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Financial dictionary: CDS (Credit Default Swap) What are they? This is essentially a contract between the buyer and seller of debt, designed to protect the buyer from the risk of a default.

Like an insurance policy, the buyer will make a series of payments to the seller of the swap and should the investment default, the swap seller will pay off the remainder of the original debt.

As credit default swaps (CDS) are normally taken out on debt which has a high likelihood of failing, CDS data can be a good indicator of the level of risk in the market.

However, they have been criticised for their lack of transparency, and in 2011 the European Parliament banned uninvolved parties from trading in CDSs on the debt for sovereign nations.

Asset manager Investec has rolled out a new range of mortgagees for professionals, starting at 3.19%. The Investec Professional Mortgages are aimed at directors and partners of professional practices as well as senior executives, managers or business heads with significant influence over the strategic direction of their company.

The minimum income requirement is PS50,000 for qualified professionals and PS75,000 for business professionals, and borrowers will be able to make overpayments when capable. Fixed-rate buy-to-let and residential mortgages will start at 3.19% for up to 80% LTV, while first-time buyers will have access to 85% LTV rates.

The spending power of the pound has dropped by two thirds over the past 30 years, new research has found.

According to Lloyds TSB Private Banking, PS1m in 1982 would provide the same value as PS3m today, meaning the average purchasing power of money has fallen at an average rate of 3.7% over the past three decades.

Over the same period, the average price for a detached property has risen approximately six-fold, from PS45,211 in 1984, to PS273,700 today.

Lloyds TSB Private Banking economist Nitesh Patel estimated that even if inflation rises only in line with the Government's target, it is likely the value of money will continue to fall significantly and decline by more than half its current value by 2042.

Leeds Building Society has launched a new range of fixed-rate Isa products with up to 25% access.

The range includes a one-year product and a two-year product, offering fixed rates of 1.75% and 1.95%, respectively.

Both Isas can be opened with a minimum investment of PS1, and allow unlimited withdrawals of up to 25% of the initial investment without notice or loss of interest.

The products are available now, on a "first come, first served basis," according to Kim Rebecchi, Leeds Building Society's sales and marketing director.

Thousands of homeowners with a Bank of Ireland mortgage are facing steep hikes to their payments from May, as the lender doubles the rates on some home loans.

The bank has been contacting the 13,500 customers who will be affected by the rate increases on its base rate tracker mortgages, most of whom have a buy-to-let loan.

The announcement, which has provoked anger, comes despite the Bank of England base rate being held at a record 0.5% low for four years.

The changes mean that a buy-to-let mortgage holder who is currently on a typical interest rate of 2.25%, made up of the base rate plus 1.75%, will see their rate climb to 4.99% from May 1. Residential mortgage customers will see their rates eventually jump to 4.49% based on the current Bank rate. The changes affect 7% of Bank of Ireland UK mortgage customers, and most have large amounts of equity, amounting to 40% or more, the lender said.
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Publication:Western Mail (Cardiff, Wales)
Date:Mar 2, 2013
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