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Charcol says rate rise looks remote

The rise in interest rates predicted for later this year is looking increasingly remote following the decision to freeze the base rate for another month, according to Charcol.

The IFA says last week&#39s decision by the Bank of England&#39s monetary policy committee to hold the rate at 4 per cent for another month is no surprise, given the renewed bear market and other weak economic indicators.

Senior technical manager Ray Boulger says the base rate would have to be increased by at least 1.5 per cent to slow down house price inflation. He believes a rise of 0.25 or 0.5 per cent would have no lasting effect.

Boulger says there are tentative signs that house price growth is slowing of its own accord and increasing rates would send out a negative message to the markets and could have an adverse effect on the economy.

He believes there is still good value to be found among discount and base-rate tracker mortgages and suggests if the stockmarket continues its poor performance, borrowers will take advantage of their flexible terms by using surplus cash to reduce debt.

Boulger says: “The base rate rise that most predicted for later this year is looking increasingly remote. An increase now would send the wrong message to the markets and without a strong housing market the economy would struggle further.”


Sandler could help more IFAs keep independence

Ron Sandler&#39s proposals for the future of the independent sector have been met with gratitude from IFAs who have concluded he has made it easier for advisers to remain independent. Sandler&#39s report published this week proposes a “substantial relaxation” of the FSA&#39s Defined Payment System by removing providers from influencing how much and how IFAs […]

Simplified products set to hit the market

A raft of simplified products designed to be sold without advice, pensions from investment firms and cleaned-up with-profits could hit the shelves following publication of the Sandler report.Sandler&#39s three-piece “stakeholder suite” would consist of a mutual or unit-linked fund, a pension and a cleaned-up ringfenced with-profits product. These products would have an initial price cap […]

IFAP highlights £315m wasted by non-taxpayers

IFA Promotion says 5.1 million non-taxpayers would each save an average of £62 if they registered their status with the Inland Revenue.The savings amount to a total of £315m. IFAP says non-taxpayers, including low earners, can obtain form R85 from their IFA, bank or building society to inform the Revenue of their situation.Once the Revenue […]

Pickering proposes new kind of regulator

The Government-commissioned pensions review by Alan Pickering is proposing a new kind of regulator which would supercede the Occupational Pensions Regulatory Authority.The new body – initially called the NKR – would provide advice on codes of practice and have the authority to intervene in schemes at an early stage if it believes there is reason […]

Europe: why persist with value today?

By Rob Burnett, Neptune’s Head of European Equities The Neptune European Opportunities Fund remains committed to a value bias. We see a broadening array of opportunities in diversified industries at compelling valuations today. The most complicated part of the market is the European banks. We are currently overweight in this sub-sector as many banks are […]


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