Second Step on the property ladder?

Enable's Independent Financial Advisors understand that a home to live and grow in is vital to well being.  But making that step up from a first-time buyer to a second home has risen almost threefold in the last decade. And in our experience parents like to help their children take steps forward.

A resent, Lloyds TSB report found the price difference between a typical first-time buyer flat and the semi-detached home desired by many "second steppers" has risen from £14,000 10 years ago to almost £41,000.Researchers said nearly half of first-time buyers live in flats, which average £148,502 in value. The typical price for a semi-detached house, the type of property often favoured by second steppers, stands at £189,312, meaning they face a 27% premium to trade up.Second steppers in the South East face the biggest percentage premium at 52%, equating to almost £85,000 to make the jump to their second home.

Stephen Noakes, Lloyds TSB mortgage director, said: "Second steppers face a number of tough challenges and in many ways have been the hardest hit by the subdued housing market, so it is unsurprising that they are struggling to fund the gap needed to trade up to their preferred second home. Parents have long been helping to fund their children's first home but many are now having to provide further support as they move up the ladder."

Enables Independent Financial Advisors can help you or your children to plan for your next big step with mortgage and savings advice.

China backing global recovery

China will pursue steady policies and seek to boost domestic demand, said Chinese President Hu Jintao to try and maintain economic growth to support a global recovery, he was speaking ahead of the start of the Asia-Pacific Economic Co-operation (Apec) summit in the Russian port city of Vladivostok.

All countries in the region, he said, shared a responsibility to maintain peace and stability. "The world economy today is recovering slowly, and there are still some destabilising factors and uncertainties," President Hu told businessmen in a speech before the summit. "The underlying impact of the international financial crisis is far from over. "We will work to maintain the balance between keeping steady and robust growth, adjusting the economic structure and managing inflation expectations. We will boost domestic demand and maintain steady and robust growth as well as basic price stability."

US Secretary of State Hillary Clinton also urged countries in the region to lift more barriers to free trade in the Pacific. American officials say they would welcome a more active Russian role in the region. "Fostering a balanced and stable economy is a challenge too sweeping and complex for countries to approach in isolation," Mrs Clinton said. "If we do this right, globalisation can become a race to the top, with rising standards of living and more broadly shared prosperity."

Experienced Independent Financial Advisors at Enable know how important it is to keep abreast of global trends to enable more broadly shared prosperity and manage wealth effectively.

Asset management in the news

Cambridgeshire IFA’s Enable can help with all forms of asset management, sometimes it is interesting to note what other individuals and institutions are up to. Over the summer, the London Borough of Camden invested 5% of its assets, or about £40-£50m, with BlueCrest Capital Management in a fund-of-hedge-funds. BlueCrest’s brief is to invest the money in at least four underlying hedge funds, and outperform cash with a lower level of volatility than the stockmarket. Camden is now also considering investing another £50m with Brevan Howard, which came a “close second” to BlueCrest in a recent hedge-funds tender exercise, according to council documents. 

Also over the summer, seven local authorities – the county councils of Norfolk, Buckinghamshire, Cambridgeshire, Derbyshire, Lincolnshire and Northamptonshire, along with the London Borough of Croydon – announced the results of their first-ever joint tender for actuarial firms.  They added five firms – Aon Hewitt, Barnett Waddingham, Hymans Robertson, KPMG and Mercer – to a permanent shortlist, from which the participating pension funds will now pick candidates any time they want to re-tender their actuarial services contracts.

The seven funds, which oversee pensions assets of about £11bn between them, are shortly to announce further joint-searches for investment consultants and for custodian banks. However, according to Nicola Marks, head of the £2.2bn Norfolk fund, it is unlikely the process will ever be used for investment managers, as there are too many companies and too much variability in the services they offer.

Independent Financial Advice at a more personal level, can be accessed through Enable’s IFA’s to help you manage your assets most effectively.

Eurozone - how the markets are responding...

With the focus back on the Eurozone and the markets responding. Experienced Independent Financial Advisors Enable know it can be a worrying time. It’s interesting to see that when EU officials are doing their utmost to make banks slim their balance sheets, analysts have done the unthinkable and imagined what life would be like if European banks merged into a megabank.

The analysts at research provider CreditSights created the megabank by combining the most recent quarterly accounts of 22 banks: Commerzbank, Royal Bank of Scotland, HSBC, Lloyds Banking Group, Societe Generale, Danske Bank, Svenska Handelsbanken, Credit Agricole, BNP Paribas, Barclays, Banco Comercial Portugues, Banco Bilbao Vizcaya Argentaria, ING, Intesa Sanpaolo, UniCredit, Banco Santander, Credit Suisse Group, UBS, Nordea, SEB and Deutsche Bank.

The gargantuan beast would have a balance sheet of some €23.7 trillion with gross loans of €9.2 trillion at the end of June this year.  CreditSights estimated that Megabank would account for about 50% of the European banking sector, making it a “good proxy for the sector [that] illustrates trends across the region's banking industry”.

Although there are a handful of banks still reporting low double digit numbers for return on equity, the average RoE for Megabank was 4.9% in the first half of this year, according to CreditSights. Many banks had produced RoE numbers in excess of 20% in the years leading up to the 2007 financial crisis. Enable can offer independent financial Advice to help improve the digits return on your equity.

Getting the technology right

In the wake of the IT meltdown at the RBS group on 19 June during routine maintenance of the RBS computer system,  the Treasury Select Committee is calling on banks to check their IT systems.
The error caused automated batch processing software to malfunction and although this was quickly fixed, the bank was left with a backlog of data to process. Many RBS, NatWest and Ulster Bank customers found that their account balances had failed to update and some customers were unable to access funds, including wages, while payments failed to go through. RBS and NatWest customers experienced difficulties for around two weeks, while the problems took even longer to be resolved at Ulster Bank.

Every bank should be checking its IT systems. The whole system needs to have confidence that such a failure cannot happen again. RBS has launched an investigation into the problems and will look at risk management, contingency planning and the impact of cost-saving measures.

RBS has set aside £125m to compensate customers for the problems they experienced as a result of the meltdown.  Ulster Bank has said all customers who visited the bank between 19 June and 18 July and made a transaction will receive £20 to compensate them and is also refunding charges placed on people’s accounts in error and will reimburse “reasonable out-of-pocket expenses” incurred by its customers as a result of the disruption.

Independent Financial Advisors Enable of Bishop’s Stortford are glad to see government requiring action getting the technology right is vital in banking.

Safe as houses still...

Property is often part of any sensible financial planning. Despite the recession, the price of the average house in the UK increased to £164,729 in August, just 0.7 per cent lower than a year ago, their biggest jump since January 2010, says the Nationwide Building Society. Robert Gardner, Nationwide’s chief economist, said: “the fact that the annual pace of house price decline moderated to minus 0.7 per cent in August from minus 2.6 per cent the previous month provides evidence that conditions remain fairly stable. “This may be explained by the surprising resilience evident in the UK labour market, with further increases in employment in recent months, even though the UK economy has remained in recession.” The August price increase follows a 0.8 per cent fall in July.

Depending on your circumstances Enable’s IFA’s know that property investment can work. Earlier in the week Land Registry figures revealed an increase in London house prices to an all-time high in July. The average price of a house in London in July was £367,785, compared with £162,900 nationally. Demand remains strong for so-called trophy homes in exclusive areas of London, despite an increase in stamp duty to 7 per cent on properties worth £2 million or more. Prices soared by more than 16 per cent in Kensington & Chelsea over the year, while Westminster saw an increase of 14.4 per cent. The weakness of the pound and the country’s relative political and financial stability has made London properties attractive to overseas buyers.

Back to School

Counting the cost of bringing up baby in Bishop’s Stortford?  Our Independent Financial Advisor's at Enable know it has always cost to have a family and can help you make sensible financial planning; savings and investments to help manage those costs. According to the Halifax the average cost of raising a child up to the age of 11 increased to £8,307 a year in 2011, the figure represents a 15 per cent increase over the last five years and means that it now costs more than £90,000 to raise a child to secondary school age.

It says inflation, as measured by the Retail Price Index, increased by 18 per cent over the past five years and parents now spend around 18 per cent, of their income on bringing up a child. Cost associated with education have increased by 24 per cent in the last five years, with uniforms, equipment, school lunches and school trips adding up to £849 in 2012. Child care costs have also increased, with nurseries and child-minding costs up by 22 per cent in 2011. Together, schooling and child care costs account for half of the total annual amount spent by parents on raising their children.

Spending on food and holidays fell in real terms, according to the study. In 2011 parents spent £889 feeding their children in 2011, an increase of 14 per cent from £780 in 2007, while the cost of holidays for children increased by 16 per cent to £740. Parents spent £513 on children’s clothing in 2011, 15 per cent less than in 2007.