What the Finance

More Britons are investing in buy-to-let schemes. The Council of Mortgage Lenders reports 1.5 million people in the UK now hold such investments. At the end of 2012, 11.5 per cent of mortgages were through buy-to-let schemes, up from 9.8 per cent in 2011.

“Buy-to-let is benefiting from strong tenant demand, which is likely to continue,” said Paul Smee, CML director general. “Landlords who can demonstrate a strong track record are in a good position to expand their portfolios.”

The Telegraph says this upsurge is due to the continued rise in rents, combined with low interest rates and the less stringent regulations compared with other mortgages. Rents are typically 25% higher than repayments, which makes buy-to-let a stable investment.

Banks and building societies also see it as a more reliable form of lending than a residential mortgage, since the loan is being taken out against a property which will provide the means of repayment.

As a result, fewer buy-to-let loans find themselves in arrears – 1.1 per cent compared with 2 per cent of buyer mortgages.

Here we have three tips to help you avoid the common pitfalls that affect many of today’s potential investors.

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Asset prices worldwide have risen to potent levels reminiscent of the credit boom 5 years earlier. The Bank of International Settlements has warned that they may be losing touch with economic reality.

“Some asset prices appeared highly valued in a historical context relative to indicators of their riskiness”

The institute states that it is unusual for markets to gain momentum during times where financial forecasters see nothing but crisis. It also said that earnings expectations on Wall Street have dropped dramatically with an unusually high proportion of companies downgrading forecasts, even though we have seen equity prices rise.

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The Investment Management Association has confirmed that Daniel Godfrey, former director general of the Association of Investment Companies, as its new chief executive.

Godfrey will take this post on December 1^st and will be replacing Richard Saunders who has provided 11 years of service at its head. Saunders said, “After 11 years in this role I feel it is time for me to move on. It has been a great privilege to work with a first-rate team at the IMA and I am very proud of what we have achieved together since the association was set up in 2002. I know that my successor will be taking charge of an organisation in very good shape to meet the challenges of the coming years.”

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What is Groupon?

It is an international website which claims to offer the greatest deals on a broad range of all kinds of products and services.

What is the recommnedation service?

Groupon has been long advertising a £6 Groupon credit for referrals. What does this mean? If a person recommends this deal to one of his friends her account will be credited the value of £6 as a reward. This would count for every friend that a person sends to Groupon and buys any deal on their website. The credit could then be redeemed against a future deal of choice. Continue Reading »

The European Commission has supported plans from 10 member states to raise funds to deal with the current European economic crisis, by introducing a tax on financial transactions.

The European Union has found resistance from several other countries though, and have been unable to proceed with the implementation of the plans. The UK has spoken out against the proposed tax, saying that the City of London will be hit hardest as one of Europe’s biggest business locations.

The 10 countries that support the new tax include; Austria, Belgium, France, Greece, Germany, Italy, Portugal, Slovakia, Slovenia and Spain. They plan to try and proceed with the introduction of a financial transactions tax even without support from all EU members.

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This week sees the Royal Bank of Scotland make its final £1.4million payment to the Asset Protection Scheme (APS), reaching the required £2.5billion minimum payment to exit the emergency insurance programme.

The APS is a state-backed insurance scheme worth £282billion, set up at the beginning of 2009  shortly after the global financial crisis hit and the bank had to be bailed out with tax-payers money (a rescue that left RBS 82% owned by the state). The Lloyds Banking Group was also included in the scheme, but exited in November 2009 saying that the scheme was not needed.

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Since the global financial crisis in 2008, which began with the failure of the Lehman Brothers, the world has slowly limped on and tried to grasp back the prosperity that people felt beforehand. While as a global economy we are doing better than 4 years ago, some countries are still struggling.

The Eurozone is constantly on the verge of total collapse, with many countries requiring bailouts and harsh austerity measures. Governor of the Bank of England, Sir Mervyn King, has declared that Britain is only halfway back to its previous standings before the problems that began with Northern Rock.

Chief economist of the International Monetary Fund (IMF) Olive Blanchard has said that “it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape.” It means that world economies can expect to be mostly recovered by around 2018.

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During the second quarter (April-to-June) the ONS (Office for National Statistics) claimed that the economy shrank by only 0.4pc, after it made a third estimate of gross domestic product for the UK.

The original estimation for the period was a retraction of 0.7pc, then revised to 0.5pc in August. This came as a surprise to analysts who had not observed, nor were expecting, a change in the original estimation.

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For the past 10 years, the office of Governor of the Bank of England has been filled by Mervyn King, chosen for two consecutive five-year terms.

Mr King is due to step down from his position, and his £302k salary, on June 30 of next year (2013). In a speech to Parliament, Chancellor of the Exchequer George Osborne announced that Mr King’s replacement will be found with a “fair and open competition”, by which the government will begin to run advertisements for the job from Friday (Sept 14).

Mr Osborne continued to say “As with Mervyn King, we are seeking a governor of intelligence, independence, and integrity. We intend to announce the successful candidate by the end of the year.”

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