Why are 8 out of 10 savers losing money?
The Queen stepped in this week to urge for greater protection for savers. As shocking report shows that most of us are losing money by placing our cash in a savings account. So if you have cash in the bank right now, you're actually losing money.
Abbey is pushing the pace up on competition. They've launched a new current account with no fees. Will UK banks be on their knees with this new product?
We hear from a bunch of businessman sick of being turned away by their banks. So they've gone to the councils to set up a community bank for local businesses. Find out why this is an excellent idea to create some extra competition.
More house price predictions. We take a look at the top 5 experts make their predictions for 2010 - this range from growth of 2 to 3 per cent to fall of 6 per cent. Who can we trust and what are the reasons for their huge differences?
As always if you have any questions or want to have a chat about current opportunities call the team on 0207 812 1255.
Transcript of video 'Why are 8 out of 10 savers losing money? '
Hello and welcome to this week’s Property News Update with Brett Alegre-Wood, your source for everything that’s happening in property in the UK, Australia and around the world.
Hey guys and welcome to Weekly Property News Update. I’m Brett Alegre-Wood and today is Thursday the 19th of November 2009.
So today what we’re going to be covering, first of all Week 3 of Movember. You’ll notice that I’ve got a lovely little moustache sitting here. It’s giving me the absolute murder but no… All for a good cause and I think we’ve actually, we’re going to have a look, I think we’ve raised £700 so far. So what I want you to do this week is actually vote for the person you think has the best moustache. You’ll see them all in the photo.
Also YPC Property Fund. Now what we’re looking at doing is launching this in December and January so I’ll be giving you more and more over the coming weeks about property funds, the pros, the cons, all the bits and pieces about it, and we’ll be doing our special, a specific video on that.
Also too we’re going to look at Abbey and the internationals beginning to pounce, so the UK banks on their knees, Abbey has come out with a fantastic offer that’s just basically looking at getting market share. So the good thing is competition coming back and the next point is competition back – the Bank of Essex, alright? What they’re suggesting is a community bank in Essex which is great news. So we’re starting to hear there’s competition coming back.
But there’s still things like UK’s sick man status, so we’ll have a look at that, the fact that the Queen weighs in for the savers saying: Hey, we’ve got to change things.
We’re also going to look at 2010 house price predictions and what we’re going to do over the next week or so, or in fact the next five weeks is sort of just start to introduce what people are thinking, what experts are thinking over the next year and what's going to happen. But it's quite interesting so we’ll look at that.
My thoughts for the week: Look, house prices or asking prices are dropping and then what will happen is the actuals will drop because of that and the reason is that I mean it’s the same here, we’re starting to get developers come to us and say: If you can do this before Christmas then we’ll give you this. So prices, you know there’s some really good deals around and especially if you’ve got cash because the problem is mortgages aren’t taking four weeks so getting a mortgage before Christmas is a bit iffy, so a lot of them are wanting cash buyers. So yeah, what I’ve said there, you know, hold tight folks, we’ll be back in March because what’s going to happen is you’re going to see lots of negativity and you’re going to see lots of stuff through the Christmas period but don’t worry it’ll all come back and you know March will be back in full swing again. Yeah, if you have cash, we have deals. There’s lots of stuff, developers coming to the market, so if you’ve got cash you know, if you’ve got £50,000 or £100,000 in cash, or even more and you want to start getting some absolute bargains then now is the time to be giving us a call and saying: Hey, I’ve got this money, what can I do with it? Get me some deals. Because if we know that we’ve got people with cash I can go out and James can go out and negotiate those deals and there are some fantastic deals. You know we’re talking in the region of 40-50% off current market values in some cases which are already 40-50% off you know what they were in 2007. So some really awesome deals about. Yeah, they’re just going to need completion before Christmas – that is going to be the big catch thing. So cool, okay, let’s get into it.
So Movember, Week 3. As you can see my lovely tache, Murray has got a little bit creative there coming up with porn names, I think he was on a porn star website and so he’s named Simon as Mitch Wrangler, myself as Harry Pearl, and James as Lenny Rockwell and I’m sure the other guys will be getting into this. But you can see that we’re all actually starting to get quite a bit of facial hair and certainly what we want you to do is jump onto the website, it’s movember, ukmovember.com/mospace and then go to 21009, that’s actually for the team and you can see we’ve raised £696.02. So we want to try and raise some more for that. Excellent. Okay. So let’s get into it then.
So Abbey throws down the gauntlet, the banking gauntlet. Now what they’ve said is we’re not talking about mortgages here, we’re talking about an actual current account. Okay? So they’ve come to the party. The thing with this and this is where a lot of the international banks, they haven’t been affected by the credit crunch like the UK banks so they’re just waiting to get in and trying to get these things in. You know, Santander or Abbey… Okay, Santander is the Spanish bank, Abbey are owned by Santander. They’re coming out but what you’re finding is you’ve got Bank of China, you’ve got Handels Bank, you’ve got all these other banks that are trying to get into the market and really just pounce and take advantage and get that market share now because they know as the market comes back it’ll grow and they’ll be able to edge some of the UK banks. And that’s one of the problems right now, is the UK banks are on their knees. You know they’re trying to restack their balance sheets but it’s taking a long time. Okay? Because they have got a long way to go. So all this is saying, I think they’re paying 6%, they’re offering 6% on a current account, no fees whatsoever, no charges for being overdrawn, none for using cash machines abroad, no foreign exchange fees, no charges for contentious things like bounced cheques, misdirected payments. So you know it’s actually a really really good offering. And this is what happens when you have competition. What actually happens is you’ve got you know security and that sort of thing and then we move into the competition phases, next we’ll move into the innovation where people will start innovating to gain more market share. Well, you know what they’ve done there is just laid down the gauntlet. An innovative product that’s you know, very competitive, so you know… Good on Abbey! And I hope some of the other banks follow suit. I don’t see them doing it as much as they probably should. Okay.
Bank of Essex. Basically what this is a lot of small businesses going to their local bank in Essex saying, and their bank is saying: Look, forget about it, we can’t lend to you. So then those small businesses are going to the councils and saying: Come on guys, this is ridiculous, we need to lend, we need to borrow money, do something about it. And so the council has now petitioned the FSA or they’re looking at doing this, to start a community bank which I think is a fantastic idea. Again competition coming back in and that’s what we want to see, more of this because this is good stuff for the recovery. Okay.
UK is “sick man of the world” says credit checker Experian. Now I love this because I read this and I thought: Wow! Hold on! Experian, what are they saying? But then actually when you get down into it in Britain there has been little demand by the banks for Experian’s credit information and data services since most firms are trying to build up their capital cushions and focus on conserving cash rather than new lending. Now of course Experian is going to say: UK is “sick man” because they’ve stopped using their services. So you know you’ve always got to read behind the headlines on the things but it is true most of the banks are still on their knees, they’re still just trying to create those capital cushions, or banking or Basel ratios, build up that capital rather than lending new lending. The lending they are doing you know you’ve got to put huge deposits in, it’s to people with cash, it’s the people that are pretty much no risk. Okay? Because the banks can’t afford that risk.
Government’s shocking vow for greater protection for savers. The Queen announced today that the government would provide greater protection for savers and taxpayers. You know, will she? I mean interesting stats here. It doesn’t deter from the fact that 9 out of 10 higher rate tax payers are actually losing money on the cash based savings account once tax and rising inflation is taken into account. And it’s as much as 8 out of 10 for basic rate tax payers. So if you’ve got cash in the bank right now it’s actually, you’re losing money, it’s costing you to leave it in there. So you know, and look there is always a place for cash but what you want to be doing is looking where you can actually put that. Okay? But yeah, quite interesting. What they’re talking about is you know they need to look after savers but in truth you know they’re putting, they’re not going to offer interest rates that are ridiculous because they’re going to lose money on it. They’re only getting, if you look at the Libor rate at the moment it’s about 0.5%, so they’re actually not going to make you know that much more because that’s what they’re earning on their deposits at the Bank of England. So as much as government is saying that, look, I think the government at the moment is a bit of a toothless tiger. A lot of stuff they’re putting in, you know, I don’t think will ever actually come about because we could have the Conservatives in. I think what Brown is hoping for is that we’ll go through some amazing recovery and then he’ll pop the election. Okay? Obviously it has to happen sometime next year, but yeah… So I think we’re seeing a lot of stuff come out that really is toothless and probably will never come about. Okay.
So house price predictions for 2010. Just running down. So Savills are saying down 6%. Yeah, you’ve got Ernst & Young down 5%. You’ve got Nationwide Building Society 0%. So Zoopla! which is a property website that values property effectively, up 2-3%. You’ve got UK Economist for Citibank or Citigroup up 5-10%. And that’s the 5% that they’re quoting now. Now, interestingly, alright, and I just want to because it says here in this particular one, Ernst & Young down 5%, but actually what it says is: Next year we expect property prices to fall, there will always be a fall in activity after Christmas (which we’ve spoken about) and over the course of the first six months we expect falls of about 5%. There will be… There will not be another dramatic slide in house prices but certainly there will be falls in the first quarter and possibly in the second quarter. So what they’re saying is fall drop and then peter out. Of you look Melanie, I’m sorry Yolande Barnes from Savills, she’s saying much the same thing you know, 6.6% drop, 2.7% rise. Okay. And this, I’ve been saying this for two months now I suppose, but it’s interesting, you know they’re all similar things. The first six months will be slow, then it will sort of come out and that will be us out. You know, so what you’re looking at now standing in November is you’ve got until let’s say June next year. You know, look there’s always a worst case, and I’ve always said go to Capital Economics website and you’ll find the worst case and I think they’re saying about 30% which is interesting because back in 2007 they were saying 20%. But you know, so you can look at things like that. But you know we’ll keep going and having a look and then I’ll publish a blog with all this data of what people are saying and I’m also going to weigh in on the things. That’ll probably come out in January.
But anyway guys have a fantastic week and we’ll see you next week!
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