ECU IN THE MEDIA
The Scotsman - November 2005
Forex scheme for mortgages
Forex scheme for mortgages
Jennifer Hill Personal Finance Editor
Aimed at high-net-worth individuals, the interest-only product sees the capital sum borrowed signed over to the UK's largest debt management firm, ECU Group, which shifts the debt into currencies it expects to weaken against sterling. It is moved an average of six times a year - in the past 12 months switching to Swiss francs, euros, sterling, dollars and yen.
If the moves pay off, the sum owed, when converted back to sterling, is lower. ECU has cut clients' debt by 6.4 per cent in the year to date, wiping £64,000 off a £1 million loan.
"Until now, ECU has focused solely on London, where it's now attracting £30-35m per month," Capital Exchange managing director Duncan Graham told The Scotsman. "But property values and income in Edinburgh are far higher than they'd thought and we felt this product could be marketed here and in other parts of Scotland."
The product has attracted strong demand among Scotland's advocates and solicitors, as well as buy-to-let investors, keen to free up capital repayments to expand portfolios.
Customers - who must earn at least £100,000 and be looking to borrow a minimum of £300,000 - also make "phenomenal" savings in the cost of servicing the loan, claimed Alan Munro, Capital Exchange's marketing director.
Interest is charged at the London Inter-Bank Offered Rate for the chosen currency, plus a fixed 1.5 per cent mortgage lenders' margin.
As inter-bank rates in other countries tend to be lower than UK rates, borrowers typically pay less, forking out just 2.9 per cent, on average, last year.
However, costs and risk are high. The arrangement fee is 0.5 per cent of the loan and there is an annual management charge of 1 per cent. ECU also takes a bonus of 20 per cent of debt reduction. And adverse currency movements could see the amount owed surge, rather than tumble.
"The managers don't get it right every time," Graham said. "Investors are prepared to accept risk with their ISAs, pensions and equity investments, and they must be prepared to accept risk with this too."
scotsman.com
An innovative new business aims to reduce Scottish mortgages worth tens of millions of pounds within the next year by speculating on money market movements.
Aimed at high-net-worth individuals, the interest-only product sees the capital sum borrowed signed over to the UK's largest debt management firm, ECU Group, which shifts the debt into currencies it expects to weaken against sterling. It is moved an average of six times a year - in the past 12 months switching to Swiss francs, euros, sterling, dollars and yen.
If the moves pay off, the sum owed, when converted back to sterling, is lower. ECU has cut clients' debt by 6.4 per cent in the year to date, wiping £64,000 off a £1 million loan.
"Until now, ECU has focused solely on London, where it's now attracting £30-35m per month," Capital Exchange managing director Duncan Graham told The Scotsman. "But property values and income in Edinburgh are far higher than they'd thought and we felt this product could be marketed here and in other parts of Scotland."
The product has attracted strong demand among Scotland's advocates and solicitors, as well as buy-to-let investors, keen to free up capital repayments to expand portfolios.
Customers - who must earn at least £100,000 and be looking to borrow a minimum of £300,000 - also make "phenomenal" savings in the cost of servicing the loan, claimed Alan Munro, Capital Exchange's marketing director.
Interest is charged at the London Inter-Bank Offered Rate for the chosen currency, plus a fixed 1.5 per cent mortgage lenders' margin.
As inter-bank rates in other countries tend to be lower than UK rates, borrowers typically pay less, forking out just 2.9 per cent, on average, last year.
However, costs and risk are high. The arrangement fee is 0.5 per cent of the loan and there is an annual management charge of 1 per cent. ECU also takes a bonus of 20 per cent of debt reduction. And adverse currency movements could see the amount owed surge, rather than tumble.
"The managers don't get it right every time," Graham said. "Investors are prepared to accept risk with their ISAs, pensions and equity investments, and they must be prepared to accept risk with this too."
scotsman.com
The ECU Group plc is
registered in England No. 2296619 and is authorised and regulated by the
Financial Services Authority © 2009