Podcast Summary
UK Lenders Tighten Mortgage Approval Process: UK lenders are increasing their scrutiny of mortgage applications, focusing on past credit histories and property valuations, even for those with strong credit ratings.
Lenders in the UK are becoming more stringent in their mortgage approval process due to the subprime mortgage crisis in the US. This is affecting even those with strong credit ratings, who might now face difficulties in getting mortgages or loans. Lenders are taking past credit histories more seriously, and even small blemishes like missed payments on mobile phone bills could impact mortgage applications. Additionally, property valuations are also being scrutinized more closely. On a lighter note, the Capital Ideas podcast's new edition, hosted by Capital Group CEO, Mike Gitlin, offers insights from investment professionals about their best mentors, mistakes, and next steps. Don't forget to celebrate Mother's Day by ordering gifts from 1800flowers.com/acast and save up to 40% off Mother's Day bestsellers.
Stricter Lending Practices and Alternative Investments: During economic downturns, lenders tighten requirements for mortgages, requiring larger deposits, family guarantees, proof of income, and good credit history. Alternatively, investors can consider exchange-traded commodities (ETCs) as a less volatile investment option, accessible through Individual Savings Accounts (ISAs).
Lending practices are becoming more stringent due to the economic impact of the subprime mortgage crisis. Some lenders are relying on automated property valuations, which can sometimes misrepresent property values. To qualify for a mortgage, borrowers may need larger deposits or guarantees from family members. Self-employed individuals may need to provide more proof of income. Credit history is becoming increasingly important, and minor issues could make it harder for some people to get credit. Additionally, exchange-traded commodities (ETCs) offer an alternative to traditional investments like bonds and equities, allowing investors to trade commodities like oil futures on the stock market with less volatility. ETCs can even be put in Individual Savings Accounts (ISAs).
Invest in oil with longer-term contracts for stability and additional benefits: ETF Securities introduces product to invest in oil with stability from longer-term contracts and extra benefits of collateral yield and roll yield
ETF Securities has introduced a new investment product that allows investors to be long on the oil price for a year, two years, or three years, by pricing off longer-dated oil contracts and regularly rolling them over. This strategy is attractive because the longer-term oil prices tend to be less volatile than the spot price and offer additional benefits such as collateral yield and roll yield. The collateral yield is the interest earned on investors' money, while the roll yield comes from selling shorter-dated oil contracts and buying longer-dated ones, with the difference contributing to the investment's return. This strategy is particularly useful in a market where the forward curve is in backwardation, meaning the longer-term prices are higher than the shorter-term ones. The product provides investors with a passive way to gain exposure to the oil market while avoiding the need to manage the position themselves. While some may view this as a simple bet on the oil price in a few years, the additional benefits of collateral yield and roll yield make it a more complex and potentially profitable investment strategy.
Creative Estate Planning for Pets and Families: As families grow more complex and individuals seek to provide for their pets after death, creative estate planning becomes necessary. However, these arrangements can lead to disputes among family members, making clear communication and careful planning essential.
People are becoming more creative in setting up trusts and wills to provide for their loved ones and even their pets after they pass away. While it's not common to leave fortunes to animals like Leona Helmsley did with her pet dog, some individuals do choose to do so. However, in the UK, animals cannot inherit property directly, so arrangements must be made through trusts or charities. The increasing complexity of families, with second marriages and children from multiple relationships, has led to a greater need for creative estate planning. However, these more complex arrangements can lead to disputes among family members who may not have been aware of the deceased's wishes. As a result, disputes over estates, even those of relatively small value, are becoming more common. Paula James, a partner at Thomas Vega, shared her insights on this trend and the various ways individuals can provide for their animals after they're gone.
Making Unusual Requests in a Will Can Lead to Disputes: Seek legal advice before drafting an atypical will and consider explaining reasoning to avoid disputes. Keep track of savings account rates and move funds to competitive accounts when initial period ends.
Making an unusual request in a will can lead to disputes, even over seemingly insignificant items. Paula James of Thomas Seger shared stories of disputes over land, garden tools, fabrics, and toys. To avoid potential challenges, it's crucial to seek good legal advice before drafting an atypical will. Additionally, the will maker should consider explaining their reasoning in a separate letter or statement. On a brighter note, some banks and building societies have been increasing their savings deposit accounts' rates, offering higher returns due to the rising cost of borrowing. However, these rates are usually only available for a fixed term. It's essential to keep track of when the initial period ends and ensure your money is moved to a competitive account to continue enjoying the good news.
Importance of saving and resources for informed finance decisions: Explore savings rates at ft.com/forward/money, listen to Capital Ideas podcast for investment insights, save on Mother's Day gifts with code 'acast' at 1-800-Flowers
Learning from this week's FT Money Show is the importance of saving and the availability of resources to help you make informed decisions about your finances. If you're interested in learning more about savings rates, you can visit ft.com/forward/money. Additionally, Capital Group CEO, Mike Gitlin, invites you to listen to the Capital Ideas podcast for insights from investment professionals. In the spirit of Mother's Day, consider giving back to the special moms in your life with discounted gifts from 1-800-Flowers. Use the code "acast" to save up to 40% on Mother's Day bestsellers before the offer expires. Remember, saving and investing wisely are key steps towards financial success. Stay tuned for more financial insights next week.
