our team on 0800 0147798 asking for the Wise Money Service
Please just click on the Get Started button- or fill out the free, no obligation form below:get started

Please just click on the Get Started button- or fill out the free, no obligation form below:get started

New car sales greater than expected

The new car sales figures surprised with the Society of Motor Manufacturers and Traders announcing a huge number of cars had been sold in March- the highest numbers since 1999.

The new car sales figures surprisedwith the Society of Motor Manufacturers and Traders announcing a huge number of cars had been sold in March- the highest numbers since 1999

Although March is notorious for its strong numbers, the amount which were sold had surprised some. The sector’s improvement is welcoming for the UK economy as GBP took a further nose dive yesterday against its major currency pairings as the EU Referendum inches closer.

It looks as if the voting will be fairly tight, with there now being a real possibility of a ‘Brexit’ causing uncertainty with investors and taking some of the back bone away from the pound recently.

Uncertain economic outlook

Last night the FOMC Minutes for March suggested a mixed review with regards to another possible rate hike in April. With global economic uncertainty but better domestic data, the 12 members didn’t see eye to eye which could suggest a rate hike at the end of Q1 is unlikely.

Car and vehicle finance

If you are looking to buy a car, van or vehicle and are struggling to find the finance, then please contact us on the Get Started button- or fill out the free, no obligation form below:get started

Commonwealth dream for Brexit

Eurosceptics campaigning for the UK to leave the European Union dismiss the idea that “Brexit” would leave the country economically isolated and bereft of trade alliances.

Eurosceptics campaigning for the UK to leave the European Union dismiss the idea that
They point out that the UK’s links with the 53 nation Commonwealth, composed mainly of territories that belonged to the former British Empire- predate its membership of the EU.

And the Commonwealth itself is eager to stress the trade advantages that its members enjoy by virtue of belonging to the association.

As it opens its 24th summit in the Maltese capital, Valletta, which runs from 27 to 29 November, its place in the global trade landscape is a topic high on the agenda.

At least one influential senior Commonwealth figure from outside the UK argues that the country has no need to choose between the EU and the Commonwealth – it can have both.

With the eurozone currently beset by economic troubles, some commentators feel that the UK should turn away from its stagnating neighbours in favour of broader global trade pacts.

They are assisted in this view by statistics such as those produced by the organisation World Economics, which has a growth tracker showing that the Commonwealth has already overtaken the eurozone in its share of world economic output.

“The Commonwealth accounts for 2.6% more than the eurozone in terms of world GDP share,” states World Economics. “Economic growth in the Commonwealth has accelerated over the post-1973 period in sharp contrast to the EU.”

However, such comparisons can be misleading, since the Commonwealth is far from being a unified or homogenous bloc.

As the Commonwealth’s own website says, “Our countries span Africa, Asia, the Americas, Europe and the Pacific and are diverse – they are amongst the world’s largest, smallest, richest and poorest countries.

“Thirty one of our members are classified as small states – countries with a population size of 1.5 million people or less and larger member states that share similar characteristics with them.”

In fact, just six Commonwealth countries account for more than four fifths of all trade conducted by the organisation’s members. Apart from the UK, they are Australia, Canada, India, Malaysia and Singapore.

As things stand, the UK isn’t exactly giving any of these countries the cold shoulder. Earlier this month, the UK and India signed commercial deals worth £9 billion during a visit to London by India’s Prime Minister Narendra Modi – a visit seen as giving an important boost to the UK’s relations with the world’s fastest-growing large economy.

Other big Commonwealth economies are not badly placed either. Some Conservative MPs, including Boris Johnson, feel that the UK “betrayed” countries such as Australia when it joined the EU in 1973, but the Australian government doesn’t seem to see it that way.

“We share an extensive economic, trade and investment relationship,” says the Australian government website’s country brief on UK relations, before going on to list the evidence.

Investment is particularly strong: the UK is “the second-largest source of total and direct foreign investment in Australia”, while Australia returns the favour, with the UK also being “Australia’s second most important foreign investment destination”.

For its part, the Commonwealth stresses that countries benefit economically from belonging to the club. According to its Trade Review 2015, members’ combined exports of goods and services amounted to $3.4 trillion in 2013, “which is about 15% of the world’s total exports”.

“When both bilateral partners are Commonwealth members, they tend to trade 20% more, and generate 10% more foreign direct investment inflows than otherwise,” says the review.

“This ‘Commonwealth effect’ implies bilateral trade costs between Commonwealth partners are on average 19% lower compared with those for other country peers.”

So the Commonwealth does seem to confer economic benefits on its members.

PPI payout deadline finally considered by regulator

The Financial Conduct Authority (FCA) is finally considering a deadline for claims over mis-sold payment protection insurance (PPI).

The Financial Conduct Authority (FCA) is finally considering a deadline for claims over mis-sold payment protection insurance (PPI)The FCA anticipates that PPI customers would still though have at least until 2018 to claim compensation.

So far more than £20 billion has been paid out for PPI mis-selling to more than 10 million consumers. The policies were supposed to protect people against loss of income or sickness, but were often inappropriate.

The regulator will now launch a consultation, on whether there should be a deadline on compensation claims. It said there should be a window of at least two years after the deadline is set.

This would not be before the Spring of 2016 – meaning that consumers would have until the Spring of 2018 to make a claim through their bank or the Financial Ombudsman.

Shares in Lloyds, the bank most exposed to PPI, jumped by nearly 3% in early trading as it has set aside £13.5 billion to cover claims.

The banking industry welcomed the announcement, saying it provided further clarity for consumers.

Banks such as Lloyds have long argued privately that there should be a cut off point. They are convinced that many of the claims are bogus and are driven by claims management firms rather than by irritated customers.

Of course, many say that the banks are rightly reaping the effects of their appalling past behaviour.

The FCA move today is all about the “normalisation” of relations between regulators and the City.

As George Osborne signalled in his Mansion House speech earlier this year, the government is keen to see a new “settlement” with the financial services sector.

The former, combative head of the FCA, Martin Wheatley, was removed by the Treasury and the PPI deadline means another thorny legacy issue looks close to being dealt with.

The number of complaints about PPI is falling, but still runs in to hundreds of thousands every month.

In the first half of 2015 more than 883,000 customers complained about mis-selling, a fall of 16.6% on the same period in 2014.

The FCA said a deadline would “bring the PPI issue to an orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector.”

The watchdog said too many people were taking too long to bring their claims, and that a deadline – along with an advertising campaign promoting any potential deadlines – would spur any outstanding claims to be brought.

Consumers who want to complain about PII should do so as soon as possible

In the first instance, complaints should be directed to the bank that sold the policy.

If customers do not receive a satisfactory response from their bank, they should take it up with the Financial Ombudsman Service.

Consumers do not need to use a claims management company to help them, advises the FCA, as such complaints are free.

UK economic growth increases to 0.7% in second quarter

UK economic growth increased in the second quarter of the year- helped by a big jump in oil and gas production.

UK economic growth increased in the second quarter of the year- helped by a big jump in oil and gas productionThe UK’s economy grew by an estimated 0.7% in the April to June period, the Office for National Statistics (ONS) said which compared with growth of 0.4% in the first quarter of the year.

Britain’s recovery strengthened, as the official figures suggested growth per head was finally back to pre-crisis levels.

Output in the economy during the second quarter was 2.6% higher than the same period a year earlier, the ONS said.

“After a slowdown in the first quarter of 2015, overall GDP growth has returned to that typical of the previous two years,” said ONS chief economist Joe Grice.

The UK’s economy has now seen 10 quarters of sustained economic growth.

The ONS stressed the first estimate was based on about 40% of the available economic data and is subject to revision.

It said manufacturing output experienced its first fall in two years with output dropping 0.3% in the quarter.

However, a surge in North Sea oil and gas production lifted overall industrial output by 1% – the biggest increase since late 2010.

The “mining and quarrying” component of the industrial output figures, which includes oil and gas extraction, rose by 7.8% in the quarter, the biggest increase since 1989.

The ONS said the increase, which came despite falling oil prices, was driven by tax cuts in March designed to support the sector.

Construction was flat in the period, the ONS said, recovering from a slight fall the previous quarter.

The UK’s dominant services sector recorded growth of 0.7%, following a rise of 0.4% in the previous three months.

Domestic demand is expected to remain strong, as wages rise and with the temporary effects of low inflation boosting consumer spending.

The ONS said there were also signs that businesses were finally increasing investment.

George Osborne, the Chancellor, said the figures showed Britain was “motoring ahead”. He tweeted: “We must stay on road we’ve set out on.”

The economy is now 5.2pc larger than its pre-crisis peak, and ONS said the 0.7pc expansion in the second quarter suggested that gross domestic product (GDP) per head was now “broadly equal to the pre-economic downturn peak” in the first quarter of 2008. This is expected to be confirmed by the ONS next month.

Mark Carney, the Governor of the Bank of England, has said that “sustained growth” of “around 0.6pc per quarter” will be needed for the remaining “spare capacity” in the economy to be eliminated and for rate setters to start tightening policy.

Mr Carney said in a speech this month that the decision to raise rates would come into “sharper relief” by “the turn of this year”.

UK government borrowing falls in June after record tax haul

UK government borrowing fell to £9.4 billion in June, down £0.8 billion from a year earlier- as income and corporation tax receipts rose to record levels.

UK government borrowing fell to £9.4 billion in June, down £0.8 billion from a year earlierThe Office for National Statistics (ONS) said income tax receipts rose to £11.5 billion, while corporation tax brought in £1.7 billion- both record monthly highs.

It was lowest borrowing figure for June since 2008. However analysts had been expecting it to drop further to £8.5 billion.

In the financial year so date UK Government borrowing has fallen by £6.1 billion to £25.1 billion.

The ONS figures showed government finances received a £117 million boost last month from a fine paid by Lloyds Banking Group over its handling of payment protection insurance (PPI) complaints.

In the summer Budget earlier this month, the Office for Budget Responsibility (OBR) forecast public borrowing would be £69.5 billion this year.

Public sector net debt at the end of June 2015 was £1.513 trillion, or 81.5% of annual UK economic output- up from 80.8% in May.

A Treasury spokesperson said the figures showed the UK government’s deficit reduction plan was working but added “the job is not done”.

The UK government is aiming to eliminate the budget deficit by 2019 and to run a £10 billion surplus in 2020 and in subsequent years.

Chancellor George Osborne announced £37 billion of spending cuts during this parliament in the summer Budget.

In November, the government’s spending review will set out £20 billion worth of departmental budget cuts over the next five years.

Global stock markets slide on Greece debt crisis

Stock markets in Britain, Europe and the US have fallen after Greece closed its banks and imposed capital controls.

Stock markets in Britain, Europe and the US have fallen after Greece closed its banks and imposed capital controlsThe moves by the Greek authorities came after the European Central Bank decided not to extend any extra emergency funding.

London’s FTSE 100 index was down 1.47% and Germany’s Dax index fell more than 2%. In the US, the Dow Jones fell nearly 1% early in the session.

Bank stocks are among the hardest hit, with shares of Deutsche Bank and Commerzbank both losing more than 4%.

The Athens Stock Exchange and Greek banks will be closed all week.

On the money markets, the euro lost ground against other major global currencies.

The London FTSE 100 share index was down 98.47 points at 6,655.23 with other European markets seeing even bigger falls. Earlier in Asia, Japan’s Nikkei index fell nearly 3%.

On the currency markets, the euro saw volatile trading in Asia, falling by 2% at one point. However, it has since recovered some ground, with the euro down 0.15% against the dollar at $1.1149.

The euro has weakened against the pound, with one euro now worth £0.7089, while the pound buys €1.4108.

Oil prices are heading lower. Brent crude oil futures fell more than 1.5% to $62.10 a barrel.

Bond yields (an indication of borrowing costs) for Italy, Spain and Portugal – which are considered some of the weaker eurozone economies – rose sharply.

In contrast, German bond yields fell. German bonds are seen as safer investments in times of crisis.

Greece was due to make a €1.6bn payment to the IMF on Tuesday – the same day that its current bailout expires.

Last week, talks between Greece and the eurozone countries over bailout terms ended without an agreement, and Prime Minister Alexis Tsipras then called for a referendum on the issue to be held on 5 July.

At the weekend, the Greek government confirmed that banks would be closed all week, and imposed capital controls, limiting bank withdrawals to €60 (£42) a day.

There is zero chance of the European Central Bank turning Emergency Liquidity Assistance back on – life-saving lending to banks – unless Greeks give an affirmative vote to a bailout proposal from the rest of the eurozone and the IMF, which Juncker sees as a proxy for Greece’s monetary future.

As for Athens, most of the Syriza government detests the bailout offer – for the way it pushes up VAT and cuts pensions.

So we will have the bizarre spectacle of a Prime Minister, Alexis Tsipras, arguing both against the bailout and for remaining inside the eurozone – so goodness only knows how he will vote.

And Greek people will be torn between fear and loathing of bailout proposals that will damage the living standards of many of them, and fear and loathing of abandoning the euro and seeing their banks closed.

UK government borrowing deficit falls in May

UK government borrowing debt fell to £10.13 billion in May, the Office for National Statistics (ONS) said, down from £12.35 billion a year earlier.

UK government borrowing debt fell to £10.13 billion in MayA rise in income tax and VAT receipts helped to cut UK government borrowing in May, official figures have shown.
It was the lowest borrowing figure in May for eight years.

Public sector net debt excluding public sector banks now stands at £1.5 trillion, the ONS said, which is 80.8% of gross domestic product (GDP).

“While the deficit in the financial year ending 2015 has fallen by more than a third since its peak in the financial year ending 2010, public sector net debt has maintained a gradual upward trend,” the ONS said in a statement.

Income tax receipts recorded their highest level for May in four years, rising £0.5 billion, or 5.3%, from a year earlier to £10.8 billion. VAT receipts rose by £0.6 billion, or 5.6%, to £10.7 billion.

The ONS also said that it now estimated total public sector borrowing in the financial year to March 2015 was £89.2 billion, or 4.9% of GDP.

While this figure was slightly higher than the previous estimate, it was still £9.3 billion lower than the previous year’s total.

Analysts said the drop in government borrowing during May was good news for Chancellor George Osborne at the start of the new fiscal year.

Last week, the chancellor said he would attempt to bind future governments to maintaining a budget surplus when the economy is growing.

However experts say that the rise in public sector debt above £1.5 trillion will be troubling for Mr Osborne.