14 July 2010
Mr G Howe
Nationwide Building Society
Dear Mr Howe
I am in receipt of my voting papers and Summary Financial Statement for the year ended 4 April 2010 and despite being an extremely busy person I feel that I can not just ‘cast my vote’ without making comment on the Remuneration of the Directors.
I have studied the detail provided and it is clear from the levels of remuneration for 2009 and 2010 that there has been no acknowledgement by the Directors of the financial difficulties that the country and the banking sector are in. Whilst the Society may have contractual obligations that it is committed to from previous years when times were better, it is completely within your powers to have acted by 2010 on what was clearly a serious problem emerging in early 2008.
Whilst the Society may be one of the strongest in the sector there really is no justifiable reason why anyone on our very small and fragile planet should be worth more than £150,000 per annum remuneration. The situation is made even more distasteful and inappropriate as some of the directors are working for other companies and presumably receiving remuneration from these positions too. How can anyone give 100% to their position if they are working for other organisations too?
It is important that Nationwide Directors wake up to the real world like the rest of us have had to and accept that things are changing. I feel that I have no choice but to vote to re-elect the Board of Directors as what is the alternative? However, morally I feel it is my duty as a member to point out that I am not at all happy with the levels of remuneration or with the Directors apparent lack of acknowledgement that remuneration MUST be reduced drastically to reflect the actual work that any one person, no matter how skilled, can actually contribute.
Wednesday, 14 July 2010
Wednesday, 7 July 2010
Do you have the benefit of an older mortgage linked to the Bank of England Base Rate which has tumbled to 0.5% possibly saving you hundreds or even thousands of £’s each month?
I have received yet another booklet from Mortgage Express, one of the Mortgage Providers who sold products to Buy To Let Landlords at reasonable margins, such as 1.75% above BOE Base Rate before the Credit Crunch. The booklet claims to offer support to struggling landlords. Mortgage Express no longer sells mortgages and seems to have one goal in mind – to reduce their loan book. The message in all their literature has the same theme - either sell up or make lump sum capital repayments to reduce your debt.
Whilst this might not be bad advice for some people it is only right that people understand the motives behind the message ‘we need you to repay your debt as we are in trouble’ – that’s how I read it.
I am not going to offer advice to anyone as to whether they should use any surplus cash to repay their mortgage debt but I do think people should be given a balanced view and consider their own circumstances as repaying their low interest mortgage debt might not be the right thing for them at the moment. I would prefer that people think about things as a whole:-
- Is the debt on their home or on a Business Asset eg Buy to Let? – Business loan interest is often tax deductible and is unlikely to be this cheap again.
- Are there any other debts which are attracting higher interest rates, eg overdraft, credit cards, home mortgage – maybe these should take priority?
- What interest rates can be earned after tax from putting the money in to savings accounts? Yorkshire Building Society are offering 3.5% before tax (2.84% after tax) for a 2 year fixed bond.
- How else can the money be invested and is it possible to get a higher return than the current debt is costing?
- What effect will it have on my tax payable if I repay some of my business debt?
There is a bigger picture than just reducing your mortgage commitment.
I am paying between 1.75% and 2.25% to Mortgage Express for some of my Buy To Let mortgages but my home mortgage attracts a higher interest rate with another provider. It makes no sense to me to repay Mortgage Express any lump sum, I would rather pay off my home mortgage or put it into a savings account earning 2.84% net of tax until interest rates go up, then consider reducing the debts. Never forget that people only become insolvent when they run out of cash so Cash is King.
But on the other hand, I also believe that there is a great opportunity to make a good return at the moment from building individual quality homes – the huge shortage of new build properties brought about by the Credit Crunch can only bring more opportunities for those who can still find the finance to build. So maybe I can get a better return by reinvesting in new build rather than repaying low cost debt. Even buying land and getting Planning Permission to build might be a very good investment right now.
I am aware of course that interest rates can only go up and there is a risk, but business always brings risks and this is one that on balance I believe might be worth taking.