Sunday, July 6, 2008
Bonds linked directly to house prices – what a great idea (not!)
"Falling house prices are delivering a double blow to tens of thousands of investors. Not only is the value of their homes dropping, they are also seeing returns on their savings eroded because they have fixed-term bonds linked to the value of property. And there is little anyone can do to protect their investments because of expensive exit penalties or onerous terms and conditions that prevent them getting hold of their money until plans mature. Banks including Abbey, Barclays, Bradford & Bingley, Newcastle Building Society, Skipton Building Society and Saga are among those that have sold these bonds, which link profits to the value of the Halifax House Price Index (HHPI). Halifax itself does not sell such investments."