Two fresh bond series are launched today, with higher interest rates across the board and more frequent monthly interest payments. Here are the headlines: REAL Monthly Income Bonds (Series 7) - 5 year term - Penalty-free redemption available after thirty months - 4.90% pa gross interest payable on the last working day each month (5.00% AER) - Tracks Bank of England base rate between 0.75% and 5.0%, plus 4.4% - Secured on UK property Compared with the previous series of Income Bonds we have increased [...]
Two new loans since November are keeping bondholders' investments in profitable use. One is financing a residential redevelopment nearing completion in Tonbridge, the other relates to the conversion of a former Surrey nursing home into modern studio flats. Both loans are secured by first charges over the properties. Meanwhile a previous loan has reached maturity and the borrower has repaid the advance, with full interest. Taking account of these recent changes to the loan book, the loan-to-value ratio reveals that [...]
Today's announcement by the Bank of England Monetary Policy Committee ends months of speculation about the timing of the first base-rate increase for more than a decade. The rate has risen from 0.25% to 0.5% pa. The previous increase was as long ago as July 2007 when the rate moved from 5.5 to 5.75% pa. REAL Income Bonds offer investors a base-rate tracking feature. The Bonds' marginal interest rate of 3.5% tracks any changes in base rate between 0.5% and 5% [...]
REAL Bondholders received their half-yearly interest payments on time today, coinciding with the Bank of England's broadest-yet hint that interest rates could rise in the 'relatively near term'. Mark Carney, BoE Governor, suggested last week that it was time for the bank to 'ease its foot off the accelerator'. The next opportunity for a change in interest rates is the Bank's monetary policy committee meeting on 2nd November. Investors in REAL Income Bonds will start to benefit from higher interest when base rate [...]
The latest quarterly review of security cover for REAL Bondholders - comparing the value of bonds against the value of property security - shows a loan-to-value ratio of only 44.8%. A figure below 50% implies that sufficient returns would be generated to redeem Bondholders' investments even if property values were to slump by half. REAL director Alan Bate comments, "We continue to see strong demand for the finance provided by REAL Bonds with availability of generous first and second-charge security. [...]
Investors seeking higher income from fixed-term products are facing a surprise split among policymakers on the Bank of England’s Monetary Policy Committee. Last week’s decision once again forces investors to plan for potential interest rates increases. Sparked by concerns over rising inflation, the rate-setters voted by a 5-3 majority to keep interest rates at the current level. Analysts had expected a 7-1 split but two more external committee members unexpectedly joined calls for an increase. The last time three MPC [...]
At the end of May, the latest quarterly assessment for REAL Bonds Series 5 & 6 continues to show generous security cover. Loans represent only 45.4% of the value of the security pool, still well below the scheme’s maximum permitted 75% loan-to-value. Director Alan Bate comments, "We see no reduction in demand for our financing facilities from experienced developers and landlords offering sound security, which will allow us to deploy fresh bond subscriptions well within the scheme's mandate.".
April's interest instalment reaches REAL Bondholders' bank accounts today, representing another payment on time and in full. Income Bondholders earned 4% per annum. Capital Bonds paid out 1.5% pa and are accruing a share of the 33% redemption bonus. REAL director Alan Bate commented, “These payments and the recent loan-to-value covenant test show that investments using Bond finance are performing in line with expectations. We continue to see a pipeline of new investment opportunities where we can deploy new Bond subscriptions."
February's assessment of security cover for REAL Bonds Series 5 & 6 shows that loans represent only 45.2% of the value of the security pool. Director Alan Bate comments, “The assessment is well below the scheme’s maximum permitted 75% loan-to-value so bondholders currently have much greater security cover. Put another way, bondholders would still be protected if the existing security assets were to halve in value.”
Today’s news of changes on the Bank of England's Monetary Policy Committee once again puts base rate in the spotlight, writes REAL director Alan Bate. Kristin Forbes, one of the nine rate-setters on the MPC is departing at the end of June. Only last week, Ms Forbes gave a strong signal that she is on the verge of voting to increase interest rates due to the UK economy’s robust performance since the Brexit vote and the growing risk of significant [...]