Hose prices continue to rise

Around 27pc of those aged over 50 said they planned to use money tied up in their home to provide themselves with a retirement income, such as through downsizing or releasing equity, according to life insurer LV=. The average homeowner in this age group believes around £27,000 has been wiped off the value of their property during the downturn.

But despite this only 2pc of people said house price falls had put them off using their home to fund their retirement. The research also found that previous house price booms have left many people reliant on the wealth tied up in their property, with 12pc admitting they had saved less into a pension because of the rising value of their home.

A further 13pc claimed they could not afford to buy their own property and invest in a traditional pension because house prices were so high. A third of homeowners think it will take between three to five years for house prices to return to their former values.

Around 17pc of people hope to recoup some of their lost equity by carrying out home improvements, while 21pc will save extra and 29pc will wait for house prices to recover.
Vanessa Owen, head of equity release at LV=, said: "In the decade leading up to the credit crunch, more and more homeowners saw their property as a potential cash cow to aid retirement. "But in a matter of months millions of pre-retirees have seen both their property and pension fund values battered. Despite this, their confidence in the long-term value of bricks and mortar remains."

It is perhaps encouraging therefore to hear the latest news from the Nationwide. The cost of a home increased by 0.5pc during the month, pushing average property prices up to £162,764 - a level last seen in August 2008.

Martin Gahbauer, Nationwide's chief economist, said: "The monthly rate of house price inflation was unchanged in November at a seasonally adjusted 0.5pc, leaving the average price of a typical property 2.7pc higher than a year earlier."

But there are signs that house prices are rising at a more moderate pace than in the spring and summer, with the 0.5pc rise recorded for both October and November, the smallest since prices stopped falling in April.

The three month on three month growth rate, which is generally considered to be a smoother indicator of the underlying trend, also moderated during November to 2.8pc, down from 3.5pc in October and 3.8pc in September.

Today's figures come the day after the Bank of England reported that the number of loans approved for house purchase had increased for the 11th consecutive month in October, rising to 57,345, their highest level since March 2008. The housing market has recovered quicker than expected during 2009 as a shortage of properties on the market has pushed up prices.
However, many economists are predicting a return to price falls during 2010 as more homes are put up for sale.

Nationwide said the housing market remained "crucially dependent" on labour market conditions. It added that while unemployment had increased noticeably, the rise had not been as rapid or as pronounced as previously feared. Mr Gahbauer said: "Despite continued uncertainties about the future, the better than expected performance of the labour market has probably contributed to the surprise rebound in house prices this year.

"Together with the fact that mortgage rates have fallen sharply as a result of base rate cuts, this has meant that far fewer borrowers have fallen into arrears than would normally be the case in such a deep recession. As such, the downward pressure on house prices from distressed sales has so far been significantly lower than expected."

Savers Rates

Despite no change in bank base rate since March 2009, savings rates across the board have risen steadily as providers moved to fund more of their lending activities through their savings book and the FSA declared that providers must hold increased savings reserves.

The sharpest increases have been on fixed rate bonds, where providers can lock savers money in, but those looking for easy access accounts or ISAs have also seen rates increase. However, it seems that the demand for savers deposits has started to wane as a number of top deals have been withdrawn in recent weeks.

The average rate on a one year fixed rate bond peaked at 3.23 per cent at the start of October, but has fallen to 3.17 per cent today. Similarly, those looking to lock in for longer have seen rates fall from 4.77 per cent at the start of October compared to 4.66 per cent today, but the rates being offered are still significantly higher than those on offer back in March.

Once again the Coventry Building Society has launched its Poppy Bond in partnership with the Royal British Legion. The bond pays a market leading rate of 4.30 per cent and donates 0.20 per cent of all funds invested to the Poppy Appeal. Between £500 and £250,000 can be invested in the bond, with a monthly interest option available for savers looking for a regular income. Access to funds are not available during the two year term.

Savers looking to fix the rate on their money for two years are being offered a rate of 4.00 per cent from Abbey, Alliance & Leicester and Bradford & Bingley. Savers can invest between £10,000 and £2 million into the 2 Year Fixed Rate Bond, which is operated in branch or online. Once opened, further additions are not permitted and access to funds is available on closure only subject to a loss of 120 days’ interest.

National Savings and Investments (NS&I) has just launched a range of Guaranteed Growth and Income Bonds paying rates of between 3.85 per cent and 4.60 per cent, depending on the term of the bond selected. The Guaranteed Growth Bond Issue 48 is topping the best buy tables for one year bonds paying 3.95 per cent. Savers can invest between £500 and £1 million into the bond, which is operated online, by post or telephone. Access is available during the term of the deal, but will be subject to 90 days’ loss of interest.

The latest issue of the Hinckley & Rugby Building Society Tracker Savings Bond is paying 2.00 per cent and guarantees to pay 1.50 per cent above Bank of England Base Rate until 31st August 2010. After this date the bond guarantees to pay at least equal to Bank of England Base Rate until 31st August 2013. Savers can invest between £2,500 and £300,000 into the bond, which is operated in branch or by post. Savers must give 7 days’ notice to make a withdrawal or forgo 7 days’ interest for earlier access.

Source: Moneyfacts.

Britain’s women are leaving themselves dangerously exposed to financial risk in later life a new report says.

The research also shows that almost half (42%) of women aged 30-59 are living in fear of what their retirement might hold.

HSBC Insurance's The Future of Retirement report makes grim reading for the nation's female population who appear far less prepared for their retirement.

It highlights that women may be leaving themselves open to financial hardship in later life should their circumstances change, and notes that fewer women than men have addressed their long-term financial security.

Twice as may women (17%) as men (8%) say they have no retirement planning, while almost twice as many men (32%) as women (18%0 feel prepared for the long term.


Christine Foyster, head of premium wealth proposition at HSBC, said: "Often women do not consider long-term financial planning early enough, leaving them at risk of being under-prepared in later life.

"There is also a tendency to have unrealistic expectations about how much to save and therefore to put saving off," she added.





Source: Cover Magazine

On the countries leading and most respected fund managers, Fidelity's Anthony Bolton has said the bull market could run for a 'considerable' time.

According to the Telegraph, Bolton (pictured), who is in Seoul mentoring Fidelity's emerging Asia portfolio managers, said: 'The bargain phase is over but, despite the fact the market is well off lows, we expect the bull market to go one. It's a multi-year bull market,' the Telegraph reported.

Bolton, tipped technology and consumer sectors to lead the next leg on the bull run.

He also remains bullish on banks and insurers, alongside property based on the their cheap valuations, although he expressed some concern over how regulation could impact these sectors.

'I still think it is right to own financials. I generally found after financial crisis that you can own financials [for] two to three years,' Bolton said, according to a Reuters report.

He also told the Korean media he expected China to continue driving world economic growth, although the Chinese stockmarket could suffer a setback in the short term.

'For China's market there's a possibility of a correction, but the long term outlook is still bright,' Bolton said. 'The relative growth being seen in some emerging markets is going to look particularly attractive against the low growth in the West.'

He believes emerging economies will benefit from rises domestic consumer spending. He said: 'I particularly like emerging markets that can be driven very much by domestic demand, by the internal dynamics of their economy.'

Source: Citywire.

Child Trust Funds

With tighter public spending expected from the Government this Autumn, the child trust fund could be one of the "less unattractive" options for cuts, says Institute of Fiscal Studies deputy director Carl Emmerson.

In an IFS observation last week Emmerson assessed the pros and cons of abolishing the initiative. He says the need in the medium-term to reduce public borrowing makes it natural to try to identify areas of public spending that could be cut with the least pain and that the CTF is a possible candidate.

CTFs were launched in 2005 but were backdated for children born on or after September 1, 2002, to help boost long-term savings for children. All children receive £250 at birth or £500 for those in lower-income families with a second payment from the Government of £250 made shortly after the child’s seventh birthday.

Emmerson says abolishing the CTF would make “a small but not insignificant contribution” to the £26bn spending cut estimated to be required by 2013-14 under the Government's spending plans.

He says: “When the time for tough choices about public spending arrives abolishing the child trust fund could be one of the less unattractive options.”

Child trust fund supporters argue the saving initiative complements existing spending on schools and cash transfers to families with children and that it could help improve their ‘life chances’ through a stronger saving culture. But Emmerson says though abolishing CTFs would make newborns worse off in 18 years time, spending cuts in other areas could be even more detrimental.

He says cuts to benefits or tax credits would reduce the disposable cash parents have to spend on their offspring during childhood and public services cuts could reduce the quality and quantity of the services on offer. He says: “Both could reduce the quality of life and the future life chances of children by more than the abolition of the child trust fund.”

Watch this space as more public spending cuts loom large……

Source: Moneymarketing

Banks receive 50 times more complaints than advisers

Banks are facing more than 50 times as many complaints as financial advisers, according to figures released for the first time by the Financial Services Authority (FSA).

The aggregate complaint figures show how many complaints regulated firms have received and how they have dealt with them.

In the second half of 2008, banks received 988.702 complaints, more than 53 times as many complaints received by advisers, which received a total of 18,633.

The figures show the extent of consumer dissatisfaction with bank advice and support figures released earlier this year showing advisers are the most trusted of the financial services profession.

The figures show an upward trend in bank complaints, which increased 8% between the first and second half of 2008 compared to adviser sector, where complaints fell 5%.

Advisers also trumped bankers in the percentage of complaints that they handled, closing 20% of complaints they received, compared to just 11% of the complaints banks received.

Dan Waters, director of retail policy and conduct risk at the FSA, said the publication of the figures for the first time would help consumers better inform themselves of how the industry operated.

‘This is stage one of our drive to say more about how the industry handles complaints and builds on our recent proposals, currently out for consultation, about the publication of firm-specific data,’ he said.

We expect firms to treat customers fairly by dealing with complaints promptly and efficiently. We are focusing even more attention, particularly through intensive supervision, on ensuring that firms are dealing with complaints properly.'

House Prices Continue To Rise.

House price bounce extends into August.

• House prices rose by 1.6% in August
• Year-on-year decline slows from -6.2% to -2.7%
• Low interest rates helping to underpin prices for the moment

Average UK House price now £160,224

Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said:

“The price of a typical house rose for the fourth consecutive month in August, increasing by 1.6% on a seasonally adjusted basis. The 3 month on 3 month rate of change – generally a smoother indicator of the near term trend – rose from 2.7% in July to 3.3% in August, the highest level since February 2007. At £160,224, the average price of a typical UK property is still slightly lower than 12 months ago. However, the annual rate of change rose further in August, from -6.2% to -2.7%. Over the first eight months of 2009, the seasonally adjusted index of house prices has risen by 3.2%, though relative to the October 2007 peak it is down by 14.4%.

For further information and to see this month's full report click here.

Working In & Through Retirement

More than two thirds of UK retirees are estimated to be either working, considering a return to work, or upping their hours as a result of the downturn.

A survey, conducted by financial technology group 1st - The Exchange, who questioned 2,000 people in retirement age, found that 70% of them were either working or considering working in retirement, directly because of the double whammy of the ongoing recession and a lack of pension savings.

The results are a timely reminder of the dire straits that many retirees and pension savers are presently in.

Paul Yates, at 1st – The Exchange, said: 'With news this week that a further one million workers are facing inadequate retirement provision due to the closure of many final salary pension schemes by 2012, the situation is only likely to get worse.'

A separate study from annuity group MGM Advantage has found that the impact of the economic downturn on pension pots has forced more than a third of people of 55 – almost 2m - to put off their retirement plans and continue working.
In its research, 1st - The Exchange, found that more than half of retirees, at 53%, are already working full or part time in order to supplement their pension, of which 10% are looking to extend their hours.

Another 17% are considering returning to work because their existing pension is not enough to see them through retirement.

In addition, 28% of men expect to work for 10 years after retirement until at least the age of 75 and 13% of these expect to work for longer, almost half, at 49%, of women anticipate that they will have to work 10 years after retirement up to the age of 70.

Source: thisismoney

Fund Managers Optimism

Fund managers' optimism about the global economy is at its highest level in nearly six years, according to the Merrill Lynch Survey of Fund Managers for August. Now I know you would expect them to be optimistic but this time I think they might actually believe it.

Seventy-five per cent of respondents said they believed the world economy would become stronger over the next 12 months, up from the 63 per cent recorded in July and the highest figure since November 2003. Further, 70 per cent of respondents expected global corporate profits to increase in the coming year, up from 51 per cent last month.

The survey showed managers were also putting their cash back into equities. Equity allocations have risen sharply, with 34 per cent of respondents now overweight in the asset class compared with 7 per cent in July.

Michael Hartnett, chief global equities strategist at Banc of America Securities-Merrill Lynch Research, said: "Strong optimism in August represents a big turnaround from the apocalyptic bearishness of March. But with four out of five investors predicting below-trend growth for the year ahead, a nagging lack of conviction about the durability of the recovery remains. "We have yet to see investors fully embrace cyclical regions such as Japan or Europe, or Western bank stocks."

Within Europe, 66 per cent of respondents expected the European economy to improve in the next 12 months compared with 34 per cent in July. Investors in Europe took overweight positions in basic resources and radically reduced their overweight in pharmaceuticals. The survey also found that European managers had increased their cash positions, while their overall sector conviction esd near record lows.

Separately, global equity fund managers are waiting for fundamentals to catch up with the recent market rises before making any substantial policy changes, according to the latest annual review of global equity funds from Standard & Poor's Fund Services. The firm said the market upheaval led to a general move toward developed markets, defensive sectors and larger companies.

Flash Floods Insurance Risk

Householders face higher building insurance premiums after a sharp increase in property damage blamed on climate change. A rise in insurance claims has been caused by flash floods and storms in areas of Britain previously immune to severe weather events.

The AA, which produces an insurance premium index monitoring costs, reports a 15% rise in claims in the first six months of 2009 over the same period in 2008 "in the number and cost of payments for buildings damaged by flash floods and storms in areas with little or no previous record of such claims."

It cited one village, Carbrooke in Norfolk, where homes were damaged by giant hailstones during an ice storm in late spring. The storm also caused the roof of a supermarket to partially collapse, and when the hailstones melted, a local school was flooded. "It happened in an area with no previous record of severe weather events," said the AA.

Insurers are now demanding higher premiums to meet the cost of such freak weather, linked to climate change. The AA found that, in the 12 months to June 2009, the average quote for buildings insurance had risen by 10% — though customers who shopped around were able to limit the increase to 5%.

Insurers are beginning to reflect concerns about climate change in their premiums. The industry is expecting rising cost and frequency of claims for flooding, subsidence and storm damage.
Meanwhile, tighter building regulations mean repairs must meet modern standards for such things as electrical wiring and insulation. As a result, the cost of meeting a claim — particularly for older properties — has been rising steadily.

At the same time households are benefiting from a fall in the cost of home contents insurance to a 15-year low. The AA said that despite reports of a recession-related rise in the number of burglaries, there is little evidence of this from the industry.

One reason is that insurers are making more specific calculations of premiums based on local crime rates. So although the average cost of home contents cover is falling, the figure masks a growing disparity between high and low crime areas.

Fraudulent claims are also contributing to a steep rise in car insurance costs, which are growing at their fastest rate for nearly a decade, said the AA. Drivers are typically being charged £526.42 for fully comprehensive cover, up 10% over the past year — the fastest increase since 2000.
The industry continues to suffer underwriting losses, which are predicted to be in excess of £240m this year," said Douglas. "Although the number of accidents on Britain's roads is thankfully falling, the cost of claims continues to rise — particularly personal injury claims and legal expenses. During the current downturn, fraudulent claims are also putting pressure on premiums, leading to an increase in the number of people who drive without insurance, currently estimated to be 1.6m.

The burden of claims involving uninsured drivers unfortunately falls to honest drivers, to the tune of £30 per policy.

Worst hit are drivers under the age of 21. The average premium for third party, fire and theft cover, typically bought by young drivers, rose 4.6% in the second quarter of 2009 over the first to £968.22.

With rising insurance costs contact us today for an independent quote backed up with a full locally based service.