Venture capital investors are now looking long and hard at the opportunities offered by new online lending platforms, which are springing up in opposition to the banks and traditional lenders.
One such US platform, Lending Club, has recorded more than US$2 billion in loans made to date, with others in the UK and Australia jostling for a position in this lucrative new marketplace.
A recent survey has revealed that over 50% of British SMEs (Small to Medium Enterprises) expect to grow in the next year, indicating that optimism about an economic recovery is starting to spread.
The survey was conducted by BDRC Continental and commissioned by a business finance taskforce, set up by the UK’s six largest banks.
Recently-released figures from the Australian Prudential Regulation Authority (APRA) show the number of new home loans being approved has risen sharply (up 28% in the June quarter). This indicates that the residential property market is beginning to recover.
Loans to property investors are up 35% to $27.8 billion in the quarter, making property investment the fastest growing category, while owner-occupier loan approvals also rose sharply, up 25% to $51.2 billion.
The Australian’s Michael Bennet has highlighted concerns being felt in some quarters about the rising number of high LVR (loan-to-value ratio) interest-only loans being written by the big banks.
New data released by the Australian Prudential Regulation Authority (APRA) showed that over 30% of loan approvals for the June quarter were high LVR. Such loans are considered higher risk because they are for more than 80% of the home’s value.
Many businesses have dozens of financial reports that can be overwhelming for the owners to decipher. Financial expert Anthony Keane suggested that business owners can simplify their financial reports by focusing on the three most important reports: the cash flow, aged debtors, and profit and loss statements.
Cash Flow Statement
The cash flow statement answers one of the most fundamental questions for business owners: whether their business has enough money to pay its bills. Understanding the cash flow statement enables the owners to check for cash flow challenges, conserve cash flow or arrange financing if necessary.
The Reserve Bank has cut the cash rate to a historic low of 2.5%. This has led to some speculation about whether it is a good time to lock in a fixed-rate mortgage.
According to commentator Penny Pryor, doing so means one is betting against the banks and anyone considering a fixed loan should understand the benefits for their personal situation.
A recent survey has revealed that retirees are less optimistic than before. The survey, conducted by ME Back, indicated that most households were feeling slightly more optimistic about their finances. The only exception was the retiree group.
The survey showed a drop of 5% in the ‘financial comfort’ category for retirees over the past six months. The retirees stated that they were feeling more worried about their income stability, investments and living standards.
Creating a budget is often easy to do, the difficult part is following it. Fortunately, there are ways to create a realistic and workable budget and follow it successfully.
It can be easy to forget the ‘fun’ component in a budget, but a realistic budget includes an entertainment and leisure component.
Credit cards can be a convenient way to make purchases but they can be costly if they are not used with care.
Fees and Interest
Credit cards often attract a foreign transaction or currency conversion fee when used overseas. Interest rates are another factor to be careful with. If the entire amount is not paid off by the interest-free period, the outstanding amount will attract an interest payment, which can be more than 20% a year.
Living in debt can lead to high interest payments and possibly even insolvency. Symptoms of excessive debt include making only the minimum payments and maxing out credit cards.
Those with excessive debt are often those who make only the minimum payments on their credit cards. Paying only the minimum amount can mean that it takes decades for the cardholder to pay off their credit card debt, instead of months or a couple of years.