Brexit countdown gets a legal twist

A High Court ruling has confirmed that only the parliament and not the government has the power to trigger Article 50.

A High Court ruling has confirmed that only the parliament and not the government has the power to trigger Article 50.

Therefore a parliamentary vote will be required before Article 50 is activated. The UK government will appeal the verdict and it will now go to the Supreme Court in December for review.

If upheld in December, this would lean towards of softer Brexit as the majority of parliament have a pro-EU stance. The second impact is that it will very likely delay the triggering of Article 50 due to the negotiations within parliament on agreeing the right deal.

The pound has benefitted from the news as from a financial markets perspective a softer Brexit is favoured. We can expect further short term volatility in the pound as we get further news and twists.

Interest rates left unchanged

Yesterday the Bank of England left interest rates unchanged and shifted their bias from easing to neutral which again mildly favoured Sterling. The BoE will adopt a “wait and see” approach and only if economic data markedly dips, will we see a further rate cut. It is also very unlikely that we will see any movement towards a rate hike despite higher inflation given the ongoing Brexit uncertainties.

Philip Hammond set positive economic tone

New UK Chancellor Philip Hammond took to the Conservative stage, and set a positive tone for the conference.

New UK Chancellor Philip Hammond took to the Conservative stage, and set a positive tone for the conference.

He stated that roads and railways, among other infrastructure, has been seriously under invested, and that the UK is considerably behind other dominant countries. Hammond has been assigned the task of announcing the Autumn Statement, and investors will want his positive sentiment to be more concrete on November 23.

Much needed positive wise money data for UK

With regards to data, the UK enjoyed some much needed positive news, with Manufacturing PMI rising to 55.4 in September against 53.4 in August. Exports have been enjoying a tremendous amount of added work, as the pound continues to be hit hard by most trading currencies.

That said, importers are starting to take financial hits across the board. Buying foreign currency is proving expensive for import businesses, and Teresa May’s announcement that Article 50 will be triggered Q1 2017 has found financial directors wincing that much more.

European bank job cuts

European bank job cuts have made the front pages this morning, as a number of banks are suggesting seats may be left empty in the coming years. Dutch, German and Spanish banks have all stated in recent days that a staff cut is only natural due to current market conditions, as well as some looking at a new digital age, stating a non-requirement for human resource.

UK stock exchange highs

The FTSE 100 has cleared its year high as sterling fell off a cliff in early trading, after May announced an Article 50 date, and outlined her hard stance on key issues. Today has already seen the Reserve Bank of Australia keep interest rates at 1.5%, with New Zealand sharing its Dairy Auction averages with onlookers. In the European and US markets, we have very little to mull over, with UK Construction PMI the only dish to pick.

FED keeps loans interests rate unchanged

There was no surprise from this week’s FED meeting, as Janet Yellen announced there would be no loans interest rate hike in September.

There was no surprise from this week's FED meeting, as Janet Yellen announced there would be no loans interest rate hike in September.

The interest rate has not moved since last December’s decision to move interest rates from 0.25% to 0.5%. Another rate hike in December 2016 is now looking a shoe in.

It seems that unless global economic sentiment deteriorates in the next few months, December is seen as a good time to move again. As key data solidified in recent months, the Fed now want to see ‘economic progress’. Employment and inflation will be scrutinised until the end of the year, and the Fed members seem more aggressive as three voted to move rates, where as in July there was just the one.

UK’s public sector net borrowing falls

The UK’s Public Sector Net Borrowing fell in August, as the latest figures from the Office for National Statistics were released. The Public borrowing figure has dropped to £10.5 billion from July, down £0.9 billion from a year earlier, but the numbers had been expected to fall an additional £500 million. UK Borrowing in the present economic year to date has touched £33.8 billion, which is £4.9 billion lower than the previous year.

The ONS did say that ‘there was no clear sign of Brexit voting affecting the figures’. They also added that ‘receipts from income and corporation taxes rose strongly compared with a year ago, but VAT receipts rose at their slowest annual pace since March 2015′.

Also out was positive car production news in the UK, as car production touched a 14 year high in August. According to the Society of Motor Manufacturers and Traders (SMMT), just over 109 K vehicles were released from manufacturers hands, up 9.1% year on year.

Attention shifts to Sterling

Following a bit of an anti-climax after no policy changes from the FED on Wednesday we only saw a narrow trading range of about 100 points on the GBPUSD pairing yesterday. We surprisingly saw an even narrower trading range on GBPEUR yesterday considering we had the President of the ECB, Mario Draghi speaking at 2 pm. Further to this, he gave a speech at the first annual conference of the ESRB (European Systemic Risk Board) where he discussed overbanking in Europe and macro-prudential policy. We didn’t see too much market movement during this speech as it was mainly focussing on the broader picture of the over European banking system.

Attention focuses on Eurozone and US PMI

With not much news to drive the market today, the attention will be focussed on Eurozone and US PMI. So far, both have shown resilience in the face of the UK’s vote to leave the EU although analysts will be watching for hints of pre-election nerves within the US economy.

Bank of England leaves interest rates on hold

Wise Money is pleased with loans interest rates news from Bank of England.

Wise Money is pleased with loans interest rates news from Bank of England.

The Bank of England rate decision meeting didn’t provide any fireworks last week, as UK policymakers voted 9-0 in favour to keep interest rates unchanged. Despite signalling further rate cuts in the future, the decision didn’t come as a surprise considering the amount of stimulus they introduced last month.

The central bank is monitoring recent data closely, and they are encouraged to see that the stimulus package seems to be working, as recent data has been fairly positive and at times even better than market expectations.

It appears that investors are still not worried about the implication of the Brexit, at least until they find out what it really means. For this they will have to wait until article 50 is invoked early next year.

Busy money market data releases

It has been a very busy 24 hours in terms of economic releases. In the US, data came in softer, led in particular by a disappointing retail sales number. Headline sales were down -0.3% last month, the first decline in 5 months. Excluding autos and gas, spending fell -0.1%. Industrial production also declined in August, printing -0.4% against a market expectation of -0.2%.

It wasn’t all bad news though, as manufacturing activity encouragingly bounced back in the New York and Philadelphia regions, but it is not enough to convince investors that the FED will have enough reasons to lift interest rates next week.

Data in Europe will be quiet with final Q2 wages numbers due out in France. In the US, investors will closely look at August CPI report with market expectations of an increase of +0.1% month on month. Those numbers also match the views of our US economists. As always in the US, the University of Michigan consumer sentiment is scheduled for release.

Sterling performs well thanks to record UK jobless

Sterling had a much better day trading yesterday against all its major currency pairings, as the UK Jobless Claims total fell to a record 1.64 million.

Sterling had a much better day trading yesterday against all its major currency pairings, as the UK Jobless Claims total fell to a record 1.64 million.

The numbers from April to June showed that the total fell by just over 50,000, with official figures indicating 31.75m people (74.5%) are currently in work.

Wages with and without bonus’ also showed gains, as the current claimant count for July displayed an 8,000 drop in actual claimants since the surprise Brexit vote.

Conversely Fed Reserve hints at interest rate hike

The minutes of July’s Federal Reserve meeting has hinted at another interest rate hike before the end of the year, but there was a clear division between members.

The FOMC looked to be nearing another move, as job growth and the sharp market recovery (post Brexit) has been a major factor; but a low inflation figures lack of rise, and staying towards its 2% target is still a concern.

With unemployment levels in the US below 5%, one Fed Member, Esther George, wanted a further hike in rates as ‘the economy is at or near full employment’.

Money news to come

Today we see GBP Retail Sales, Eurozone Construction Output & Consumer Price Index, along with Initial Jobless Claims and Continuing Claims.

UK interest rates cut to 0.25%

The Bank of England’s has cut interest rates by half to a new record low of 0.25%.

Bank of England’s cut interest rates by half to a new record low of 0.25%.

In addition the Bank of England (BOE) launched a massive stimulus package designed to save the UK economy from recession.

The Bank of England’s Monetary Policy Committee (MPC) voted unanimously to slash interest rates to an all time low; they also hinted that it might cut rates “close to but a little above zero” and could unleash more Quantitative Easing if needed.

With a 60 billion government bond buying program and a new initiative to buy 10 billion pounds of corporate bonds, the Bank of England hope to support the necessary adjustments in the UK economy following Brexit.

Mark Carney and the Bank of England think that the outlook for growth has “weakened materially” and they anticipate that the pain will be felt in 2017 as their Quarterly Report shows 2017 forecast slashed from 2.3% to 0.8%, the largest downgrade to its growth forecast to date.

Inflation is forecasted to increase thanks to the weakness of the pound, with the Central Bank now anticipating to hit their 2% target in Q4 of 2017 as opposed to Q2 of 2018 as previously anticipated.

The unemployment rate is also expected to rise to 5.4% in Q3 2016 compared to a previous forecast of 4.9%.

From the US to Europe, other data to come

After Super Thursday, the market will look at the US non-farm payrolls. Following the strong increase in June, a majority of economists are now expecting a weaker number with job growth around 180,000 as Wednesday’s ADP employment report showed signs of softness in the employment components of both ISM reports.

Looking at the day ahead the rest of the data due out in Europe will be overshadowed. Germany factory orders numbers for June, the latest trade balance reading for France and the latest UK house price data are the main data this morning before the market turns its eyes to the July employment report in the US.

UK votes to Leave eu in BREXIT

After the UK’s vote to leave the EU following a very close sentiment, Sterling has weakened significantly- but is bouncing back from it’s lows.

UK votes to Leave eu in BREXIT

There is a factor of uncertainty within the markets which has caused a lot of major sell-offs. Further to this, GBPUSD has opened this morning at a 30 year low, representing a fall of around 10% from last night’s peak, after breaking through key resistance levels.

This volatility is emphasised by the fact that there has already been a 2% bounce back. Naturally, a heavily declining rate is being seen across other Sterling focused currency pairings.

For the rest of the day, Sterling looks to remain under a lot of pressure, as will EURUSD. The next main focus will likely be the contemplation of the aftershock and how to deal with the uncertainty that is sure to follow the referendum’s result.

Sharp reactions on the money markets

It was widely expected that a remain vote would be seen after all of the polls released and therefore, it comes as no surprise that the markets reacted sharply when the contradicting news came in this morning and last night.

Looking out to the rest of the day, it’s likely to be chaotic and busy in the world of trading. It’s not just currencies that are being affected either – we’re seeing huge risk off moves elsewhere, including within the futures and commodities markets, just to name a couple.

Further to the general impact, it would come as no surprise to see central banks tightening their financial conditions and cutting interest rates. We’re also likely to hear from the ECB soon. Politics will determine the long term cost and with David Cameron resigning this morning, there is yet another factor of uncertainty on this side of the Brexit.

Pound rallies on UK Manufacturing Data

Yesterday we saw a surprise jump in UK’s manufacturing data in April to 2.3% from a paltry 0.1% in March.

Yesterday we saw a surprise jump in UK's manufacturing data in April to 2.3% from a paltry 0.1% in March.

The positive number in an area that has struggled, led to a move higher for the Pound. In addition, the NIESR GDP estimate also came out stronger, which suggests that UK growth could be stronger than thought.

The Pound will continue to be driven by the perceived outcome of the referendum in the short term, and tonight we have a two hour ITV debate (8-10pm) involving politicians from both camps.

Initial jobless claims to come

Today ECB President Mario Draghi will be speaking, and the market will be looking for any new signals or comments following last week’s meeting. In addition, we have US data with initial jobless claims later on. This data is normally benign, but given the weak non-farm payroll number on Friday it will be eyed closely. If jobless claims are rising, it could suggest that labour market growth is turning sour.

Royal Bank New Zealand rates unchanged

Overnight the Reserve Bank of New Zealand (RBNZ) left rates unchanged at 2.25%. There was some expectation that a 25 basis points cut could be on the cards. It is still likely that we will see a rate cut in the near future as the RBNZ maintain an easing bias. The NZD has strengthened on the avoidance of a rate cut.

US jobless claims drop

We are just a few hours away from the spring Bank holiday and today is expected to be a quiet day.

We are just a few hours away from the spring Bank holiday and today is expected to be a quiet day.

The main piece of news out today will be the second estimate of US growth in the first three months of the year which is scheduled at 1.30pm GMT.

The first estimate was disappointing and showed growth slowing to an annual rate of just 0.4% and with the latest sets of data; economists believe the figure could be revised up. Jobless claims dropped to 268K from 278K, durable goods orders rose 3.4% and pending home sales increased 5.1%.

We learned from Fed President Powell that a rate hike may be appropriate fairly soon. Powell said “Depending on the incoming data and the evolving risks, another rate increase may be appropriate fairly soon”.

Many analysts agreed that Powell didn’t show any sense of great urgency to move at the June meeting and he stated that he had not made his mind up yet. He sounded cautious when he added “I can imagine the upcoming Brexit vote as presenting a factor in favour of caution about raising rates in June”.

Investors encouraged by stronger German data

No major Eurozone economic reports were released yesterday but investors were encouraged by stronger German data. Everybody seems to agree the ECB will leave interest rates unchanged but improvements in Germany and France could persuade the Central Bank to wait and see the effect of the current stimulus before deciding on the next step.

UK GDP figures released yesterday

Over in the UK, GDP figures were released yesterday and came in line at 0.4% on a quarterly basis but were slightly weaker on an annualised basis as they came in at 2.0% versus a market expectation for a 2.1% reading. Brexit is weighing on the economy as the underlying data showed weakness. Exports were down and business investment was disappointing.

The only bright spot was provided by government spending and consumer spending, which helped to offset the decline. The housing market is also showing signs of a slowdown as data from BBA Mortgage approvals showed a low at 40.8K against 45K in the previous month. This seems to indicate that the Brexit might be a drag on the housing market.

As mentioned earlier, the economic calendar is light today. In Europe business and consumer confidence surveys are due out in Italy, consumer confidence in France and retail sales in Spain.

The main focus will be in the US with Q1 GDP growth scheduled for release with analysts expecting a 0.4% upward revision. Later in the afternoon Fed Chair Yellen will also be interviewed at a Harvard event. The US and UK markets will remain closed on Monday.

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.