Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Categorized | Financial, Property

Castle Trust eyes cash-strapped homebuyers

Posted on September 30, 2012

The former head of the City watchdog is to chair a new company that offers cash-strapped homebuyers interest-free loans in return for a big slice of any future house sale profits.

Sir Callum McCarthy, former chairman of the Financial Services Authority, is backing Castle Trust which is offering controversial shared equity mortgages, products that have been snubbed by the big high street lenders and met with muted reception from advisers.

    Castle Trust, which has received $65m of equity investment from buyout firm JC Flowers, will offer 20 per cent of the value of a property on interest free terms in return for a 40 per cent slice of any increase in its value.

    Homebuyers will have to have a 20 per cent deposit and borrow the remaining 60 per cent of the property value from a participating mortgage lender.

    At the time of the launch, none of the big high street banks have signed up to the scheme, restricting the mortgage options for those taking out a partnership loan from Castle Trust.

    Advisers warned that the scheme could bring back memories of the shared appreciation mortgages that were offered by Barclays and Bank of Scotland in the mid-1990s. Borrowers were offered an interest-free equity loan of 25 per cent for 75 per cent of the gain in the property’s value, but many homeowners were caught out by the rapid appreciation in house prices that meant many were unable to move and buy a bigger home as most of the equity belonged to the lender.

    Sir Callum, who presided at the FSA in the run up to the financial crisis before leaving in September 2008, said there were fundamental differences to these earlier shared equity schemes, which he claimed were “badly designed and poorly distributed”.

    “We are very careful to whom we will provide the partnership mortgage to. We won’t offer it to somebody over the age of 55, while previous products were offered to people who were clearly too late in their life cycle,” he said. Castle Trust will also share in 20 per cent of any fall in the property’s value, and the scheme will only be offered on an advised basis.

    But many advisers said they were sceptical of the scheme. “The product isn’t straightforward. There’s a degree of flexibility people would lose and I’m not convinced they will get the best interest rates from lenders taking part in the scheme,” said Patrick Connolly of AWD Chase de Vere.

    Ray Boulger of mortgage broker John Charcol said the product was innovative but borrowers need to understand the risks. The scheme could be a good deal for buyers if house prices go up slowly, remain flat or fall slightly, but if prices rise rapidly, it would prove costly.