Despite Brexit uncertainties and the slightly torpid state of the economy over the summer, the company continues to see demand for its lending products (writes director Alan Bate). Over recent months we have seen the successful redemption of earlier loans, we have made fresh advances in accordance with our lending mandate, and also have a healthy pipeline of sound enquiries from prospective new borrowers. Notable features of our current loan book revealed by the latest security review are that [...]
The latest review of security cover for REAL Bondholders – comparing the value of bonds against the value of property security – shows an average loan-to-value ratio of below 25%. 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, “The current low loan-to-value level reflects our increased focus on well-secured first-charge lending. Whilst some individual loan arrangements including [...]
Today's Monetary Policy Committee decision to increase base rate from 0.5% to 0.75% pa brings nearer the prospect of higher returns for investors in REAL Monthly Income Bonds. Interest on these bonds, currently 5% pa AER, will rise while base rate exceeds 0.75% pa. For example if the next MPC change leads to a 1% base rate, monthly bond interest will increase to 5.4% pa.
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.".