InvestmentsApr 28 2014

Morning Papers: MMR to force first timers out of market

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The Mortgage Market Review came into force on Saturday, and according to property group Savills could spell the end of interest-only mortgages for individuals and young families trying to get on to the property ladder for the first time.

Savills said more people will opt to rent due to the new loan to value criteria, which will push up rental costs making it harder for people to save for a deposit. Furthermore, the changes will see would-be borrowers give more detail about their spending when they apply for a home loan.

The Guardian reported that Lloyds Banking Group said the changes meant interviews with new new customers could take around 15 minutes longer, taking the average length up to around two hours. Others have reported inquisitions lasting several hours.

It said the additional questions would be focused on “imminent changes to their lives that can be backed up with evidence”.

FTAdviser reported last week on the dangers of the way the rules are being interpretted for remortgage borrowers, citing an example of a couple that have been prevented from downsizing their loan due to failing a new tougher affordability test.

Aim stocks now stamp duty exempt

From today (28 April), the Alternative Investment Market will become exempt from stamp duty, meaning investors will no longer have to pay the 0.5 per cent fee when they buy Aim stocks, the Daily Mail reports.

It is all part of the government’s drive to attract institutional and retail investors to the growth market, which will make it cheaper and easier for companies to tap the market for cash.

According to the Mail, traders are expecting the stamp duty abolition to have a “similar effect as the inclusion of junior shares in Isas had on Aim in August”.

RBS to introduce incentivised pay

According to the Telegraph, the Royal Bank of Scotland is set to introduce an incentive-based allowance for key employees to mitigate the effect of the bonus cap forced on it by the government.

The board, headed by Sir Philip Hampton feels that if taxpayer-backed RBS is to remain competitive in attempting to attract top bodies, it needs to maintain incentive pay.

However, the board will face difficulties in winning support as UK Financial Investments, the organisation responsible for handling the taxpayers’ 81per cent stake in the company, forced RBS to abandon its original scheme to award share incentives equivalent to two-times salary.

Apple prepares $17bn jumbo bond sale

Apple is preparing the groundwork for another debt sale in the region of $17bn that could rank as “the second-largest corporate bond sale of all time”, the Financial Times reports.

Last week, the tech giant said it planned to increase its share buyback from $60bn to $90bn, funded by domestic and international bond sales.

Apple plans to use proceeds from the debt sale to fund the buyback rather than tap its $150bn cash pile.

According to the FT, a foreign debt sale would probably target the eurozone, where interest rates are lower than in the US, and “diversify Apple’s debt investor base”.

CBI Scotland chief to retire

Iain McMillan, the director of CBI Scotland, has announced he will retire following Scotland’s independence referendum, the Guardian reports.

Mr McMillan revealed on Saturday that he planned to retire less than a day after the CBI revealed it wanted to reverse a decision to formally register as a “no campaigner” with the Electoral Commission, which led to 13 organisations leaving the organisation.

Pfizer weighs takeover options

US pharmaceutical group Pfizer is weighing its options for a takeover of rival AstraZeneca after the UK pharmaceuticals company rebuffed a second approach by the US drugs group, according to the Financial Times.

The Viagra maker confirmed it had contacted AstraZeneca at the weekend in a bid to renew discussions over a deal that would be “one of the largest in the industry”.

The US group said it had made a preliminary, non-binding indication of interest to the board of AstraZeneca in January for a cash-and-shares deal that valued the UK company’s equity at £58.8bn.

Forex investigation expands

The Financial Times reports US criminal prosecutors have flown to London to question individuals as part of their probe into the alleged rigging of foreign exchange rates.

The Department of Justice invited several UK-based currency traders “on the periphery” of the investigation to attend “voluntary interviews” in London rather than the US, people familar with the DoJ told the FT.