REVIEW YOUR FINANCES

The last number of months have been difficult for everybody both personally and financially. We have been fortunate to have been able to assist a large number of our clients in reviewing their finances during this time. We have found that while clients have been affected in different ways, they have found the opportunity to use this time to review their finances very beneficial. Overall where spending, and in some cases earnings, has been reduced a clever budget can help to prioritise outgoings and provide a level of savings at the end of the month.

This has been a national trend with the Central Bank noting that deposits are at their highest levels since 2007.  Overnight deposits comprised 84.4% of all savings, which means bank customers are mainly using current accounts and short-term deposit accounts. The extremely low (and in some cases negative) interest rates on these accounts highlight the need for alternative options for savings and investments. There are a large number of options available for both short and long term deposits that should be considered to provide returns in excess of current interest rates.

MARKET UPDATE

The number of COVID-19 cases has now reached over 10 million worldwide. While the number of cases in the USA continues to grow from the apparently increased levels of testing, a number of states have reversed their decision to ease the lockdown restrictions.  Cases continue to increase in countries with low GDP, while it appears that Europe and Ireland have this contained, for now.

Markets initially took a hit in mid-March but stabilised in late March and April due to the rapid response of authorities. Governments introduced interest rates cuts, asset purchases and corporate funding supports. The ECB increased its pandemic stimulus programme to €1.35 trillion earlier this month while the US Federal Reserve has put together a $3 trillion coronavirus stimulus pack.

The expectation of a vaccine being developed is to provide positivity for longer-term recovery in 2021. However, the fear of the second wave of COVID-19, the reintroduction of lockdown, continuing global tensions, and the ongoing Brexit negotiation will lead to continued volatility in the markets.

A diversified portfolio suitable to your investment risk profile will continue to help you meet your investment objectives while this uncertainty continues.

MORTGAGE NEWS

Surprisingly, the demand for property has not fallen in the midst of the recent pandemic, however, the number of approvals fell by 62% last month. It is assessed by mortgage companies that lending institutions have introduced stricter conditions for mortgage approval.  AIB has stopped lending to those in receipt of the temporary wage subsidy scheme. Permanent TSB will allow customers on the wage subsidy scheme to draw down their loans “subject to their employers providing assurance on the sustainability of their income when the TWSS comes to an end”. Finance Ireland, a non-bank lender which is more than 30% owned by the State, will not allow loans to be drawn down until a return to a regular income can be evidence, while Ulster Bank will insist that where one applicant in a couple is on a wage subsidy, the second applicant who is not must be able to cover the entire loan by themselves. This will make borrowing very difficult for a lot of couples. The speed of our economic recovery will hugely affect the levels of approval and lending for the foreseeable.