Very low interest rate shame

As with all things Enable’s IFAs in Bishops Stortford would always recommend shopping around. Recently a report drew attention to banks paying ultra-low interest rates to loyal savers and regulators suggest strongly that customers shop around for the best deals in a move to get banks to do more to help their long-term depositors get a better return on their hard earned cash. The results of the so-called "Sunlight" study show that on some easy access accounts, rates can be as low as zero and 0.01pc.

The Financial Conduct Authority, headed by interim boss Tracey McDermott, wants people with savings accounts to shop around for the best deals. From next year, banks and building societies will have to offer clear information on interest rates that is displayed prominently alongside a customer's account balance The Financial Conduct Authority (FCA) is also forcing banks to make it easier for customers to switch to a new savings account, under rules which will come into force in December 2016.

“We are publishing this information to raise awareness of firms’ strategies towards their longstanding customers. This should also encourage firms to offer better value products to existing customers, especially those with products no longer on sale,” the FCA said. “We have called this publication the ‘sunlight’ remedy because we are shining a light on interest rates that are not prominently displayed, but that may be earned by some customers. These customers stand to lose out by not switching to a different account.” If you would like Enable’s IFAs in Bishops Stortford to try and shed more light on your savings options we are always happy to talk.

Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Source : The Telegraph

Mortgage controls to continue

The Bank of England Enable’s experienced IFA’s in Bishops Stortford notice is preparing for some new mortgage controls in a bid to dampen what it worries is the potential volatility of the buy to let sector. Jefferies investment consultancy has written to investors saying: “More Buy to Let lending controls may be on the cards” in the form of more stringent testing of affordability when landlords apply for loans.

A recent Financial Stability Report says the Bank is not going to look favourably on any relaxation of the lending criteria being offered by mortgage companies, such as reducing the size of deposits or income requirements. "The committee remains alert to the rapid growth of the UK buy-to-let market, and potential developments in underwriting standards as the sector could pose a risk to broader financial stability," the Bank of England says in its report.  Lending to landlords has been a key factor in the mortgage market in the past two years and some reports suggest it is now close to its pre-crisis peak.

In the first nine months of 2015, buy-to-let lending rose by 10 per cent and last year regulations limiting the number of owner-occupier mortgages worth more than 4.5 times the borrower's income and implementing stress tests on the borrower's ability to repay came in but these rules do not apply to buy to let. “The Bank of England reports that Buy to Let investors are often subject to less stringent affordability tests than owner occupiers. Affordability is typically tested by ensuring that rental income exceeds 125 per cent of loan interest, assuming mortgage rates in the range of five to six per cent, whereas owner occupier’s affordability is typically tested at seven per cent” says Jefferies.

Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Source: Letting agent today

Can expats take money from their UK home?

Enable’s IFAs in Bishops Stortford can see that at this time of year spending time in the sun can seem really appealing. If your dream is to live more abroad for the Winters it can sometimes be hard to work out your finances. But there are more and more ways of being able to release money from a UK home using equity release.

Equity release is a form or borrowing for those over 55 who want to get money out of their UK properties without selling. There are two types of equity release in the UK lifetime mortgages and home reversion plans. The lifetime mortgage is not like a traditional mortgage because the homeowners do not make any repayments on the sum they borrow. Instead, the interest due is rolled up and the loan and interest is paid back when the property is sold after their death. Home reversion plans enable you to sell a proportion of the property in return for the cash, and when you have died and the property is sold, that money is repaid from your estate. You retain the right to live in the property rent-free for life, and there is no impact on the way you use your home as a private residence.

The average UK pensioner is using equity release is getting nearly £75,000 from their property according to data from the Key Retirement and as property prices are still going up it only increases  the amount available. If you have a property in the UK that is still your main residence  meaning you to spend more time here than abroad you should be able to get an equity release loan on that property, according to Dean Mirfin of Key Retirement. Enable’s IFAs can help you think through your options.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Average UK house prices up by 6.1%

House prices in the UK have increased in value by 6.1% annually in the year to September 2015, according to the Office for National Statistics (ONS). This is a larger increase than the 5.5% rise recorded in August and the 5.2% one in July. This brings the average house price across England to £286,000.

Although an impressive increase in value, it does not match the price rise seen a year earlier of 12%.

As always, there were wide regional variations, with price increases in Northern Ireland topping the list at 10.2%, whilst Wales and

 

Scotland could only record a modest 1.1% rise. In average house price terms, London, as usual, topped the list with houses there now averaging £531,000 and recording an average increase of 7.2%.

Overall, the increase in house prices in England was driven by the annual increases in London (as above), in the East by 8.4% and the South East rising by 7.4%. At the other end of the scale, houses in the North East of England averaged £158,000 with a more modest annual increase of 1.8%.

In September 2015, prices paid by first time buyers were 4.3% higher on average, against the same time last year, while owner-occupiers (existing owners) also saw an annual increase of 6.9%.

Commenting on these figures, a former Chairman of the Royal Institute of Chartered Surveyors (Rics), Jeremy Leaf, was reported to have said: “With the average property price in London now £531,000, unless you earn way above the national average salary, you have precious little hope of being in a position to buy.

“Generation Rent is being left out in the cold; they have aspirations to buy but are being pushed further away from their goal.”

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

OBR gives Chancellor room to manoeuvre...

With a surprise major U-turn over his intended Tax Credit cuts, George Osborne, the Chancellor of the Exchequer, delivered his joint Spending Review and Autumn Statement.

Despite this setback to his finances, from which he had hoped to save £4.4bn in welfare costs, he still maintains that he will be able to achieve £12bn of welfare saving each year up to 2020.

 

His main announcements were a pledge to bring the UK’s budget into a surplus of £10.1bn by tax year 2019/20, increase spending on the NHS by £6bn in 2016, whilst defence spending will meet NATO’s recommended 2% of GDP with a total spend of £178bn over the next decade. He will maintain the current budgets allocated to education, overseas aid, and the police force.

Housing will get a huge boost with him promising the building of 400,000 new homes, 200,000 of which will be ‘starter homes’. House builders and developers will be offered grants to achieve this target and incentives to regenerate brown-field sites for such development.

The basic State Pension will rise by £3.35 a week to £119.30, whilst the maximum flat rate New State Pension will be set at £155.65 per week. The newly introduced Automatic Enrolment pensions for all employees, will see the proposed increase in employer contributions to 2% of payroll, pushed back from 2017-18 to 2018-19.

Tax avoidance is to be targeted with the ambition of recouping £5bn of tax annually. They will introduce a General Anti-Abuse Rule with penalties imposed for disguised remuneration schemes, blatant stamp duty avoidance and the abuse of the intangible fixed assets regime and capital allowances. In future all tax returns for individuals will be digitalised and handled on-line by the end of the decade. As a result of this the HMRC will close 177 local tax offices.




Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

MARKETS: (Data compiled by The Outsourced Marketing Department)

Despite tragic terrorist activity in Paris, resulting in the death of 130 innocent civilians, and the shooting down of a Russian bomber across the Syrian/Turkish border, the equity markets, surprisingly, maintained their composure.


 

Despite incurring large losses in mid-November, the FTSE100 rallied to close at 6,356.1, down just 0.08% on the month and up 1.7% on the quarter. The wider FTSE250 fared even better gaining 1.77% in November to finish at 17,420.7, whilst the junior AIM market matched the FTSE100 performance to lose 0.08% at 737.3.

In the USA the Dow Jones trod water, closing out November at 17,719.92 for a marginal gain of 0.32%, with the Nasdaq index rising 1.09% to end at 5,108.67.

As reported last month, the prospect of renewed fiscal stimulus from the European Central Bank, allowed the Eurostoxx50 to maintain its positive momentum, as it gained just under 45 points to 3,488.99 for a 2.07% improvement on the month.
Likewise, the Japanese Nikkei225 index also remained in positive territory, finishing at 19,747.47 an improvement of 3.48%.

The foreign exchange markets saw the US Dollar powering ahead of the Euro currency, breaking parity to $0.94 for a 14.5% uplift, whilst the Euro also slipped against Sterling to €1.42 a fall of 1.43%. Given the bullish sentiment in the US Dollar, due to the anticipation that the US Fed will raise interest rates soon, Sterling slipped 1.43% to $1.51.

Gold lost its recent momentum falling $76 in the month to $1,065.8 an ounce and recording a 6.62% fall.

Oil, as measured by the Brent Crude benchmark, fell yet again - as a result of continuing oversupply - to $44.61 a barrel and compounding its year- to-date fall to 22.19%.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

UK's Service sector sees improvement

The UK service sector saw growth in October; the first time in four months that the growth rate has improved. The closely followed ‘Markit/CIPS Service Sector Purchasing Managers Index’ (PMI) improved from the 53.3 level, seen in the previous month, to 54.9 – any figure above the 50 mark represents growth in the sector.



Whilst this data was welcomed, Markit did state that the pace of improvement was still “relatively subdued”.

The PMI went on to say that within the sector there was strong jobs growth, as it hit a five-month high.

This good news follows similar bullish results, released recently by PMI, from both the ‘manufacturing’ and ‘construction’ sectors.

Chris Williamson, the Chief Economist of Markit, was reported as saying: “Such an improvement, together with the revival in hiring signalled by the three surveys... may coax more policymakers into (voting to raise) interest rates before the end of the year.”

However, he reportedly went on to add: “Dovish policymakers will note the ongoing lack of inflationary pressures in October, suggesting that there is no need to rush into raising rates.”

The Government itself will be very pleased to see more business sectors seeing improved performance, as the Chancellor of the Exchequer, George Osborne, has stated that he is committed to seeing a far more balanced economy evolving across the country, with less reliance on any one sector to drive GDP growth.

Editor’s note: The future direction and timing of interest rates remains a contentious subject, given the Governor of the Bank of England, Mark Carney’s recent comments on the subject. See ‘The Bank of England’s inflation report’ article.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

The Bank of England's inflation report...

In early November the Bank of England released its Inflation Report, as recorded by their Monetary Policy Committee (MPC). The committee decided, by an 8-1 majority, to leave the Bank Rate at its historical low of 0.5%. There was one dissenting MPC member, Ian McCafferty, who would have preferred to see a 25 basis point (1/4%) increase. They did, however, unanimously vote to leave their purchase of assets at the current level of £375 billion. This is also colloquially known as their ‘Quantitative Easing’ programme.




As at the end of September, the Consumer Prices Index (CPI) stood at -0.1%, which is marginally more than 2% below the Bank’s own inflation target. They cite lower prices in food, imported goods and energy as the major factors here, with lower domestic cost growth as a lesser influence. The wider core inflation rate currently stands at 1%.

Whilst they believe that CPI will remain subdued at around the 1% level until Q3 or Q4 of 2016, the Bank did confirm that they are determined to return inflation to the 2% target range within two years in a careful and sustainable way, avoiding the danger of it overshooting, should the current disinflationary factors diminish. They also believe domestic momentum is strong, consumer confidence is high and wage growth is continuing to improve.

Given that the MPC believes that the Bank Rate will rise in due course, as inflationary factors reverse, it also expects any such rise to be more gradual and to a lower level than seen in previous economic cycles.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Tax rise on buy-to-let and second homes

Enable’s experienced IFA’s in Bishop’s Stortford know that many have been turning to buy to let as an investment and some of us have second homes. But the Chancellor is clearly concerned for those squeezed out by house price rises but many analysts warn that undeterred investors will simply pass the cost on in higher rents.



Chancellor George Osborne, unveiled a raft of measures in his spending review to help boost revenues and cut spending, he plans to introduce an additional 3 percent on the stamp duty property tax for second homes and buy-to-let properties from next April. "People buying a home to let should not be squeezing out families who can’t afford a home to buy," he told parliament.  But the chief executive of the Federation of Master Builders, Brian Berry, is unsure the extra tax would dissuade investors from buying, instead he suggests tenants will end up footing the bill. "I think buy-to-let buyers will offset the cost and the danger is that might be passed on in terms of higher rents."

Stamp duty, which is levied in bands according to the market value of a property, and an increase on buy to let properties, adds to the woes of landlords as earlier in the year, the government also said that it also intends to restrict the amount of income tax relief landlords could get on residential property mortgages. These changes will not affect larger firms but hit smaller investors as those buying six or more residential properties in one transaction have a lower stamp duty based on the value of all the properties added together unlike small investors who tend to pay per home.

Source: Reuters

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

The real new state pension gap

The current pension system as Enable’s IFAs in Bishops Stortford agree, has been far too complex, for far too long and its replacement by a simpler, although still complicated system has many benefits.  But it has also thrown up numerous anomalies and sources of unfairness and the disparity gap in the basic entitlement is perhaps one of the worst.

 

The Chancellor announced in the recent spending review that the basic state pension paid to current pensioners would rise by £3.35 to £119.30 a week in April. The “single-tier” pension paid to those who retire after that date will be £155.65 a week, he said.  So the difference between the amounts paid by the two systems will be £36.35 a week, or just under £1,900 a year.  This difference between the new and old state pension is finally clear and amounts to a significant about of money that is different in the basic entitlement.

Malcolm McLean, a former head of the Pensions Advisory Service said pensioners were waking up to the fact that only those who reached state pension age after the introduction of the flat rate in 2016 would receive it. Anyone who reaches retirement age before then will receive the existing state pension for the rest of their life. Ros Altmann, the pensions minister, said back in 2012: 'I would call on the Government to consider extending the flat-rate system to those who have already retired' but she has not been forthcoming yet. Rather than be wholly dependent on a state pension make sure you start saving as early as you can. Enable’s IFAs can help you look into the right kind of saving plan for you.

Source: The telegraph


Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

November house prices slowed

Enable’s Independent Financial Advisors note that mortgage lender Nationwide stated that house prices rose by a less-than-expected 0.1 percent in November compared with a 0.5 percent increase in October. 

 

British house price growth slowed according to their survey published recently which suggested the recovery in the housing market, which recently pushed prices to new record highs, might now be advancing at only a modest pace. November was the weakest monthly performance since June, Nationwide said as house prices rose 3.7 percent in year-on-year terms, slowing from 3.9 percent in October.

Robert Gardner, Nationwide's chief economist, said; "The annual rate of house price growth has fluctuated in a fairly narrow range between 3 and 4 percent over the past six months, which is broadly consistent with earnings growth over the longer term."  The Nationwide survey tends to estimate slower price growth than other measures of house prices. An index compiled by rival mortgage lender Halifax suggested that prices rose by nearly 10 percent in yearly terms in the three months to October.

Whatever the actually fluctuations in house prices most would agree that prices are still supported by a shortage of properties on the market for sale. Nationwide said 135,000 new homes were built in England in the 12 months to September, a long way below the estimated 220,000 new households that are projected to be built each year over the next decade. If you or another member of your family are looking to get onto the ladder Enable’s IFAs can help you consider your options.

Source: Reuters

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
 • Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE