FinanceBAM News

Once again we have been slow updating some financial news on Financebam, we will get it right soon.
Let’s start with an update on some financial news items over the last few weeks that will only scratch the surface of what really happened.

Yesterday it was mentioned that even though the high street is taking a battering with sales leading up to Christmas, there is a different story for online sales. Not only is it expected that sales will stay at the same level than last year, but there is real evidence, that credit crunch or not, sales will increase for online purchases compared to last year.  Nothing was mentioned about the online insurance market, such as car insurance or breakdown cover.

We clearly have different priorities to the USA. We have easily let our motoring history disappear when the car factories were unable to compete with Japanese and foreign cars imported to us. The message has always been clear in the UK, that if a business is unsustainable then it is right for it to fail, job losses or not.  It is not seen this way in other European countries that have no problem saving their national car manufacturing forms by pumping in tax payer’s money.

This trend has crossed the Atlantic, which the big car manufacturers, Ford, General Motors and Chrysler all going cap in hand to the American government for $34b or so to keep them afloat.

Insurance comparison sites have come under some criticism recently, stating they do not do a though enough job of helping customers buy the right insurance. It is claimed that insurance comparison sites, are good at delivering prices, but not so good at ensuring all the facts and conditions of each policy is explained in enough details.

Last week saw another huge drop in bank landing rates, down to an astonishing 2% base rate, in an attempt to get people borrowing and banks lending especially in the mortgage market. Many however are still complaining that they have not yet seen a reduction in their mortgage payments from the last reduction, never mind this further recent one.

It was also mentioned that the government would allow a 2 year holiday (if you could call it that) on interest payments, should you lose your job. This mortgage interest will accumulate and you will have to pay it in the end. Should your home continue to drop in value, this could create some serious negative equity. However, should home prices start to rise again; this could be the answer to giving customers some piece of mind with mortgage payments.

Finally the announcement that Honda have pulled out of Formula One should not have been a surprise in hindsight.  How can they justify spending £350 on making 2 cars go around a track faster, when thousands of jobs are on the line and factories are being shut, to keep costs down, with compounds full of unsold cars.

Mark Atherton wrote an interesting article in the June 27, 2007 edition of Times Online. In it he explained that the Financial Services Authority (FSA) announced plans for a massive shake-up of the financial industry. Critics say that it still has not gone far enough.

In its Retail Distribution Review, the FSA has put forward plans which, were drawn up the industry itself, designed to make the actual cost of financial advice much more clear and distinguish it from the cost of financial products.

It is proposing a tiered structure for financial advice with advisers falling into the category of one of the tiers. The advisers on the top tier would be able to advise on anything from savings accounts to investment trusts. A second tier would include those who could give primary, simple advice at a lower cost such as banks, insurers, some existing financial advisers. (more…)

This June 26^th Corin Vestey wrote an article for EveryInvestor.co.uk about “How to get yourself an interest free loan today”. The article is related to, as the title states, ways of getting loans without having to pay any interest on it.

The first and the most easy way to do so may be the credit cards. Some of the best credit card deals will lend you money on a balance transfer for 13 months at 0% and for new purchases for 12 months at 0%. If you already have debts racking up, say, on a store card which is costing you 29.9% APR interest or on a standard credit card which is costing you 16.9% APR then transferring your balance to one of the new 0% offers makes seriously good financial sense. (more…)

The June 27, 2007 edition of The Daily Mail had an interesting story about interest rate being on the rise. One of most Britain’s senior bankers warned that interest rate must rise to help ward off an unsustainable boom in the city and the property market.

Sir John Gieve, deputy governor of the Bank of England, warned that massive growth could hurt the banking system and cause a huge financial downturn. He said the only way to control the problem was with higher interest rates.

Having voted against a rise in June, the bank is now greatly expected to raise it’s key interest rate to 5.75% to 5.5% next Thursday. This will be the fifth time in a year the bank has raised their rates, placing even more pressure on household budgets. (more…)

Phillip Scott wrote an interesting article in the June 17, 2007 edition of Times Online about foreign investment markets.

With Shanghai and Mumbai shares being overvalued, investors are now seeking other countries such as Egypt, Turkey, and Mexico for investment. Goldman Sachs, the American investment bank, has created a list of the new top eleven – Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.

Over three years, economic growth for these countries has averaged 5.5%. This is the best it’s been in fifteen years and doubles Europe’s average of 2.3%. (more…)

Lauren Thompson wrote on interesting article in the June 20, 2007 edition of the Daily Express regarding bank fees. With much excitement already surrounding bank charges, new research has revealed thousands of customers still face excessive bank fees.

A study by Moneysupermar-ket.com revealed a huge difference in banks for those customers going over the authorized limit. The study showed what would be charged for going over an agreed limit by 60 pounds, with three 20 cheques paid out in a month.

HSBC came out with the lowest rates as they charge a flat fee of 25 pounds for any amount gone over. NatWest however, charges 28 pounds for going over and 35 pounds for every cheque on top of that. Alliance & Leicester have a 50 pound fee and charge 25 pounds for every cheque on top of that. Barclays and Lloyds do not have a flat fee but charge 30 pounds per cheque. (more…)

John Stepek of MSN Money wrote on interesting article on June 20, 2007, that brought to light the fact that the government bond market is making big news. This is unusual for a section of news that hardly anyone ever sees.

The yield on a 10-year gilt (UK government bond) hit a seven-year-high of 5.5% last week while the yield on a 10-year Treasury (US government bond) was also on the rise.

This is important as the yield for government bonds is the foundation for all asset values. If you can receive because if you can get a 5.5% on a government bond which is virtually risk-free than you need to be able to get a better return on anything riskier.

This means that yields on everything have to rise. And for yields to rise, prices need to fall. (more…)