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Mortgage Market Active in May –Report

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  • Mortgage Market Active in May –Report

A strong performance in April was followed by an equally active May for the UK mortgage market, which showed no signs of being affected by the slowdown facing the property sector.

There were 65,801 residential mortgages approved during May 2019, up 1.2 per cent compared to the same month in 2018, according to the data from the latest Mortgage Monitor from chartered surveyors e.surv.

This growth comes at a time when activity in the property market has tailed off in many areas, with many local markets showing little signs of growth and it is existing home owners who have driven the mortgage market forward so far in 2019.

According to Propertywire.com, the report found that this is because mortgage lenders have continued to offer competitive deals, despite many having to contend with higher funding costs. May’s lending total did drop back slightly from last month’s figure, falling by 0.7 per cent month on month.

The proportion of loans given to first time buyers and others with small deposits also declined when compared to April’ with a fall of 0.7 per cent. However, this figure is still well ahead of the 26 per cent recorded in March and demonstrates the strong performance of the first time buyer market, even when others are holding off on making purchases.

“While few people are moving when they don’t have to, first time buyers are still desperate to get onto the ladder. Existing home owners, they are being tempted into the market by near record low interest rates. Those looking to switch could save hundreds of pounds a month by moving to a cheaper deal from a rival lender,” said Richard Sexton, director at e.surv.

The proportion of mortgage approvals to borrowers with a small deposit dropped back slightly in May. Large deposit borrowers felt the benefit somewhat, but it was the mid-market which saw the greatest increase in activity. Over the course of the month, 27.7 per cent of all loans went to smaller deposit borrowers, down compared to last month.

Meanwhile the number of loans to their larger deposit counterparts grew modestly from 24.3 per cent to 24.5 per cent. This meant it was mid-market borrowers who increased their share of the market most substantially, growing from 47.2 per cent to 47.8 per cent month on month. This returns activity to the exact level recorded in March.

On an absolute basis, the number of small deposit borrowers dropped from 18,748 to 18,227.

“The strength of the remortgage market means that many mid-market borrowers, who often benefit most from switching, are flocking to lenders in search of a cheaper deal, supported by advice from mortgage professionals,” Sexton pointed out.

Yorkshire had the most favourable market conditions for small deposit borrowers in May and has held its place at the top of the chart throughout 2019 so far. In Yorkshire 34.9 per cent of all loans went to this part of the market, higher than all rival regions. In the North West, the nearest challenger, this figure was 33.7 per cent The only other region to record over 30 per cent was the Midlands, which registered a total of 31.3 per cent this month.

At the other end of the scale, London was once again the most difficult market for these borrowers, with just 17.5 per cent of loans in the capital made to these customers. London was once again dominated by those with large amounts of equity, with 32.8 per cent of all loans going to them. This is ahead of South East, which recorded 27.9 per cent, and Eastern England, which was 25.9 per cent. By contrast, the proportion of large deposit borrowers in Yorkshire was 19.1 per cent and in the North West 19.3 per cent.

“Few people are likely to move to the other end of the country purely in search of a cheap house, but those in, or close to Yorkshire stand a much better chance of getting onto the property ladder with a small deposit,”Sexton said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Ghana/Kenya: Eurobonds to Decouple as Fiscal Challenges Come to Fore

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Ghana and Kenya, two of the sub-Saharan African sovereigns with the highest amount of outstanding Eurobonds, could see a widening of their risk premiums over 2021, according to a Senior Credit Analyst at Redd Intelligence, Mark Bohlund.

Faced with fiscal challenges, the two African nations are expected to return to the Eurobond market in the first quarter of 2021, but this time with bigger risk premiums as investors are expected to incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.

Mark Bohlund said, “Ghana and Kenya are likely to return to the Eurobond market in 1Q21 but see a widening of their risk premiums over 2021 as investors incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.”

With Ghana’s outstanding Eurobonds presently estimated at US$10.3 billion and Kenya’s outstanding Eurobonds put at US$6.1 billion, spreads on Ghana’s Eurobonds will increase over those of Kenya in 2021.

It is likely that spreads on Ghana’s eurobonds over those of Kenya will increase over 2021 as concerns rise over its weak fiscal position and high reliance on commercial overseas financing,” Bohlund stated.

Commenting on the countries’ fiscal positions, Bohlund said both countries are likely to post double-digit fiscal deficits this year, as contracting economies add to already faltering government revenue.

“With interest costs absorbing close to 50% of government revenue, Ghana will struggle to find sufficient cost- savings in other areas to reduce the fiscal deficit substantially in 2021.”

“In contrast to Kenya, Ghana has already cut back its capital expenditure to a bare minimum. The Bank of Ghana stepped up its purchases of government bonds sharply in September and we expect this to continue during 2021.

“In Kenya, part of the solution should be to encourage county governments to raise more revenue, but this will be challenging to implement before the August 2022 elections.

“Having shied away from bi- and multilateral creditors in favor of commercial borrowing, Ghana is likely to struggle to secure sufficient external financing in 2021. This makes increased central bank financing likely and poses downside risks to the cedi.

“Neither Ghana nor Kenya is likely to seek DSSI participation in 1H21 even if they deem that international bond issuance will not be possible.

“We have changed our view and now expect both Ghana and Kenya to issue Eurobonds in 1H21.

“Kenya is likely to continue to draw on funding from the IMF, the World Bank and other multilateral creditors, as well as bilateral financial support from China as the Standard Gauge Railway, continues to bleed funds.”

Bohlund added that the spreads between Ghana and Kenya Eurobonds are likely to widen further as a higher risk of a debt restructuring is priced into Ghanaian assets.

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Insider Dealing: Paul Miyonmide Gbededo Adds Another 612,326 Shares of Flour Mills to His Stake

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Paul Miyonmide Gbededo, the Group Managing Director, Flour Mills of Nigeria Plc bought an additional 612,326 shares of the company.

The management stated this in a disclosure statement sent to the Nigerian Stock Exchange on Monday.

The managing director purchased the shares at N27.75 per share on November 20, 2020 at the Nigerian Stock Exchange in Lagos, Nigeria. Meaning, Gbededo has invested another N16,992,046.5 into the company.

This was in addition to the 3,284,867 shares valued at N91,642,269 and 4,200,852 shares worth N117.62 million purchased by Gbededo earlier in the month of November. Bringing his recent purchases to 8,098,045 million shares worth N226,254,315.5. See the details of the latest transaction below.

 

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FCMB Reports 16.4 Percent Increase in Profit After Tax in Q3 2020

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FCMB

FCMB Group Plc, one of the leading financial institutions in Nigeria, reported a 16.4 percent increase in profit after tax for the third quarter of the year.

In the unaudited financial statements released through the Nigerian Stock Exchange (NSE), the lender’s profit before tax grew by 10.2 percent year-on-year to N4.8 billion while profit after tax increased by 16.4 percent to N4.2 billion.

FCBMB Group Plc expanded gross earnings by 4.8 percent to N48.3 billion during the period under review. Similarly, the bank’s net interest income rose by 30.03 percent year-on-year to N22.7 billion.

The strong performance continued across the board as net fee and commission income increased by 0.29 percent to N5.2 billion. Net trading income rose by 39.4 percent year-on-year to N1.82 billion.

Personnel expenses dropped by 7.9 percent to N6.9 billion during the quarter while general and administrative expenses declined by 7.52 percent year-on-year to N7.6 billion. Largely due to the COVID-19 lockdown.

Loans and advances to customers rose by 10.8 percent to N793.14 billion between December 2019 and September 2020. Total desposits from customers during the same period grew by 26.7 percent to N1.2 trillion.

The bank’s total assets increased by 22.12 percent to N2.04 trillion.

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