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First step on the housing ladder

UK Finance data shows that lending for house purchase was higher in August 2017 than in both the preceding month and a year earlier. Looking at the data first-time buyers borrowed £5.7 billion, 16 per cent more than in July and 12 per cent more than in August 2016. They took out 34,400 mortgages, 14 per cent up on the preceding month and nine per cent more year-on-year. Home movers borrowed £8.4 billion, 18 per cent more than in July and 20 per cent more than in August last year. This equated to 38,500 loans, up 17 per cent on July and 13 per cent on August 2016. Remortgaging by home owners totalled £6.4 billion, four per cent less than in July but eight per cent more than in August 2016. The number of people remortgaging totalled 36,700, down one per cent on July but five per cent higher than a year ago. Buy-to-let lending totalled £3.1 billion, down three per cent on July 2017 and the same as in August last year. This equated to 20,400 mortgages, the same as in July but four per cent more than in August last year. Looking at first time buyers, the proportion of household income taken up by mortgage payments edged up for first-time buyers (17.5 per cent) but was unchanged for movers (17.6 per cent). Overall, it remains low by historical standards. The average amount borrowed by a first-time buyer increased from £138,999 in July 2017 to £140,035. There was a smaller proportionate increase in the average first-time buyer household income, and the average income multiple increased from 3.60 to... read more

Money is there

In its latest review of the UK lending market the Bank of England has reported that the availability of secured credit to households, for example mortgages and second charge loans has increased slightly in the three months to mid-September. This was focused on borrowers with low loan to value ratios (75% or less) and was driven by lenders’ market share objectives. Lenders expect availability of these loans to be unchanged over the next three months. The availability of unsecured credit to households decreased in Q3 and there is expected to be a significant decrease in Q4. Credit scoring criteria for granting both credit card and other unsecured loans appears to have tightened again in Q3, while the proportion of unsecured credit applications being approved falling significantly. Overall demand for secured lending for house purchase fell slightly in Q3. This was driven by a slight fall in demand for prime lending but Lenders expect total demand for secured lending for house purchase to be unchanged in Q4. The data the Bank of England used was supplemented by discussions between Bank staff and major UK lenders Banco Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide and Royal Bank of Scotland. This group of lenders account for around 70% of the stock of mortgage lending, and 50% of consumer credit (excluding student... read more

Take time to study

In the same time it takes to undertake the average degree course, university towns across the UK recorded an increase in average house price of 22.5% (£38,666), according to new research from Halifax. Across 65 university towns, the average house price has grown from £172,179 to £210,845 in three years – an increase of £38,666, equivalent to a rise of £1,074 per month or 22.5% since 2014. The top 10 university towns with the largest price growth are all located in southern England. The largest price growth was in Guildford, home to the University of Surrey, which increased in value by £105,362 and also doubles up as the most expensive university town, with an average house price of £511,673. This is nearly two and a half times higher than the average for all universities. The next most expensive is Winchester with an average house price of £458,228, followed up by Uxbridge where Brunel University is located, (£441,273), Oxford (£424,258) and Cambridge (£397,170). The greatest percentage increase was in Bedfordshire, where house prices increased by 42% from £200,086 to £284,707 in the last three years. This is followed by Coventry, where the average price has grown from £154,573 to £207,974 – an increase of 35%. The least expensive student town is Paisley which has the University of the West of Scotland with an average price of £122,681 – about quarter of average price in Guildford. Others include Bradford (£127,643), Hull (£134,938), Sunderland (£138,548) and Middlesborough... read more

The only way is up

At its meeting ending on 1 November 2017, The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-2 to increase Bank Rate by 0.25 percentage points, to 0.5%. The MPC still expects inflation to peak above 3.0% in October but is expected to fall back over the next year and, conditioned on the gently rising path of Bank Rate implied by current market yields, to approach the 2% target by the end of the forecast period. The MPC highlighted that the decision to leave the European Union is having a noticeable impact on the economic outlook with constraints on investment and labour supply appearing to reinforce the marked slowdown that has been increasingly evident in recent years. Unemployment has fallen to a 42-year low and the MPC judges that the level of remaining slack is limited and consumer confidence has remained resilient. In line with the framework set out at the time of the referendum, the MPC now judges that it can raise interest rates to tighten modestly the stance of monetary policy in order to return inflation sustainably to the target. All members agree that any future increases in Bank Rate would be expected to be at a gradual pace and to a limited extent. The Bank believes that there remains considerable risks to the outlook, which include the response of households, businesses and financial markets to developments related to the process of EU withdrawal. The MPC will respond to developments as they occur insofar as they affect the behaviour of households and businesses, and the outlook for inflation. The Committee will monitor closely... read more

I don’t think so

Financial fraud losses of £366.4 million in the first half of 2017 were 8 per cent lower year-on-year, figures from UK Finance show. The data, which covers payment cards, remote banking and cheques, also shows that the industry prevented over £750 million of fraud during the same period, or 67 per cent of attempted fraud. This compares with £400.4 million of losses and £678.7 million of prevented fraud in the first half of 2016. The new data comes as the banking industry and government join forces to launch the next phase of Take Five to Stop Fraud – the national campaign that offers advice to help customers protect themselves from fraud. Launching on Monday 2 October 2017, the campaign is focused on helping customers to recognise scams and confidently challenge any requests for their personal or financial details by remembering the phrase ‘My money? My info? I don’t think so’. Data for January to June 2017 shows that the industry helped prevent over £500 million in attempted card fraud. Actual fraud losses on cards were down 11 per cent on the same period the year before – to £287.3 million despite card spending rising by 8.4 per cent year-on-year across the six-month period. Card fraud as a proportion of spending equates to 7.5p for every £100 spent, down from 8.7p in the first half of 2016. It peaked in February 2002 when it was 18.9p per £100. Overall there were 937,518 cases of financial fraud, a figure that has remained stable compared with the same period the year... read more

Be aware

In recognition of childhood cancer awareness month, Aegon is reminding parents to check their critical illness (CI) policies and has shared information for child CI claims since 2007. Of all the CI claims for children received by Aegon in the last 10 years, 67% were for cancer. Since 2007, 30% of childhood cancer claims were for brain tumours, 25% were for Leukaemia and the remainder were for other forms of cancer. In 2016, cancer accounted for 83% of CI claims for children. In the last 10 years the Insurer has paid a total of 84 claims for Child CI. These claims have included all ages from children under one to teenagers of 17. Cancer diagnosis and treatment for a child can come with a hefty and unexpected financial burden. Aegon highlights that people often forget to consider the length of treatment, the need to take regular time off work, expensive parking at hospitals, travel costs and buying snacks and food in hospital. Many people might be unaware that their cover includes their children so Aegon are urging anyone with a family to check their policy or speak to their adviser to make sure their children are covered... read more

East Midlands leads the way

In its latest analysis, the Office for National Statistics has said that average house prices in the UK have increased by 5.1% in the year to July 2017 (unchanged from June 2017). The annual growth rate has slowed since mid-2016 but has remained broadly around 5% during 2017. The average UK house price was £226,000 in July 2017. This is £11,000 higher than in July 2016 and £2,000 higher than last month. The main contribution to the increase in UK house prices came from England, where house prices increased by 5.4% over the year to July 2017, with the average price in England now £243,000. Wales saw house prices increase by 3.1% over the last 12 months to stand at £151,000. In Scotland, the average price increased by 4.8% over the year to stand at £149,000. The average price in Northern Ireland currently stands at £129,000, an increase of 4.4% over the year to Quarter 2 (Apr to Jun) 2017. The East Midlands showed the highest annual growth, with prices increasing by 7.5% in the year to July 2017. This was followed by the East of England at 7.1%. The lowest annual growth was in London, where prices increased by 2.8% over the year, followed by the South East at 3.8%. In July 2017, the most expensive borough to live in was Kensington and Chelsea, where the cost of an average house was £1.4 million. In contrast, the cheapest area to purchase a property was Blaenau Gwent, where an average house cost... read more

No change, no change

At its meeting ending on 13th September 2017, the Monetary Policy Committee (MPC) voted by a majority of 7-2 to maintain Bank Rate at 0.25%. The MPC set out its most recent assessment of the outlook for inflation and activity in the August Inflation Report. That assessment depended importantly on three main judgments: that the lower level of sterling continues to boost consumer prices broadly as projected, and without adverse consequences for inflation expectations further ahead; that regular pay growth remains modest in the near term but picks up over the forecast period; and that subdued household spending growth is largely balanced by a pickup in other components of demand. Since the August Report, the relatively limited news on activity points, if anything, to a slightly stronger picture than anticipated. GDP rose by 0.3% in the second quarter, as expected in the MPC’s August projections, although initial estimates of private final demand were softer than anticipated. The unemployment rate has continued to decline, to 4.3%, its lowest in over 40 years and a little lower than forecast in August. Headline and core Consumer Price Inflation in August were slightly higher than anticipated. Twelve-month CPI inflation rose to 2.9% and is now expected to rise to above 3% in October. All MPC members continue to judge that, if the economy follows a path broadly consistent with the August Inflation Report central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations. A majority of MPC members judge that, if the economy continues to follow its current path then... read more

Are You The 1 In 3?

Almost a third (31%) of UK adults have experienced temporary or permanent leave from work due to ill health, a cancer diagnosis or even a death within the family, research from Aviva shows. More than three quarters (77%) of these have seen their finances suffer, equivalent to 12.3 million people. Aviva’s Protecting Our Families report shows the reality of the financial fall-out caused by unexpected illness, with a particularly damaging effect on families with young children. The research shows more than a quarter (27%) of parents with dependent children have suffered a health crisis, with nearly all (91%) of these saying their finances were negatively affected. UK adults who have suffered unexpected health events have noticeably poorer finances. Aviva’s data shows the average monthly income of someone who has experienced this is 24% lower than those who have not (£1,909 vs. £2,518). They also typically have 40% less in savings and investments (£2,991 vs. £5,011). In addition, they have 47% more in average debt (£9,692 vs. £6,573), possibly suggesting many who experience a health crisis are forced to turn to borrowing to cope. UK adults who have experienced unexpected health events or a death in the family have had to resort to a number of measures to get by. Almost two in five (38%) had to apply for benefits or other support from the Government, while over one in five (22%) had to dip into their savings. In addition, 13% cited that they stopped saving for their retirement. One in six (16%) also had to sell their personal possessions. Worryingly, 15% had to either downsize, move back in with... read more

The Deadline Is Approaching

The Financial Conduct Authority will soon be launching a campaign to inform people about the 29 August 2019 deadline to complain about payment protection insurance. This campaign will complement the regulatory and supervisory work the FCA has done – and will continue to do – around PPI. The consumer campaign is being funded by 18 firms that together receive more than 90% of complaints about the sale of PPI. These firms include banks and other providers. The FCA have asked these firms to make a range of improvements to the way people can complain to them about PPI, ahead of the launch of the campaign on 29 August 2017. The improvements should make it quicker and easier for people to complain about PPI or check if they’ve had it. They include redeveloping parts of their websites and online tools, to make it easier for people to check online if they had PPI, complain online about PPI using a simple, straightforward form and find more information about PPI on the FCA and Financial Ombudsman Service websites. The FCA has also worked to ensure that firms are offering accurate, timely and free PPI checking services, which are clearly signposted with information in a format that is easy to understand. In addition, these firms will now offer a simplified process for people who have previously had complaints rejected but now want to make a new complaint about high levels of commission earned from the sale of PPI. This means customers don’t have to provide lots of information a second... read more
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