Finance Matters

• 14Sep

  Higher earners now hit by mortgage repossessions

  Finance No Comments

  From The Telegraph:

  Mortgage arrears and home repossessions are rising fast among higher earning households, a report by a credit rating agency suggests.The finding indicates that serious housing debt problems caused by the credit crisis are not limited to those on low incomes.The study, by Moody’s, examined the situation of people who on average owed 66 per cent of the value of their home – far less than millions of riskier borrowers. The proportion of homeowners in arrears for 90 days or more had risen by half, the report found. It stood at 0.9 per cent at the end of June, compared with 0.6 per cent at the same point in 2007.advertisementHouse prices are falling at fastest rate since the Great Depression More on construction and propertyMeanwhile the number of homes repossessed among the group more than doubled, rising to 0.082 per cent from 0.037 per cent last year. Daron Kularatnam, a co-author of the report, said: “The percentage of mortgage loans greater than 90 days in arrears has reached the highe…

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• 14Sep

  House prices are falling at fastest rate since the Great Depression

  Finance No Comments

  From The Telegraph:

  House prices are falling at the fastest rate since the Great Depression new figures show, with the number of home owners in negative equity trebling in the last month alone.
  David Owen, chief European economist at investment bank Dresdner Kleinwort, said: “It is a major collapse. The last correction in house prices was around 20 per cent from peak to trough.
  While the number of people currently in negative equity is well below the level hit in the early 1990s, when two million fell into that predicament, the speed of the deterioration has shocked many experts.
  “In the early 1990s, the peak-trough decline in house prices was 13.1 per cent, and this occurred over 74 months, from May 1989 to July 1995.
  Jeremy Leaf, a north London estate agent, and spokesperson for the Royal Institution of Chartered Surveyors, said: “People will carry on pulling out of deals until they are confident that we have hit the bottom.
  Equally, some sellers are being shocked to discover that m…

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• 14Sep

  Mortgage rates fall back to where they were before credit crunch

  Finance No Comments

  From The Telegraph:

  Mortgage rates have fallen back to the level they were before the credit crisis sent the price of home loans soaring last year.The average interest rate on a two-year fixed-rate mortgage – the most popular deal taken out by home owners – has dropped from a peak of 7.08 per cent at the beginning of July to 6.39 per cent, according to Moneyfacts.co.uk, the financial website.Two-year rates have not been this low since July 2007, before Northern Rock was forced to borrow £26 billion from the Bank of England and the phrase “credit crunch” entered everyday use.advertisementThe figures confirm that while the economy and the housing market continue to slide downwards, the worst seems to be over in the mortgage market.It follows two months of steady rate-cutting from the UK’s leading banks.Lloyds TSB and its mortgage lending arm Cheltenham & Gloucester as well as Abbey and the Royal Bank of Scotland are cutting fixed rates this week and other leading providers are expected to follow s…

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• 14Sep

  BMI’s no comment on merger rumour

  Business No Comments

  From The BBC:

  UK airline BMI has declined to comment on newspaper speculation that it has been approached by Abu Dhabi carrier Etihad over a possible merger.
  Etihad first went to BMI in the summer over a potential deal which values BMI at £600m, the Sunday Times reported.
  The Middle East airline is also said to have spoken to Germany’s Lufthansa, which owns a 30% stake in BMI.
  Etihad said it had had “a number of discussions with a variety of carriers” but “no firm talks planned”.
  BMI operates more flights from London’s main Heathrow Airport than any other airline except British Airways.
  Industry-wide issues
  Like almost all airlines, BMI has seen its profits trimmed this year by the continuing high price of aviation fuel.
  This has led to a number of carriers seeking closer ties with rivals, such as British Airways plans for a tie-up with American Airlines.
  Other carriers have faced financial problems, such as Italy’s Alitalia, which is trying to secure a rescue deal.
  BMI flew 10.6 million p…

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• 14Sep

  Ashley puts United up for sale

  Business No Comments

  From The BBC:

  Newcastle owner Mike Ashley has said he is ready to sell the troubled club.
  Ashley, who has pumped about £250m into the club, says he fears for the safety of his family after a weekend of heated protests by unhappy Newcastle fans.
  “I am now a dad who can’t take his kids to a football game because I am advised that we would be assaulted,” he said.
  “I am no longer prepared to subsidise Newcastle,” added the billionaire, who has been under fire since manager Kevin Keegan rocked the club by quitting.
  Keegan left his position after just eight months on 4 September, claiming he had no control of transfer dealings at St James’ Park.
  His departure prompted a number of protests against Ashley and the Newcastle board of directors, culminating in demonstrations in and outside the ground before, during and after Saturday’s 2-1 home defeat to Hull.
  Those protests appear to have been the tipping point for Ashley, who has decided to put the Premier League club up for sale just 16 months after h…

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• 14Sep

  Stranded Britons face extra bill

  Business No Comments

  From The BBC:

  A British couple staying on a Caribbean island have been given a hotel bill for almost £1,000 despite having already paid for their XL package holiday.
  Martin Skillings, visiting St Lucia with his wife, said there were 34 other people there with similar bills, after the collapse of the travel operator.
  XL had 21 planes grounded on Friday, leaving some 85,000 people abroad.
  In its wake, 150 holidaymakers are also stranded in Turkey after K&S Travel ceased trading on Saturday night.
  K&S, also known as Travel Turkey, charters planes from Onur Air and only flies to Turkey.
  No refund
  Mr Skillings, who lives in Norfolk, said there was little chance of the hotel getting any money.
  “Most [of those billed] have done what I’ve done” and refused to pay, he went on.

  “That’s where we stand at the minute. We’re a little bit worried about whether there’ll be any sort of retribution by the hotel.”
  A spokesman for the CAA (Civil Aviation Authority) said poor weather conditions in the Caribbe…

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• 14Sep

  Alitalia crisis meeting held up

  Business No Comments

  From The BBC:

  Emergency talks have been held up between Italy’s government, investors and trade unions over attempts to save the airline Alitalia from collapse.
  The government has been trying to broker a rescue package with investors, which would involve a sell-off of profitable parts of the airline.
  A meeting originally convened for 1800 Italian time (1600GMT) has been pushed back to 2200 Italian time (2000 GMT).
  If no deal is reached, Alitalia, could go into liquidation next week.
  With the airline saying it is running out of money to buy aviation fuel, the government needs to persuade unions to back a deal that involves job cuts.
  The only offer on the table is from Italian consortium CAI, which only wants Alitalia’s profitable operations.
  Unions have so far rejected this deal as it would mean major job losses.
  The BBC’s Frances Kennedy, in Rome, says informal discussions throughout the day were meant to iron out enough of the obstacles to get the parties back to the table for a final do or…

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• 02Sep

  Regulator confirms suspension of pension scheme trustee

  Pensions No Comments

  From The Pensions Regulator:

  The Pensions Regulator today issued the following statement in relation to the suspension of GP Noble as trustee of a number of pension schemes:

  “We can confirm that the Pensions Regulator decided that it was appropriate to suspend GP Noble, and replace them as independent trustee, from a number of schemes. This was due to their actions in relation to certain schemes giving cause for concern.

  “We can confirm that members’ benefits are not at risk.

  “As these matters are subject to an ongoing investigation, and details of the case restricted information under the Pension Act 2004, we are unable to comment further at this time”…

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• 02Sep

  Draft guidance to help trustees calculate transfer values

  Pensions No Comments

  From The Pensions Regulator:

  Draft

  A ‘cash equivalent transfer value’ is normally the expected cost to the scheme of providing the member’s accrued benefits. This value requires assumptions to be made about the future course of events affecting the scheme and the member’s benefits – factors including investment returns, mortality rates and inflation rates.

  The guidance aims to help DB scheme trustees understand and fulfil new responsibilities being introduced in regulations by the Department for Work and Pensions. From 1 October 2008, it will be the responsibility of the trustees to take the decisions on which the calculation of cash equivalent transfer values is based.

  The regulator’s draft guidance provides suggestions of good practice on the calculation of CETV, including calculations for schemes in wind up and dealing with enquiries in a PPF assessment period, and em…

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• 02Sep

  Regulator stresses importance of good record-keeping

  Pensions No Comments

  From The Pensions Regulator:

  The Pensions Regulator has stressed the importance of good record-keeping in the governance of pension schemes in a

  The regulator acknowledges that there are some schemes and providers which achieve high standards. However, evidence suggests that there is certainly scope for improvement in standards of record-keeping, and that this is true irrespective of size or type of scheme. The main problem areas we have found include poor legacy data and limited appreciation of the importance of good record-keeping.

  Poor record-keeping can lead to significant additional costs in a number of areas, such as higher costs during buy-outs or wind-up, more expensive administration, claims from disgruntled members, and inaccurate actuarial valuations. These costs are ultimately borne by members, the employer, or both.

  The regulator’s consultation calls for views on some specific steps, to…

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