Archive for May, 2015

“Real Issues in today’s Financial World”

Bell & Company and  FD Clarity are proud to present our next networking seminar on Tuesday 9th June 6.30pm- 9pm.

Join us and our guests for some nibbles and drinks and use this event as a way to meet experts in the Finance Industry and gain new clients as well as get advice and key advice and Information on the Financial news.

Our Key Speakers and topics include:

“George Obsorne What have you done!?”

Brian Hill, Ardtalla Weath Management, Managing Director- 

Brian, the Managing Director of Ardtalla Wealth Management has enjoyed a successful career within the financial services sector for over 20 years. Brian Will be talking us through the ramifications of the new pension legislation.

“Who would be a landlord!?”

Raymond Crooks, Senior Partner of Thompson Crooks Solicitors and chairman of LANI ( Landlords Association of Northern Ireland)- 

Raymond Crooks B.A. (Hons) M.A qualified 1996 specialises in Commercial and Domestic Conveyancing and Probate and will be talking about the ever increasing ‘red tape’ and requirements for residential landlords. It is vital to know all of the current requirements and Raymond will deliver it in his own inimitatble style.

“Commercial Funding in Northern Ireland”

Wiliam Davey, Director of Adelaide Commercial Finance with 15 years’ experience obtaining people and Businesses finance in Northern Ireland

William will be talking us through the options available for those seeking finance in today’s challenging Market

Click here to RSVP  your place or if you have any questions please call Jessica on 02890 517 047.



Cerberus and Ulsterbank- Loan sales- What is going on!?

In late 2014 it was announced that Cerberus had purchased Ulster Bank’s giant non-performing Project Aran loan book. Cerberus paid £1.1bn for Project Aran which has an unpaid loan balance of c£6bn. The transaction completed in the first quarter of this year and Cerberus and Cerberus Capital management have started to work away.

Project Aran consists of 6,200 loans and 5,400 properties with 75% of the loan balance secured in Republic of Ireland and 20% in Northern Ireland, incredibly 90% of this loan book is in default.

Royal Bank of Scotland stated, “The transaction, which represents RWA equivalent of c£1.2bn as at 30 September 2014, is part of the continued reduction of assets in its RBS Capital Resolution division and is in line with the bank’s plan to strengthen its capital position and reduce higher risk exposures.” Perhaps they should have said, we have no means of resolving this debt on behalf of the Bank’s stakeholders and borrowers!

In recent days Cerberus have agreed to purchase another Ulster Bank Portfolio known as Project Rathlin. The transaction involves a purchase price of £205mn with the portfolio valued at £1.4bn.  This purchase falls in line with the Banks continuing efforts to reduce assets and high risk exposure. Project Rathlin has properties across Northern Ireland including substantial defaulted loans and well know properties in Belfast.

It is understood Cerberus are dealing with the highest loan values and that everything will be for sale. It is clear Cerberus are looking for a return on their investment and have set a time frame for 2 ½ years, which is tight given the substantial size of the Project Aran book. Given the tight time frame assets will be sold off a lower price and a typical sale in possession means a sale price of c60% of market value or even less.

Cerberus and Ulsterbank- Loan sales-

Cerberus Capital Management will manage facilities and some Ulster Bank staff have moved across to this department.

After a slow start, Bell & Company understand debtors in Project Aran will soon be receiving relevant letters from Cerberus and those in Project Rathlin further down the line. This will hopefully bring a resolution to this disastrous and long standing loan book.

Call Bell & Company today on 02890 517 047 to discuss your position with Ulster Bank and/or Cerberus. We have an excellent relationship with both the Bank and Cerberus and can work with you to a solution.

Terry Bell – Director

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You Can’t Delay the Inevitable

Given the nature of our work at Bell & Company we continually meet clients with mortgage difficulties despite the historic low interest rate set by the Bank Of England. This clearly demonstrates the reckless lending pre-crisis of 2008 of which many have fallen foul.

Many borrowers are currently getting by but must be aware a rise in Interest Rates is coming and there is an air of inevitability around the news. It has been predicted that it would take until 2020 for rates to get to pre-crises levels but nonetheless we expect many borrowers to feel the pinch long before then, particularly in areas suffering declining property value.

With 2016 earmarked as the year for a rise in Interest Rates it is vital that borrowers finding mortgage repayments difficult whilst the burden of negative equity lingers in the background act now to resolve the issues. Interest rates are predicted to hit 1.7% in the second quarter of 2017 and many will simply lose their homes merely because they buried their heads in the sand.

The whole economic picture has been revisited by the Bank of England and things are not as rosy as they seem and the Greek crisis too sends the future of European Union into doubt, we still live in a time of economic volatility.

For those finding mortgage payments a trial we would recommend you contact Bell & Company’s resolution team to discuss your options. Our team will always offer the best advice for your situation so call us on 02890 717047.

Many of you may question “why should I call now? I can hang on in there for another year!” The reason to act now is to have a strategy in place well before a rise in Interest Rates. The resolution process can take over a year to finalise and we are sure people will approach us when it’s all too late and the situation is now out of their hands and the lender has control.

If you take a grip of the situation, no matter how dire you think it is, you can minimise the risk to you and your family.

We look forward to hearing from you- contact us now for a free financial review.

Terry Bell – Director

Mortgage rate rise would make buy-to-let ‘unviable’ in 7 out of 10 regions

Property price rises have far outstripped rent increases, narrowing landlords’ profits and making them vulnerable to higher rates

Britain’s two million buy-to-let investors are already anxious about what tax changes or other policies might do to their property holdings under a new government, as even the Conservatives have been less than supportive.

But quite separate to that – and possibly far more threatening – is the risk of a rise in interest rates.

In recent years lenders have been focusing attention on buy-to-let, one of the only points of growth in an otherwise stagnant mortgage market. As a result rates have fallen to all-time lows.

But this has coincided with a period in which property prices have risen, in general, far faster than rents. As a result, yields have dropped to record lows, especially in the South and other costly areas.

It leaves some landlords – particularly those who have bought recently and borrowed the typical maximum of 75pc of the price – vulnerable to even modest rate increases.

With an already narrow margin between rental income and mortgage outgoings, the danger is that a rate rise could push them into a position where they are losing money each month.

The figures, above, show average property prices and average rents for 10 UK regions.

The “mortgage now” figures show the monthly cost of servicing an interest-only mortgage of 75pc of the property value at a rate of 3pc. This is currently a competitive “starter” rate – either on a fixed or discounted basis – for a typical buy-to-let loan with a 25pc deposit.

The “future mortgage” figure is based on taking the same loan, but pushing the rate up to 5.5pc. This higher rate is a typical “follow-on” buy-to-let mortgage rate charged by the biggest landlord lenders.

So if, for example, a borrower came to the end of their fixed rate period and was unable to remortgage to another, cheaper deal, they would typically pay 5pc to 5.55pc.

In this scenario, property investors in seven out of 10 regions would be at risk of negative cashflow, as monthly mortgage costs rose above rents.

What could trigger an increase in loan rates?

David Whittaker of Mortgages for Business, a landlord broker, said there was “no problem with the supply of finance” and any rate rise would be more likely to result from the Bank of England pushing up its benchmark Bank Rate – either in response to a fall in sterling or in the normal course of the continued economic recovery.

The market is now predicting the first rate rise to occur in July next year.

Any political anxiety over, for instance, the prospect of a second Scottish referendum or Britain’s relationship to the EU could weaken the pound and bring that rise closer.

David Hollingworth of broker London & Country said “a weakening in sterling could lead to higher inflation and therefore begin to raise the expectation of an interest rate rise, which could feed through to mortgage pricing”.

He pointed out that many lenders were “waking up to the danger” and increasingly likely to factor in potential rate rises when first advancing the loans.

“Lenders typically want rental income to be 125pc of the mortgage cost,” he said. “And they may well use as the basis of their calculation a much higher rate, such as 6pc.”

That would imply that most landlords had a greater degree of “headroom” than the figures above suggest.

And the figures above are based on average properties and average rents, while many landlords can be assumed to have made investments where yields are higher.

Even so, little of today’s total returns for landlords comes from rental income. Property group LSL said average national total returns for the year to February 2015 were 12pc, of which 5pc was rental income and 7pc property price growth.

It said on average yields across the country were now 5pc before costs, a figure which has been steadily falling for the past two years.


Banks that veto debt deals face being overruled by the courts

Courts will be given new powers to overrule banks that have vetoed debt deals, as part of the Government’s long-awaited mortgage package.

Senior ministers are close to finalising a detailed set of proposals which include an appeals process for homeowners whose debt deals have fallen through.

The so-called ‘examinershiptype’ model will be able to enforce debt deals, representing a major step towards ending the banks’ stranglehold on the personal insolvency service.

Personal Insolvency Arrangements (PIAs) are dealt with through the courts already. Therefore this option is unlikely to cause any major additional workload for the court system.

Both Finance Minister Michael Noonan and Tánaiste Joan Burton yesterday gave their clearest indications yet that the banks’ veto is being effectively removed.

Speaking in Galway, Ms Burton said an “examinership-style” process would weaken the banks’ influence on the Insolvency Service.

“First of all, we want to see a process that if necessary allows an examinership-style process that will result in the decision of the bank or the withdrawal of the bank from the personal insolvency arrangement process,” Ms Burton said.

The Labour Party leader said that banks were “pulling the rug” on debt deals when the proposals put forward were often perfectly reasonable.

“Now it seems to me there (is) very little economic argument as to why a bank from either an Irish national perspective or from a bank perspective should pull the rug on a deal where, say, somebody had a mortgage of €1,500 a month but because maybe one person in the house lost their job or their earnings were reduced, very typical in the crash, they could only pay €700 or €800 a month,” the Dublin West TD said.

“That’s a viable arrangement and if the banks refuse viable arrangements, we want, as in an examiner process in business, a process that will allow that individual, that family, that couple to stay in their home,” Ms Burton added.

Mr Noonan said he expected the Government’s mortgage package to be unveiled shortly.

He agreed with Fianna Fáil TD Michael McGrath that the “final say” on mortgage deals should be taken out of the hands of the bank.

The setting up of the new watchdog service has been called for by mortgage campaigners.

David Hall of the Irish Mortgage Holders’ Organisation, who proposed such a mechanism in a submission to Government, told the Irish Independent: “This is the only real option to allow some balance after the catastrophic decision to give the banks a veto.”

Director of policy at FLAC Paul Joyce said that while his preference was for an independent body, pursuing any option other than the courts could be deemed unconstitutional.

He said the system would likely operate in a similar fashion to examinership court hearings, where a judge can overrule a bank that wants to wind up a company and force a rescue package to be put together for a failing company.

Mr Joyce said that banks were allowing few formal debt deals for stricken homeowners. Just 328 of the State-back personal insolvency arrangements (PIAs) have been put in place since the Insolvency Service began operating in late 2013.


This is out of a total of 1,204 proposed PIAs. He said this meant that only a quarter of the deals proposed were approved. A PIA involves a write-down of mortgage debt.

Asked if FLAC was in favour of banks being forced to do deals that would deplete their capital, Mr Joyce said: “Yes, to solve the problem for once and for all.”

But he stressed that not all of the almost 38,000 mortgages accounts that were more than two years in arrears would be suitable for a PIA, as the income of many of these people was too heavily impaired.

Mr Joyce said PIAs involved those who got one having to live on a set level of income for up to six years. And a bank can claw back money if there is mortgage debt written down and the house is subsequently sold.

Irish Independent

Irish Banking Inquiry: 100% mortgages ‘were detrimental’

The former chief executive of Ulster Bank has told the Irish Banking Inquiry that promoting 100% mortgages was a “detrimental initiative”.

However, Cormac McCarthy denied that the bank was the first in the Republic of Ireland to offer the product.

Ulster Bank’s First Active subsidiary began marketing 100% mortgages in the summer of 2005.

He said by then, rivals banks were already offering the mortgages and he was only “recognising market reality”.

‘Lent too much’

Mr McCarthy added that the financial regulator did not object to the product.

The bank went on to lend about 1bn euros (£745m) of 100% mortgages over the next three years across 4,000 customers.

The parliamentary inquiry, which began in Dublin late last year, is examining the reasons why the Republic of Ireland “experienced a systemic banking crisis” in 2008.

Mr McCarthy, who is now the chief financial officer at bookmaker Paddy Power, told the inquiry that Ulster Bank lent too much money to too few people in the years before the financial crash.

He said the assumptions that underpinned the bank’s lending polices were “seriously flawed” leading to “ill-judged and mistaken” decisions.

Mr McCarthy would not be drawn on his or the bank’s role in one of the most notorious transactions of the the Irish property bubble.

In 2005, Ulster Bank lent the developer Sean Dunne more than 300m euros (£224m) to buy a site at Ballsbridge in south Dublin.

Mr Dunne had planned to create a Dubai-style high rise development in the area but the project did not get the necessary planning permission and the site was eventually repossessed.

Mr McCarthy said he could not talk about it for legal reasons.

He revealed that the executive at RBS, which owns the bank, had encouraged him to get Ulster Bank included in the Irish government’s bank guarantee.

‘Biggest mistake’

When the Irish banks were guaranteed it led to a huge outflow of deposits from Ulster Bank and into the Irish banks.

Mr McCarthy spoke to the Irish government about getting Ulster Bank included but it soon became clear that it would not be possible.

Earlier, the current Bank of Ireland chief executive Richie Boucher told the inquiry that his bank’s biggest mistake was the way it expanded into the UK mortgage market.

Rather than using customer deposits to fund UK mortgages, the bank borrowed on the wholesale markets.

When the wholesale markets froze during the financial crash it put the bank under huge pressure.

Mr Boucher said it was a “flawed model” to lend money without gathering customer deposits and the bank has now moved away from wholesale funding.


Source: BBC News

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