UK Mortgage Rates and Mortgage Approvals – June 2010 Update

Today I present two regular charts that could provide an indication of what is happening in the housing market. The first shows the monthly interest rate of UK resident banks and building societies sterling standard variable rate mortgage to households (not seasonally adjusted) and highlights that for this data set rates remain at near record lows at 3.99% for May 2010 (actual low was 3.82% in April 2009). Compare this with the retail price index (RPI) of 5.3% and the average mortgage is better than free money with a negative real interest rate.

Calculating historic portfolio returns and particularly my return versus a sensible benchmark

As I’ve explained many times my Retirement Investing Low Charge Portfolio has both a Strategic and Tactical Asset Allocation associated with it. The construction of this portfolio can be seen here. The tactical element is an attempt to squeeze some more performance from the portfolio however I want to monitor the return of my total portfolio carefully to ensure that I am not under performing a simple stocks/bonds allocation. After all why put all the effort in and then under perform.

The Bank of England holds the UK Bank Rate at 0.5%

The Bank of England today held interest rates at 0.5% for the fifteenth month in a row and decided to do no more quantitative easing (QE). This was no surprise to me and just continues with the unspoken strategy that I have previously suggested the Bank of England have formulated. Meanwhile in the real world the retail prices index (RPI) has risen from 4.4% to 5.3% and the measure supposedly followed by the Bank of England, the consumer prices index (CPI), has risen from 3.4% to 3.7%.

My Current Low Charge Portfolio – June 2010

Buying (New money): Since my last post I have had a good month of savings and managed to save 72% of my after tax earnings and pension salary sacrifices. Total new money entering my Retirement Investing Low Charge Portfolio was around 0.8% of my total portfolio value. The allocation was as follows: 42.0% to cash, 8.7% to UK equities, 12.2% to international equities, 2.3% to index linked gilts and 34.8% to UK commercial property. This money was invested outside of tax wrappers and also within a pension.

UK Property Market – May 2010 Update

David Cameron, George Osborne and others are I guess as I write this post working hard trying to pull together the emergency budget that will take place on the 22 June 2010. We have already seen in the press plenty of commentary about the possible increases to Capital Gains Tax (CGT) and the effect it may have on property prices, particularly the Buy to Let (BTL) brigade out there. Personally I’m not seeing them doing anything to engineer a crash (or even significant reductions in values). This is for a couple of reasons:

Buying Emerging Markets Equities

Yesterday I rebalanced my Retirement Investing Today Low Charge Portfolio by moving 0.6% from cash into emerging markets equities (ie buying equities with cash). Emerging market equities are an important part of my portfolio as I explained here.

Investing mistakes I’ve made – not considering investment fund fees

When I first started investing in the stockmarket I was extremely naive. The first thing I did was a search for the share funds that had given the highest return over the past few years. (What is it they say as a warning on many investments – past performance is not necessarily a guide to future performance or similar – I really was naive). Of course that was an actively managed fund. I have now changed my opinion and where possible only buy passive index tracking investments in my retirement investing low charge portfolio in vehicles like Exchange Traded Funds (ETF’s). I won’t go into the justification for passive versus active in this post today as there is plenty of information out there on the web already. A Google search of ‘passive versus active investing’ or ‘Bogle investing’ would be a good start for those that are interested.