In The News
Help for ‘Mortgage Prisoners’
Good news for the estimated 140,000 homeowners trapped on high interest rate home loans with unregulated or inactive firms, who have been unable to switch to a more cost-effective loan.
The Financial Conduct Authority Chief Executive has now written to the Chair of the Treasury Committee, raising concerns over the issue and detailing plans to publish a consultation paper this spring.
Number of Households Renting Jumps 61% in 10 Years
Office for National Statistics data shows that the rental market has continued to grow steadily over the last decade. The number of UK households in the private rented sector jumped from 2.8m in 2007 to 4.5m in 2017. At the end of the 2017 financial year, the median weekly rent payable across the UK stood at £134.
Young Adults in 2018 Financially Weaker Than 20-Somethings in 2008
Further evidence highlights the financial plight of those aged 22 to 29. Research shows they are less likely to own a home or have any savings, compared with the same age group in 2008. This lack of accessible savings could mean that if they were faced with an unexpected expense, they would get into debt or need to ask the Bank of Mum and Dad for help.
Last-Time Buyer Numbers Increase in Home Purchases
While first-time buyers make up just over 50% of residential home purchases currently, a further 30% of purchases, accounting for approximately 200,000 homes, are being made by buyers aged 55 or older. This research, conducted by the Intermediary Mortgage Lenders Association (IMLA), states that of this group, many are cash buyers, using the large equity reserve in previously owned properties to downsize to their ideal last home and retain the excess cash; 63% of these older homeowners own their properties outright. The IMLA went on to add the caveat, that while only 2.5% of those eight million older homeowners actually move in each year, it predicts that this small cohort will grow exponentially faster than any previous generations over the next 10-20 years.
Subsidence Claims Quadruple
The Association of British Insurers (ABI) reports that the long dry summer of 2018 saw subsidence claims quadruple to the highest level in more than a decade. In just three months of last year, over 10,000 households made subsidence claims worth a total of £64 million. This increase represents the highest quarter-on-quarter jump since records began more than 25 years ago. The ABI advises those who spot cracks in their property and fear they may be experiencing subsidence to contact their insurer for guidance and assistance.
Interest Rates Remain on Hold
The Bank of England (BoE) has once again left interest rates unchanged while reaffirming its belief that near-term monetary policy will remain inextricably linked to Brexit. All nine members of the Monetary Policy Committee (MPC) voted to leave rates on hold following their latest meeting on 21 March. This marks the seventh month in a row that rates have remained unchanged since they were raised from 0.5% to 0.75% in August last year.
Moreover the minutes of the MPC meeting continue to highlight that the future path of interest rates will largely depend upon the outcome of the Brexit process. Interestingly, they also reaffirmed that the policy response to Brexit could involve the BoE adopting either a tighter or looser monetary stance.
Specifically, the minutes said: “The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal, in particular: the new trading arrangements between the EU and the UK; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond. The appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.”
Meanwhile, the US Federal Reserve has announced an end to its three-year drive to tighten monetary policy, saying that it now no longer expects to raise interest rates at all during 2019, amid growing signs of economic slowdown. Fed Chairman Jerome Powell, again stressed that the central bank now intends to be “patient” and stated that: “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy.”
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