BROKERS SET TO INTRODUCE MORTGAGE FEE - The credit crunch, coming from losses to banks through irresponsible lending, has made it more difficult and more expensive for banks to borrow money. Banks have now started to pass on their difficulties to the broker channel - they are withdrawing some products, cutting commission on others, and in Ulster Bank's case, pulling out completely. This is serious because half of the mortgages sold in Ireland each year are through the broker network. PIBA is holding a brokers conference today
Jack Fitzpatrick, the Chairman of the Professional Insurance Brokers Association, says that the move by the banks is similar to waking up in the morning and finding out that 50% of your wages has been slashed. He says it is inevitable that brokers will have to pass on the costs of the cut in commission. He says that consumers need to start knowing the difference between partial and independent financial advice. He adds that the broker market has been enormously beneficial for consumers. Brokers are effectively the 'on the ground consumer watchdogs' making sure that banks come up with competitive and innovative mortgage products, Mr Fitzpatrick states. These products would include tracker mortgages and interest only mortgages. He says that competitive foreign banks have only entered the Irish market because of the influence of brokers.
The PIBA Chairman says a fee is an inevitability if consumers want to have independent advice. He says that the brokers have always received a fee, but it has been paid by the lender, on behalf of the consumer.
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PRIZE BONDS SECURE HAVEN FOR INVESTORS - The Prize Bond Company today reports a 39% increase in net sales for 2007, its fiftieth year in business. The value of online sales grew by over 72% in the year, and total sales mounted to a record €143.2m. The value of prizes paid out during 2007 was €15.9m, up 15% on 2006.
Michael O'Keeffe, chairman of the Prize Bond Company, says that if someone has €1,000 in prizebonds, the odds of winning are five to one in any 12 month period. He says 2007 was a great year for the company. It changed its prize structure, by increasing the monthly jackpot from €150,000 to €0.5m. It also introduced a bigger jackpot at Christmas and Mr O'Keeffe said the company plans to have three or four €1m jackpots this year. The most important factor behind its success, Mr O'Keeffe points out is the security issue. With all the volatility in the stock markets recently, prize bonds are seen as a secure investment.
MORNING BRIEFS - The world's biggest retailer, Wal-Mart, is restricting sales of rice at its Sam's Club chain. Sam's Club, which has 550 outlets in the States, is Wal-Mart's cash-and-carry division. It says customers can buy a maximum of four bags per visit. Wal-Mart owns British chain Asda, and thoughts are that rice rationing could now be introduced closer to home. Rice is already being rationed by shopkeepers in Asian neighbourhoods in the UK to prevent hoarding.
*** Benchmark Thai rice prices leapt more than 5% to a record high above a $1,000 a tonne - and that is before big regular purchases from major buyers Iran and Indonesia. Today's price of $1,000 this morning, compares with a high of $383 four months ago in January.
*** Elan says that in the first three months of its financial year revenue increased by 22%. It says its total revenues for the year will approach $1 billion and that it will achieve its target of having 100,000 patients on MS treatment Tysabri by the end of 2010.
*** After the closing bell in New York last night, Apple and Amazon reported quarterly results. Apple said its second-quarter profit rose 36%, more than analysts estimated, after selling over 2 million Macs, and on the popularity of the new Mac Book Air. That was the biggest quarterly gain in sales for any computer maker so far this year. Amazon, the world's biggest internet retailer, said earnings rose 29% on electronics sales but it forecast that annual profit would be lower than previously forecast.
*** On the currency markets today, the euro is trading at $1.5854 cents and 80.13 pence sterling.
