Special Liquidity Scheme extended
by Gill Montia
Story link: Special Liquidity Scheme extended
The Bank of England has extended its Special Liquidity Scheme (SLS).
The scheme was introduced in April and has become a lifeline to UK mortgage lenders by providing regular injections of cash and allowing them to swap mortgage-backed securities for Treasury bills.
The market for mortgage securities has been virtually frozen since the credit crisis took grip [...]
Inflation hits 4.7%
by Richard Kilner
Story link: Inflation hits 4.7%
Inflation has risen again, with the official Consumer Price Index (CPI) rate up to 4.7% in August.
The new rate, up 0.3%, is the highest since records began in 1997, and remains more than twice the official government target rate of just 2%.
As with previous months, inflation is being driven by large and continuing rises in [...]
New Zealand cuts OCR by 50 basis points
by Richard Kilner
Story link: New Zealand cuts OCR by 50 basis points
The Reserve Bank of New Zealand has slashed the Official Cash Rate (OCR) to 7.5%, a cut of 50 basis points from the previous level of 8%.
Governor Alan Bollard has stated that the New Zealand economy is in a decline, largely due to the household sector.
Bollard added that, globally, the financial situation remained turbulent and, [...]
Negative equity could cost £38 billion in bad debt
by Gill Montia
Story link: Negative equity could cost £38 billion in bad debt
Bernstein Research is predicting that UK banks could have to write-off £38 billion in mortgage debt.
The Wall Street financial analyst is expecting Britain’s plummeting house prices to push one-fifth of the country’s home loans into negative equity.
By comparison, the 1990s housing downturn produced bad mortgage debts of around £12 billion but lenders are more exposed [...]
Bank of England leaves rates at 5%
by Richard Kilner
Story link: Bank of England leaves rates at 5%
The Bank of England’s Monetary Policy Committee (MPC) has voted to retain the present Bank Rate at 5%.
The decision to leave rates unchanged was widely predicted, with the last change being made in April when a cut of 25 basis points occurred.
The current economic situation for the UK presents the Bank with something of a [...]
Bank of Canada retains 3% interest rate
by Richard Kilner
Story link: Bank of Canada retains 3% interest rate
The Bank of Canada has retained its overnight interest rate at 3%, with the bank rate unchanged at 3.25%.
The Bank of Canada has accurately forecast the path of financial turbulence and difficulties within the US economy, but has been less precise with its prediction of how the interaction between a weakened US economy and tight [...]
RBNZ to have greater financial sector role
by Richard Kilner
Story link: RBNZ to have greater financial sector role
The Reserve Bank of New Zealand (RBNZ) has today seen its future powers enhanced with the passing of the Reserve Bank Amendment Bill (No 3).
The Bank’s governor, Alan Bollard, described it as a significant step forward to bolster the country’s non-bank financial sector in the future.
Under the new law, the Reserve Bank becomes the regulator [...]
Australia reduces interest rates
by Richard Kilner
Story link: Australia reduces interest rates
The Reserve Bank of Australia has reduced the cash rate from 7.25% to 7%, a cut of 25 basis points.
The cut, which comes into effect on 3 September, has been made in a bid to restrain demand and thus gradually reduce inflation.
The credit markets in both Australia and the wider global economy remain tighter than [...]
MPC member calls for rates to be cut
by Richard Kilner
Story link: MPC member calls for rates to be cut
A member of the Monetary Policy Committee (MPC) has warned that without a cut in interest rates, house prices could slump by 30% and 2 million could be unemployed by Christmas.
Professor David Blanchflower, part of the Bank of England’s MPC, made his stark assessment in an interview with news agency Reuters.
Professor Blanchflower has called for [...]
Mortgage and unsecured lending declines by £11bn in a year
by Gill Montia
Story link: Mortgage and unsecured lending declines by £11bn in a year
Price comparison website, uSwitch.com, has calculated that lending in the mortgage and unsecured loan market has fallen by £11 billion in the year from the end of June 2007.
Gross mortgage lending declined by an average of £2.5 billion a quarter over the period, accounting for £10 billion of the fall.
Making a further comparison, uSwitch [...]
Consumer debt exceeds GDP once again
by Gill Montia
Story link: Consumer debt exceeds GDP once again
Personal debt in the UK has exceeded the nation’s gross domestic product (GDP) for the second successive 12 month period.
Accountant, Grant Thornton, has been researching consumer debt and has revealed that the total amount owed via mortgages, loans and credit cards increased by 7.3% during the year to the end of June.
The figure now [...]
Personal loan rates hit six-year high
by Gill Montia
Story link: Personal loan rates hit six-year high
Financial website, Moneyfacts.co.uk, has revealed that this month, interest rates on new personal loans have hit a six-year high.
According to the website’s data, this time last year, the most competitive £5,000 loan year came with an interest rate of 6.3%.
Twelve months on, the most competitive loan for the same amount is sporting an APR [...]
Inflation more than twice official target at 4.4%
by Richard Kilner
Story link: Inflation more than twice official target at 4.4%
Inflation continues to rise beyond the desired level.
The Bank of England is tasked with keeping inflation as close as is possible to the government target of 2% (according to the Consumer Prices Index, or CPI, measure).
However, today the CPI rate was revealed to have leapt from 3.8% to 4.4% last month.
Petrol prices and the increasing [...]
Base rate held at 5%
by Gill Montia
Story link: Base rate held at 5%
The Bank of England’s Monetary Policy Committee (MPC) has once again voted to keep the base rate on hold at 5%.
The decision to maintain interest rates in August means that, despite rising inflation, the base rate has remained steady since a 0.25% reduction in April.
Deepening gloom over the economic outlook left the MPC with [...]
Australia retains 7.25% cash rate
by Richard Kilner
Story link: Australia retains 7.25% cash rate
The Reserve Bank of Australia (RBA) has chosen to leave the cash rate unchanged at 7.25% today.
Governor Glenn Stevens released a statement explaining the Reserve Bank’s decision.
Inflation has been and remains high in Australia, and the RBA wants to gradually lessen it over time.
However, added to that is the pressure of the difficult credit conditions [...]
OFT launches irresponsible lending review
by Gill Montia
Story link: OFT launches irresponsible lending review
The Office of Fair Trading (OFT) has launched the fist stage of its investigation into irresponsible lending in UK consumer credit markets.
The move follows changes to the Consumer Credit Act which require the OFT to include irresponsible lending among the matters it considers when deciding if a businesses is fit to hold a consumer credit [...]
Surprise drop in individual insolvencies
by Gill Montia
Story link: Surprise drop in individual insolvencies
Latest figures from the Insolvency Service for the second quarter of the year have surprised analysts.
The number of individuals declared insolvent in England and Wales fell slightly to 24,553 when experts had expected higher living costs to create a rise in individual insolvencies.
According to the government body, total numbers were 8.3% down on the same [...]
Personal loan providers hike rates
by Gill Montia
Story link: Personal loan providers hike rates
Research from financial website, Moneyfacts, shows that people with personal loans are being hard-hit by rising repayment rates.
According to the data, 14 providers including Abbey, AA, Tesco Personal Finance, Bank of Scotland and Direct Line have hiked rates in the past month.
In the case of AA and Tesco Personal Finance, two rises have taken [...]
Consumers scale back on unsecured debt
by Gill Montia
Story link: Consumers scale back on unsecured debt
The Bank of England has published data for June revealing a slowdown in the amount of unsecured debt taken on by consumers.
The figures, which cover all forms of consumer credit, show a £0.9 billion rise in unsecured lending.
The increase compares with £1.3 billion in May and an average rise of £1.2 billion over the previous [...]
New Zealand cuts OCR by 25 basis points
by Richard Kilner
Story link: New Zealand cuts OCR by 25 basis points
Today the Reserve Bank of New Zealand cut 25 basis points from the Official Cash Rate (OCR), resulting in a fall from 8.25% to 8%.
Since the release of the Reserve Bank’s Monetary Policy Statement in June more bad news has emerged internationally, Governor Alan Bollard explained, leading to the possibility of further economic damage in [...]
