Weekly Round-Up: 30th March 2018

Remortgage leads the way

Gross mortgage lending in February is estimated as £19bn. According to the February 2018 UK Finance update on lending, this is 4.9 per cent more than a year ago but it is still below 2017’s monthly average of £21.4bn. The data shows that in February re-mortgage approvals are up over 9 per cent in both number and value compared to February 2017.

The figures suggest an increase in re-mortgage approvals compared to last year. There is speculation that interest rates will rise later on in the year and as a result, borrowers are looking to lock into attractive deals. UK Finance has also seen a continued rise in credit card spending which reflects the growing number of transactions carried out using cards. In conjuntion to this, it has been document that other forms of borrowing such as overdrafts are continuing to fall.

The trade body highlights that real wages continue to be squeezed by inflation, impacting on consumer confidence and retail sales but suggest that the pressure on household incomes should ease in the coming months, as the effect of the fall in sterling begins to fade and the strong labour market leads to a better outlook for wage growth.

In February, we have seen modest year on year growth of commercial lending which is driven by investment within the manufacturing sector. Credit balances have risen at an even faster rate as companies build reserves in the face of economic uncertainty and its effect on longer term business confidence.

Be in control!

Causes of cancer can be placed into two rough camps: those which can be controlled and those which can’t. The latter includes signals such as random changes to people’s genes as they get older, or hereditary mutations. By their nature, there’s not much anyone can do about these risks. But for the many causes that people do have some control over, such as smoking, there’s a potentially life-saving chance to act. Armed with information about what increases risk, people can make changes that stack the odds of avoiding cancer in their favour. Politicians can see where action is needed most. The goal of new data Cancer Research UK released this week is to provide that information.

The data comes from a new landmark study led by Cancer Research UK researchers. It looks at the things in people’s lives that cause cancer and calculates how many cases in the UK are linked to each of these risk factors. Cancer Research UK have done calculations like this before, but this new research uses all the latest available data and evidence to give more accurate estimates. Because some risk factors have become more common since the previous analysis and others have become less common, it’s important to update these figures. The findings, published in the British Journal of Cancer, show that more than 135,000 cases of cancer could be prevented in the UK each year largely through lifestyle changes – that’s around 4 in 10 cases. And while what’s behind these cancers may not come as a surprise, the results confirm how the things we do each day can add up.

The team did this for all the modifiable risk factors and found that in total, more than 135,000 cases of cancer could be prevented through changes such as stopping smoking, keeping a healthy weight and eating a healthy diet. Enjoying the sun safely, avoiding certain substances at work, protecting against certain infections and cutting back on alcohol can also help.

It’s important to say again that this research can’t tell what has caused or will cause an individual’s cancer. The data come from comparing large groups of people. So, while research has shown that, for example, being overweight can increase the risk of cancer, it doesn’t mean you will definitely get cancer if you are overweight. And this is true for the other risk factors as well.

Twice the customers

According to the latest analysis by the Equity Release Council, the volume of new customers taking out equity release plans in 2017 was almost 10,000 more than in the previous year, as the number of people unlocking housing wealth for the first time increased by a third. As a source of retirement finance, equity release is now helping more than twice as many new customers as it was five years ago. More new plans were agreed in the second half of 2017 than in the whole of 2012.

All strands of equity release activity – across new customers, returning drawdown customers and further advance customers – grew in the second half of the year compared with the first, with the 14% rise in overall customer numbers driven by a 20% increase in new customers and a 19% increase in further advances. Returning drawdown activity was more consistent, with the number of returning customers rising 5% from 12,585 in H1 to 13,209 in H2.

Growing interest in the equity release market from consumers is a sign that more homeowners consider housing wealth to be a potential source of finance in later life, and are finding an increasingly flexible range of products enabling them to unlock some of its value. One sign of this shifting mindset is that back in Q2 2016 just 29p of housing wealth was unlocked by over-55s for every £1 of savings accessed via flexible pension payments, following the introduction of ‘pension freedoms’ a year earlier. This rose to 38p of housing wealth for every £1 of pension payments over the whole of 2016, climbing again to 47p during 2017 and reached 56p in Q4 2017, as property becomes increasingly important as a supplementary source of retirement finance.

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Weekly Round-Up: 23rd March 2018

On Debt Row

weekly round up 1According to the Royal Society for Public Health, Vision, Voice and Practice, two thirds (67%) of smokers said that the stress and worry associated with their debt caused them to smoke more. Nearly half (49%) of people who drink alcohol said that they drank more as a result of the stress of having debts. This rose to 62% of people who had used at least one payday loan. The survey titled Life on Debt Row highlights the impact of Debt on behaviour.

Just under half (47%) of respondents (57% of payday loan users) said they did less exercise because owing money meant that they couldn’t afford the costs involved and 65% (80% of payday loan users) said that they were less physically active because they felt too depressed. Over half (60%) of participants – 70% of payday loan users – said they ate less healthily because they couldn’t afford healthy food and two thirds (65%) – 76% of payday loan users – said that feeling depressed led them to eat less healthily while in debt. Over half (53%) of those surveyed skipped meals and three quarters (76%) said that their sleep quality declined. Both of these rose when looking solely at individuals who had used at least one payday loan over the previous 24 months (67% and 87% respectively). Seven percent of respondents said that being in debt led them to take illegal substances for the first time or to increase their usage of illegal substances.

All findings were worse for those who said they had struggled to make their repayments. Eighty percent of smokers smoked more; 61% of alcohol drinkers drank more; 81% did less physical activity because they felt too depressed; 92% said their sleep quality decreased and 81% ate less healthily because they felt distressed about their debt.

Affordable payments

weekly round up 2Research by Halifax suggests the typical mortgage payment accounted for less than a third (29%) of homeowners’ disposable income in the fourth quarter of 2017 compared to almost half (48%) in 2007 (Quarter 3). This means mortgage affordability levels for first-time buyers and homemovers have dropped by 40% since the 2007 peak. This means mortgage affordability levels for first-time buyers and homemovers have dropped by 40% since the 2007 peak.

The significant improvement in affordability since 2007 has been driven predominantly by historically low mortgage rates, despite the first base rate rise in a decade last November. With average house prices rising by 3% in the past year, mortgage affordability marginally improved in the last quarter of 2017, edging down from 29.6% in 2016.This is comfortably below the long-term average of 35%,, remaining low due to a further dip in mortgage rates during 2017 from an average of 2.09% in Q1 to 1.98% in Q4.

There have been substantial improvements in affordability in almost all local authority districts (LADs) since 2007, with mortgage payments falling by at least 30% as a proportion of average earnings in 35 areas. Three-quarters (74%) of all districts have seen an improvement of at least 15 percentage points over the period.

The 10 most affordable local areas are all in northern Britain, whilst the 10 least affordable areas are all in the South. Whilst the comparison of mortgage affordability over the last 10 years shows a vast improvement, when looking only over a five-year period, affordability – on this measure – has actually deteriorated. Whilst the average mortgage rate has fallen from 3.7% in 2012 to 1.98% at the end of 2017, average house prices have grown by 40% in the same period.

Greater probability

weekly rouind up 3Nearly three quarters (74%) of first-time buyers’ mortgage applications via intermediaries resulted in a completion during Q4 2017, according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA). This compares with just over half (53%) a year earlier, as first-time buyers benefitted more than any other customer group from improving access to mortgage finance during 2017.

The quarterly IMLA report – which uses data from BDRC – examines consumers’ success rate in securing a mortgage via the intermediary channel, by tracking their progress from initial expression of interest (seeking a ‘decision in principle’) through to completion. In doing so, it compares the fortunes of intermediaries dealing with first-time buyers, homemovers, remortgagors, buy-to-let (BTL) borrowers and applicants for specialist loans.

UK Finance data recently showed that first-time buyer numbers reached a ten-year high in 2017 . IMLA’s report suggests that this was helped by nearly nine in ten (88%) applicants securing a mortgage offer in Q4 2017 for the third successive quarter, up from 73% a year earlier. More than four in five (84%) of those offers in Q4 2017 went on to complete, compared to 72% twelve months before.

Across 2017 as a whole, 87% of first-time buyer applications resulted in an offer and 81% of those went on to complete: both noticeable improvements on 2016. Overall, it meant that 71% of first-time buyer applicants achieved their aim of securing a mortgage in 2017, compared with just half (50%) in 2016.

On hold for housing

housePeople are putting their lives on hold as they struggle to save towards their ‘dream home’, new research reveals. Almost nine in ten (86%) people living in their first home think it is harder now than a decade ago to make the jump to their second home, according to the Nationwide Building Society poll. The top barriers to moving home by potential second time buyers include finding a home within budget (38%), finding a home in the right location (25%), having a large enough deposit (18%), not being able to cover moving costs (15%) and being in negative equity (8%). One in five (21%) said they have found themselves stuck in a house that is too small for their family or in an area they don’t like due to housing affordability (16%).

The survey of more than 1,000 people in the UK living in their first home found that the average cost of the next property is £370,539, which leaves many buyers still finding themselves in need of a financial helping hand to move. When asked what they would be willing to give up to move up the housing ladder, more than half (55%) said they would forego nights out, followed by eating out (48%) and holidays or weekends away (33%). One in seven (14%) said they would even give up a spouse or partner if it meant they could move up the property ladder, although men (22%) were more likely to choose this option than women (7%). The poll reveals that when it comes to compromising on the next property, a conservatory would be the first item second time buyers would be willing to forgo (35%), followed by a garage (29%), a driveway (22%), and ideal schools (20%). By contrast, the size of the bathroom (11%) the size of the kitchen (11%) and the number of bedrooms (13%) were the least likely items to be struck off the wish list. Just under nine in ten (88%) also said they would consider buying a property that needed renovating if it was significantly cheaper to buy.

Despite the struggles experienced by potential second time movers, one in five (21%) of those surveyed said they weren’t willing to forgo anything at all on the next property they bought. More than half (55%) want their next home to be detached, and more than a quarter (26%) want it to be their forever home (26%). Just over a third (35%) said they were holding out for their dream home.

Weekly Round-Up: 16th March 2018

Be Aware

Close up of credit cardsUK Finance has responded to the Payment Systems Regulator’s (PSR) publication of the outcome of its consultation on authorised push payment scams. The Trade Body for UK Banks said that authorised push payment scams cost consumers £236m in 2017, the first time this data has been collected. There were 43,875 reported push payment scams last year, 88 per cent of which hit consumers. The rest were aimed at businesses. Banks paid back £60.8m, just 26 per cent, of push payment scams.

Push Payment scams include those where a scammer hacks an email account and monitors emails, leaving the scammer able to push payment requests through as if they look like they are from a solicitor, broker, etc., resulting in vulnerable or naïve customers making payments to the fraudsters bank account. These are startling numbers, not least that only 26% of customers have had support from their bank. UK Finance state that tackling fraud and scams is the number one priority for the finance industry, and they have successfully prevented more than £6 in £10 of attempted fraud.

The Industry has also introduced new standards on how banks respond to victims of authorised transfer scams. However there is always more to do, which is why UK Finance are working with the Joint Fraud Taskforce to deter and disrupt criminals and better trace, freeze and return stolen funds.

The price of a Car

Blurred TaxisFigures published today by the Association of British Insurers (ABI) highlight that the average cost of a motor insurance claim has risen to the highest level on record. The latest motor insurance claims statistics for 2017 show that the total amount paid on all motor claims, at £8.1billion, remained virtually unchanged from 2016, and the average claim, at £2,936, was the highest on record. Increases in the cost of theft claims and vehicle repairs contributed to this rise.

The average personal injury claim in quarter 4 of 2017, at £10,816, was the highest quarterly figure since quarter 2, 2016 although the number of personal injury claims in 2017 fell slightly on 2016, with 320,000 claims settled. However, claim volumes remain significantly higher than should be expected given the continued fall in road traffic casualties. Despite the reduction in road casualties, whiplash-style claims reported to the Compensation Recovery Unit have been rising.

Britain’s motorists are paying a heavy price for delays in the Government implementing its proposals to reform how personal injury compensation is calculated (the Discount Rate). With the price paid for the average comprehensive motor insurance policy having jumped by 9% in 2017 to a record high of £481., reforms cannot come soon enough for millions of insurance customers. The ABI estimates that a UK motorist can now expect to pay on average a total of £31,650 on motor insurance during their driving lifetime. This is up 5% on 2014. It equates to more than the price of the average new car, or the average UK salary.

Flat but still up

For sale signAccording to the latest figures from the Halifax, house prices in the last three months to February were 1.8% higher than in the same three months a year earlier, slowing from the 2.2% annual growth recorded in January. House prices in the latest quarter (December-February) were -0.7% lower than in the preceding three months (September-November), the first decline on this measure since May last year.

On a monthly basis, prices grew marginally by 0.4% in February, following two consecutive monthly falls with the average price in February being £224,353, down slightly from November’s high of £226,408. Reflecting the observations made by the Nationwide in their analysis, Halifax also suggest a flat housing market underpinned by a strong labour market. The number of people in employment rose by 88,000 in the three months to December and was almost entirely accounted for by full-time jobs. The strength of the jobs market may finally be benefitting wage growth, with the annual growth rate accelerating from 2.3% in November to 2.8% in December. However, earnings are rising at a slower rate than consumer prices.

Despite the November rise in the Bank of England Base Rate, mortgage rates continue to stay low by historical standards. While it is expected that price growth will remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.

Savings will see me through

Pound coinsNew research shows just under three quarters of people describe themselves as “in control” financially, but worry about money and health issues according to Protection Review’s The Syndicate. Confidence in protection insurance as a support mechanism is high but people are more likely to depend on their partner and savings. The public has low expectations that insurers will pay claims, but strongly believe they should – sometimes even in the event of non-disclosure and they also acknowledge the need for higher premiums for those with habits affecting their health

The 2018 report from The Syndicate, the research arm of Protection Review, has found that most people feel confident in managing their finances. 45% of the sample said they took an interest in their finances, didn’t postpone financial decisions and didn’t find financial matters confusing. 68% said they were good at managing their money with 71% of the sample describing themselves as “in control” of their finances.

Questions on the financial situation of households provided insights into how comfortable people feel about their current financial situation. Having been presented with many options ranging from macro to micro concerns, the results showed that “Having enough money” and “My health” were selected by 45% of the sample and were significantly more popular as choices than the other options presented, with Terrorism and Brexit at 33%. The research identified that people’s two main concerns for the future were their health and having sufficient money. The most likely coping mechanism should the worst happen was to ask a partner or family for support. Despite this, 64% of the sample admitted that they would be uncomfortable asking anyone for financial support and 54% suggested that they would try and seek support from other means first to avoid asking for help.

When asked how confident they were that their savings would support them for longer than 6 months in the event of a loss of income due to illness or accident, 68% of the sample expressed confidence in their savings, compared to 88% believing that insurance would offer support if needed. Insurance was the highest scoring support mechanism with the State scoring 79%.

Weekly Round-Up: 9th March 2018

Flat in Feb

HousesAccording to the latest report from the Halifax, house prices continue to remain broadly flat, as they have since the end of last year. The annual rate of growth has slowed from 2.2% in January to 1.8% in February, the lowest rate of growth since March 2013.

The Lender highlighted positive trends in the labour market which continues to perform strongly with the number of people in employment rising by 88,000 in the three months to December. Notably, this is almost entirely accounted for by full-time jobs. The strength of the jobs market may finally be benefitting wage growth, with the annual growth rate accelerating from 2.3% in November to 2.8% in December. However, earnings are rising at a slower rate than consumer prices.

Despite the November rise in the Bank of England Base Rate, mortgage rates continue to stay low by historical standards. While The Halifax expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.

Mother’s day gift

FamilyFinancial protection may not be top of the list when it comes to Mother’s Day gifts this year, but research from Scottish Widows reveals that 60% of women in the UK with dependent children have no life cover, leaving their families in a precarious situation if the worst were to happen. The research also shows that only 13% of mums have a critical illness policy, leaving many more at risk of financial hardship if they were to become seriously ill.

Three in ten (31%) mums admit their household would be placed at financial risk if they lost their income due to unforeseen circumstances. One in four (25%) claim they could only pay their mortgage for a maximum of three months, while two fifths (39%) say they would have to use their savings to pay for such adverse circumstances. The research also suggests that many mothers are underestimating the value of their role within the household. Almost a quarter (24%) say that they’ve not taken out life insurance because it’s not a financial priority or they don’t think they need it. And 7% of mums without critical illness cover say they’d rather take the risk of not having it than take out a policy.

However, on top of any day jobs, mums spend almost 23 hours a week on childcare and chores such as school runs and housework – tasks which they believe their families could not afford to pay for should the worst happen to them. Three fifths (61%) of women with dependent children also say their household would struggle to complete everyday responsibilities or pay household bills if they were to fall ill or pass away.

Lack of planning is leaving many families in a vulnerable position. When asked how they’d cope should they or their partner not be able to work for six months, three in ten (29%) mothers say they’d rely only on state benefits. And more than half (57%) don’t have the protection of a will or guardianship arrangement in place for their families. With a new Bereavement Support Payment system now in place, which may result in a significant reduction in the period over which support will be available, it’s more important than ever for mothers to review their financial protection needs. This is especially the case for cohabitees, who still don’t qualify for bereavement benefits.

Second Steppers

Moving HouseFirst-Time Sellers see potential interest rate rises as their biggest challenge to moving up the property ladder – according to Lloyds Bank’s annual Second Stepper report, which tracks the challenges faced by First-Time Sellers. The report reveals one in three (35%) of these households believe it will be more difficult to sell their home this year, with worries over the economy, the size of the deposit they’ll need and a shortage of family-friendly properties.

Second Steppers are mostly couples and young families moving on from their first-time buyer homes to secure more space and a garden who typically bought their first property in 2014, when the average price of a First-Time home stood at £167,137. Based on the latest house prices figures, selling their home for the average First-Time Buyer house price of £211,296 would provide them with an average equity injection of £85,877 for their next home. That’s grown from £68,629 four years ago.

The gap between the sale of their current property and the cost of their perfect home – usually a detached property – is now £135,985. However, the average equity level of £85,877 can help reduce this gap by 63%, meaning that Second Steppers need only add an extra £50,108 to their existing mortgage. However, across the country, there are significant regional variations in the size of this gap. In Northern Ireland, people will need to find £73,499 extra to make the step to their desired second home. At the other end of the scale, people in London need £330,599 to make the jump.

Just over a third of Second Steppers (35%) think it will be harder to sell their existing property this year than it would have been a year ago. In addition, over a quarter (29%) are worried about the uncertain economic climate, deposit size remains a key challenge (30%) and around one in four (26%) are struggling to find the right property to move to. Getting handy with home improvements is a solution for many Second Steppers if they can’t sell their current home – increasing from 34% in 2016 to 40% in 2017.

The report also reveals some optimism. Two out of five (40%) believe the market conditions for Second Steppers has improved compared to last year and 52% feel there are now more First-Time Buyers in the market, up from 43% in 2016. Over half (52%) also think the stamp duty changes announced in the Budget last year will increase the number of First-Time Buyers entering the market even further.

When looking for their ideal home, Second Stepper’s ‘must haves’ include a driveway or off-road parking (61%), a garden (59%) and a kitchen/diner (56%). Almost two thirds (64%) of Second Steppers have regrets about their first property purchase, with over a third wishing they had bought a bigger property. Just over one in 10 admit that they rushed to get on the property ladder and bought their first home without looking at the details.

5 a day

BeerMillennials are adopting unhealthy habits to keep their weight down, with more than half of UK adults aged 25-34 (51%) skipping meals, analysis from Aviva’s Wellbeing Report shows. Cutting out meals is marginally more common amongst men in this age group: 54% compared to 50% of women aged 25-34.

When it comes to their diet, millennials are willing to sacrifice their health and wellbeing for social purposes, with two in five (42%) saying they starve themselves before an evening out. Close to half (49%) also admit they would rather look good than have a healthy diet. Millennials were found to eat just two pieces of fruit or vegetables per day – less than the national average of three pieces, according to Aviva’s data. Fewer than one in five (17%) manage to eat their ‘five a day’, behind the national average of 21% across all age groups.

In contrast, they were most likely to have a diet made up of unhealthy snacks, with two in five (41%) snacking on treats such as chocolate or crisps at least once a day and nearly more than half (57%) stating they sometimes eat ‘naughty’ foods in secret. Many millennials have excuses at the ready however, with three quarters (77%) saying they find healthier foods too expensive and half (51%) saying they are too busy to prepare healthy meals.

Weekly Round-Up: 2nd March 2018

Credit card charged

Credit CardThe Financial Conduct Authority (FCA) has this week published its final policy statement on new rules for the credit card market. The FCA estimates the changes will save consumers between £310 million and £1.3 billion a year in lower interest charges. The new rules are now in force, but firms have until 1 September 2018 to comply. The changes will provide more protection for credit card customers in persistent debt or at risk of financial difficulties. The changes are being introduced following a comprehensive study of the credit card market. The study analysed the accounts of 34 million credit card customers over a period of five years, and surveyed almost 40,000 consumers.

Figures show that customers in persistent debt pay on average around £2.50 in interest and charges for every £1 that they repay of their borrowing. There are a total of 4 million accounts in persistent debt and firms have few incentives to help these customers because they are profitable. Under these new rules firms will be required to take a series of escalating steps to help customers who are making low repayments over a long period, beginning when the customer has been in persistent debt over 18 months. After this time firms need to contact customers prompting them to change their repayment and informing them their card may ultimately be suspended if they do not change their repayment pattern.

Once a consumer has been in persistent debt for 36 months, their provider will have to offer them a way to repay their balance in a reasonable period. If they are unable to repay the firm must show the customer forbearance. This may include reducing, waiving or cancelling any interest, fees or charges. Firms who do not comply with the new rules could be subject to action by the FCA.

Credit card firms have also agreed to voluntary measures, which will give customers control over increases to their credit limit. Under the measures agreed by credit card firms customers can opt-out from receiving automatic credit limit increases. Customers in persistent debt for 12 months will not be offered credit limit increases, this should result in around 1.4m accounts per year not receiving such offers.

Pay back time

Credit CardsAccording to the latest figures published by UK Finance, Gross mortgage lending in January is estimated to have been £21.9bn, 9.7 per cent more than a year earlier. Card spending was 5.8 per cent higher than in January 2017, although higher repayment levels meant that the pace of borrowing saw little change, growing at 4.8 per cent annually. Meanwhile UK businesses’ deposits grew by 7 per cent in the past 12 months, while borrowing over the same period contracted slightly by 1.4 per cent. Within business sectors, manufacturers’ borrowing expanded modestly, while construction and property-related sectors contracted.

Higher levels of repayments on credit cards is expected at this time of year as customers pay off their festive spending, meanwhile, households were careful with their outgoings as wage growth remains below the inflation rate. The increase in gross mortgage lending of almost 10 per cent compared to the same period last year, and higher than the monthly average, was a direct result of customers who took advantage of mortgage deals on offer at the end of 2017.

UK Finance suggest that business sentiment remains positive with confidence in short term trading conditions buoyed by the recovery in international markets. Investment levels remain broadly unchanged and borrowing continues to err on the side of caution, as companies adopt a ‘wait and see’ attitude to trading uncertainties, opting to use their deposits as buffers for spending decisions.

Are we content?

Gold BarsThe jaw-dropping value of possessions owned by the UK’s 27 million households, and the amount that is uninsured is laid bare this week by the Association of British Insurers. The value of the UK’s household contents is now nudging towards £1 trillion (one million million: £1,000,000,000,000), with the value of possessions owned by all UK households now worth £950 billion – that is more than central government’s entire spending last year (£675 billion), more than the combined value of all homes in Scotland, Wales and Northern Ireland (£630 billion) and eleven times greater than the wealth of the world’s richest man – Jeff Bezos, founder of Amazon (£84 billion). And if you remember back to the financial crisis of 2008, its greater than the Government bail out of the banks (£850 billion).

Worryingly, with over a quarter (28%) of households without home contents insurance, this could leave £266 billion worth of possessions uninsured against risks such as theft, fire, flooding and accidental damage. This despite the fact that the average cost of home contents insurance, at £141 a year, works out at less than £3 a week, with the weekly cost of a combined buildings and contents policy less than £6 a week.

I will survive

Family iconsAccording to the latest Office for National Statistics data, in England as a whole, 1-year survival estimates for cancer patients were above 75% and 5-year survival estimates were above 50% for the majority of cancer sites, with the exception of cancer of the lung, oesophagus and stomach. The highest 1-year and 5-year survival estimates in England, from the 14 cancer sites observed, were in prostate cancer for men (96.3% and 88.3%, respectively) and in breast cancer for women (95.6% and 86.0%, respectively) diagnosed between 2011 and 2015.

For the 10 cancer sites recorded for both sexes, 1-year cancer survival is generally higher in men than in women, except for kidney cancer, lung cancer and non-Hodgkin lymphoma. Kidney cancer survival for both men and women was the same at 76.6%. Lung cancer survival was 35.4% for men compare with 42.0% for women, while non-Hodgkin lymphoma survival was 78.0% for men and 80.5% for women. For lung cancer, this can be attributed to difference in cigarette consumption between men and women as discussed in Cancer Registration Statistics, England: 2015.

The largest difference in 1-year survival between men and women was for bladder cancer (13.1 percentage points): at 78.7% for men and 65.6% for women. This sex difference in bladder cancer survival has been reported worldwide and a number of reasons such as tumour biology, sex hormones and earlier diagnosis in men have been suggested to explain the difference.

Weekly Round-Up: 23rd February 2018

Quicker than expected?

Pound coinsIn his latest report to the Treasury Select Committee, the Governor of the Bank of England Mark Carney has highlighted that, since November, the prospect of a greater degree of excess demand over their forecast period and the expectation that inflation would remain above the target have further diminished. The report highlights the need to therefore to set monetary policy so that inflation returns sustainably to its target at a more conventional level.

As a consequence, the Monetary Policy Committee (MPC) has judged that, were the economy to evolve broadly in line with their February Inflation Report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November Report. This suggests a bank base rate rise sooner than originally predicted but still a gradual rise as stated in earlier statements.

At its February policy meeting, all members thought that the current policy stance remained appropriate to balance the demands of the MPC’s remit. The outlook for growth and inflation was likely to require some ongoing withdrawal of monetary stimulus and there is still the commitment that any future increases in Bank Rate would be at a gradual pace and to a limited extent. The Committee will monitor closely the incoming evidence on the evolving economic outlook, and stands ready to respond to developments as they unfold to ensure a sustainable return of inflation to the 2% target.

Spend it before it’s too late

Cash MachineThe paper £10 note featuring Charles Darwin will be withdrawn at 23:59 on Thursday 1 March. The Bank of England are encouraging anyone who still has any to use them in the next week. Over 73% of £10 notes in circulation are polymer, but there are still around 211 million paper £10 notes left in circulation. Put end to end, that’s enough notes to retrace almost half of Darwin’s journey on HMS Beagle. Or, these would weigh the same as nearly two thousand giant Galápagos tortoises that Darwin saw on his travels.

After 1 March 2018, the new polymer note featuring Jane Austen will be the only £10 note with legal tender status. Some banks and building societies may accept paper £10 notes after 1 March but this is at their own discretion. Most retailers will no longer accept the paper £10 note as payment. The Bank of England will continue to exchange Darwin £10 notes for all time, as it would for any other Bank of England note which no longer has legal tender status.

Making the Move

Man sorting financesAccording to new research from Aldermore, almost three in 10 (29%) British workers, the equivalent of nine million people, plan to make the ambitious move to become self- 2 employed in the future. Compared to research conducted last year, this is an increase of five million British workers, as only four million (15%) planned to make the move 12 months ago. Of those who aspire to become self-employed, over one in six (18%) intend to make the move in the next year, while for a further 28% it will take three years.

When exploring what type of business aspiring entrepreneurs want to start, one in seven (15%) would launch in the retail sector. This is closely followed by the catering and accommodation industry for just over one in 10 (11%). Making the transition to self-employed can be a risky life decision, but the research shows that the ambition is paying off for those that have already made the move. Over half (51%) of those self-employed have been able to earn more money than in their previous job, and almost three in 10 (29%) expect their revenues to increase in the next 12 months. Across the UK, the self-employed based in London are some of the most confident about revenue growth with over a third (35%) expecting to see an increase, followed by almost a third (32%) in the North West. The political and economic uncertainties don’t seem to be a concern, with over half (53%) saying Brexit negotiations will have little impact on their business.

Although the research has revealed that seven in 10 (70%) self-employed believe they made the move at the right time, they also highlight there were a lot of factors to consider when deciding to make the transition, with financial fears causing the most concern. Over four in 10 (44%) were worried about not having a regular source of income, and almost two fifths (38%) were worried about an irregular volume of work. These concerns are proven; half (50%) of those already self-employed have experienced irregular income and two fifths (40%) have had to deal with inconsistent cash flow. Other difficulties encountered by the self-employed are late payments from clients (37%), as well as a lack of free time (21%). Despite these challenges, almost all (93%) have said they enjoy being their own boss. Aside from the challenges of running their own business, the self-employed have cited difficulties trying to secure a mortgage. When asked about the mortgage process, seven in 10 (70%) believe it is harder for those who are self-employed to secure a mortgage. A major challenge the self-employed face is having enough evidence to verify their income; seven in 10 (70%) believe this is a problem, and over half (56%) feel lenders are less understanding of the circumstances of the self-employed.

Lifestyle leading to a reduction by 4

Medical care iconsResearch from VitalityHealth has identified a significant longevity challenge facing the UK, with life expectancy being reduced by more than four years, predominantly due to individuals’ poor lifestyle choices.

This research is based on analysis of people’s long term health using VitalityHealth’s Vitality Age algorithm. Vitality Age measures the impact of lifestyle, clinical and mental health factors on a person’s life expectancy. The disparity between Vitality Age and chronological age – termed the Vitality Age Gap – describes the number of years that an individual could expect to lose, or gain, in life expectancy as a result of their lifestyle choices and other risk factors. Importantly, the issue of longevity and reduced life expectancy is not confined to old ages. In order to assess the impact of poor lifestyle choices and other risk factors on mortality risk amongst the working age population, VitalityHealth has analysed the Vitality Ages of UK employees undertaking its Britain’s Healthiest Workplace study.

In the 2017 study, 88% of employees had a Vitality Age greater than their chronological age, with 10% having a Vitality Age Gap of 10 or more years older than their chronological age, meaning their life expectancy is drastically reduced. This drastic reduction in life expectancy means that many people can be expected to die before reaching retirement, and the increased risk of premature death has ramifications for employers and the general economy. Based on these findings, VitalityHealth estimates that the UK will see approximately 30,000 deaths each year among the working age population driven primarily by lifestyle health factors. When projected over a 10-year period, this equates to over 4 million working years lost, translating into a £125bn cost to the UK economy. Additionally, these figures do not reflect the full cost and impact for employers, who are faced with the need to recruit and train a replacement to overcome the loss of an experienced employee.

Gigging in the UK

Stacking coinsOver a third (36%) of gig workers aged 55 and over take on ‘gig’ jobs to help them ease their way into retirement, according to new research from Zurich UK. Published within Zurich UK’s ‘Restless Worklife’ report – based on UK-wide analysis from YouGov of over 4,200 adults, of which 603 were gig workers – the research found that the same amount (36%) said flexibility and being able to choose the work they take on was the main attraction. In fact, over one in ten of all gig workers questioned only expect to stop gig work when they are over the age of 75, almost ten years after passing State Pension age.

The number of workers over the age of 50 has grown significantly over the past few decades, with government figures showing the employment rate for people aged 50 to 64 has grown from 55.4 to 69.6 per cent over the past 30 years.

However, the gig economy itself has attracted its fair share of criticism, with little job security or access to workplace benefits given most are not defined as full-time employees. Lack of workplace benefits such as income protection, holiday and sick pay was put forward by 44% of gig workers over the age of 55 as the main drawback, while over a third (34%) said it was not knowing where their next paycheck would come from and 27% said it was not having access to a workplace pension.

Weekly Round-Up: 16th February 2018

Love is all at home

ValentinesThe majority of Brits will have opted to have had a cosy night in at home with their loved one on Valentine’s Day, spending an average £45 to rustle up a meal for two, according to research by MBNA. A further 23% will have stayed in and didn’t cook anything special, whilst many couples may switch between going out and staying in from year to year, as a quarter didn’t have a preference.

The research and credit card transaction data from MBNA shows that supermarkets fuel the food of love, with sales for certain stores on Valentine’s day last year soaring by over half (54%), compared with sales on a standard Tuesday. More than one in three of those eating at home will have opted for a juicy steak for their romantic evening in, with 39% saying a prime cut of beef would be their meal of choice.

Of the 10% who do dine out on Valentine’s night, it’s young people aged 18-24 who are most likely to have pushed the boat out, spending an average £65 on a romantic dinner for two. More than a fifth will have chosen to dine in Italian restaurants on Valentine’s Day, with steakhouses finishing second at 12%. For those who chose to dine in, 44% say it’s because they’re just too busy to celebrate and more than a quarter (27%) see Valentines as ‘just another day’. Saving money is the most popular reason for not going out on Valentine’s Day, with 58% of women and 41% of men saying it’s why they stay in.

FTB the highest in a decade

Moving HouseUK Finance’s latest Mortgage Trend Update released this week revealed that 2017 saw the highest number of first -time buyers (365,000) in a decade. The data also showed mortgage lending for first-time buyers, home movers and buy-to-let purchases all fell in December 2017 compared to the previous year.

There were 30,800 new first-time buyer mortgages completed in December, 5.2 per cent fewer than in the same month a year earlier. The £5.1bn of new lending in the month was 1.9 per cent down year-on-year. The average first-time buyer is 30 and has an income of £41,000.

Data suggested that 30,700 new home mover mortgages completed in December, which was 4.7 per cent fewer than in the same month a year earlier. The £6.5bn of new lending in the month was 3 per cent down year-on-year with the average home mover now 39 and has an income of £55,000. 30,500 new homeowner remortgages completed in December, some 7.4 per cent more than in the same month a year earlier. The £5.2bn of remortgaging in the month was 8.3 per cent more year-on-year.

17.2 per cent fewer Buy to Let Mortgages were completed in December than in the same month a year earlier. By value this was £0.8bn of lending in the month, 11.1 per cent down year-on-year. There were 9,900 new BTL remortgages completed in December, some 11.6 per cent fewer than in the same month a year earlier.

The big 5

Houses
Average house prices in the UK have increased by 5.2% in the year to December 2017 (up from 5.0% in November 2017) according to the latest analysis by the Office for National Statistics. The annual growth rate has slowed since mid-2016 but has remained broadly around 5% during 2017 with the average UK house price now £227,000 in December 2017. This is £12,000 higher than in December 2016 and £1,000 higher than last month.

The main contribution to the increase in UK house prices came from England, where house prices increased by 5.0% over the year to December 2017, with the average price in England now £244,000. Wales saw house prices increase by 5.4% over the last 12 months to stand at £154,000. In Scotland, the average price increased by 7.7% over the year to stand at £149,000. The average price in Northern Ireland currently stands at £130,000, an increase of 4.3% over the year to Quarter 4 (Oct to Dec) 2017.

The local authority showing the largest annual growth in the year to December 2017 was Orkney Islands, where prices increased by 18.2% to stand at £147,000. The lowest annual growth was recorded in Kensington and Chelsea, where prices fell by 10.7% to stand at £1,212,000 but despite this it is still the most expensive place to live where the cost of an average house was £1.2 million. In contrast, the cheapest area to purchase a property was Burnley, where an average house cost £78,000.

Rate Band

Elderly Couple_300x200pxMore than two thirds of wealthy people do not know their estate may be liable for an inheritance tax bill, according to Canada Life’s Annual IHT Monitor research. Among adults over the age of 45 with assets in excess of £325,000, 70% of people do not know the threshold for the standard nil rate band (£325,000), up from 61% in 2016. In addition 55% of people do not know the rate at which assets above their available nil rate band are taxed, up from 52% in 2016. As a result of this confusion, families up and down the country could potentially be faced with unexpectedly high tax bills.

The results underline the increasing revenue the Government is receiving from inheritance tax. Latest figures from Canada Life’s analysis show receipts from IHT have hit a record high, with families paying £4.84 billion of IHT in the 2016/17 tax year, double what it was just seven years earlier (£2.4 billion in the 2009/10 tax year).

Nearly two in five respondents (38%) do not think their main home is liable for inheritance tax – a large increase from under a quarter (24%) who said the same in 2016. This will come as a shock to a significant proportion of homeowners who are planning to pass their wealth on to family members. Meanwhile, under a third (32%) know the annual exemption amount they are entitled to (up to £3,000) – but an additional third (35%) currently believe they can give away more than £3,000 without being charged, bringing with it the possibility of unexpected bills.

Worryingly just four in ten are aware that the following are liable for inheritance tax as part of an estate on death: pension savings, vehicles, life insurance policies not held under trust, agricultural land, business assets and non-exempt gifts in the last seven years.

Weekly Round-up: 9th February 2018

Early Warning System

Pound CoinsThe Bank of England’s Monetary Policy Committee (MPC) met this week and voted unanimously to maintain Bank Rate at 0.5%. The Committee highlighted that the global economy is growing at its fastest pace in seven years and becoming increasingly broad-based and investment driven. However household consumption growth is expected to remain relatively subdued, reflecting weak real income growth but GDP growth is expected to average around 1¾% over the original forecast in November.

With much of their assumptions based on a range outcomes for Brexit, the MPC expect Consumer Price Inflation to remain around 3% in the short term, reflecting recent higher oil prices and import prices following sterling’s past depreciation. These external forces suggest pay growth will rise further in response to the tightening labour market, give increasing confidence that growth in wages and unit labour costs will pick up to target-consistent rates. On balance, CPI inflation is projected to fall back gradually over the forecast but remain above the 2% target in the second and third years of the MPC’s central projection.

Looking to the future, the Committee judged that, were the economy to evolve broadly in line with the February Inflation Report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November Report, in order to return inflation sustainably to the target. This could mean another interest rate rise in 2018 which could be sooner than first expected and higher than that implemented in November last year.

Up 6 on First Time Buyer

Moving HouseThe number of first-time buyers is estimated to have reached 359,000 in 2017, while those taking their first step on to the property ladder are putting down almost double the deposit than a decade ago, according to the latest Halifax First-Time Buyer Review.

The number of first-time buyers has gone up 6% in the last 12 months, continuing an upward trend of six years, despite the average deposit jumping from £17,740 in 2007 to £33,339 a decade later – an increase of 91%. Halifax data revealed that although the average price of a typical first home has grown by 21% (or £37,377) from £174,703 to £212,079, first-time buyer levels have almost returned to those last seen in 2007, when 359,900 took their first step on to the property ladder. This is an increase of 87% compared to an all-time low of 192,300 in 2008 and is now just 11% below the most recent peak of 402,800 in 2006. First-time buyers now account for half of all house purchases, with a mortgage, an increase from 36% a decade ago.

The average age of a first-time buyer in 2017 was 31– two years older than a decade ago. In London it has grown from 31 to 33 –the eldest in the UK. The biggest increase in age was in Northern Ireland, up by three years from 28 to 31. At a Local Authority District level, the youngest buyers are in Staffordshire Moorlands with an average age of 28 whilst the oldest are in Richmond upon Thames at 35 years old.

Don’t Touch

To letNet investment in buy-to-let property has fallen by 80% from £25 billion in 2015 to just £5 billion in 2017 due to excessive regulatory intervention on the sector, according to a new report from the Intermediary Mortgage Lenders Association (IMLA). The 80% slump is a steeper fall than after the financial crisis as recent tax and regulatory changes have caused a downturn in landlords’ activity, according to the report: ‘Buy-to-let: under pressure’. In response, IMLA is calling for a brake to be placed on further policy interventions on the UK’s Private Rented Sector (PRS).

The report notes the positive effect that buy-to-let has had on the PRS. It estimates that between 2000 and 2017, UK buy-to-let landlords invested £289 billion into the sector, meeting rising tenant demand by bringing 1.8 million properties into the rental market. At the same time, real rents have fallen 4.4% across the UK.

However, IMLA reports that new tax and regulatory measures introduced in the last two years, such as a 3% stamp duty surcharge and the removal of mortgage interest tax relief, have deterred some landlords from expanding their portfolios and prompted others to exit the market, with this cumulative effect referred to as ‘policy layering’. As a result of tax changes, more than a fifth (21%) of landlords have indicated that they plan to reduce the size of their portfolios.

There are currently 4.5 million people relying on the PRS in England alone. Should demand for rental property continue to increase at current rates, driven by a lack of social housing supply and inaccessibility to owner-occupation, IMLA’s report suggests that this will lead to upward pressure on rents, disadvantaging tenants in the sector.

Tax bonus for the Government

FuneralFor many, making sure loved ones are provided for should they die unexpectedly is considered an important responsibility. However, according to research from Legal & General 82% of consumers have assets they wish to pass on to loved ones however in the event of a claim, two-fifths (40%) have never heard of placing their life insurance policy under trust. Worryingly, more than four in ten (43%) consumers questioned said they didn’t have a will in place.

A trust is a simple legal arrangement that allows an individual to place their policy in trust, the policyholder can indicate who they want the proceeds to be paid to and controls when the money from the life policy will be paid out. This can ensure that children or any other chosen beneficiary receive financial support from the money, but will not have full access to the lump sum. It also should help to ensure that any money paid out from the life policy will not be part of the estate of the person covered, helping to minimise Inheritance Tax. For example this means that their spouse, co-habiting partner or family members will be protected from the heavy financial burden of inheritance tax. It will help to ensure that the money paid from the life policy can be paid to the right people quickly, without the need for lengthy legal processes.

Those who do not place their single life policies in trust risk leaving their spouse, co-habiting partner or close family members in a vulnerable situation. If a single life insurance policy is not placed in trust, the proceeds may not go to the chosen beneficiaries as planned. For example, if the policy holder is not married and has not made a will, there is a risk that their co-habiting partner will not be legally entitled to any of the lump sum which could possibly leave them in financial difficulty.

Weekly Round-Up: 2nd February 2018

Take Interest

HousesPeople with interest-only mortgages are being urged to take action after the Financial Conduct Authority (FCA) found that many have still not talked to their lender about their repayment options. Nearly one in five mortgage customers have an interest-only mortgage and the FCA is concerned that shortfalls in repayment plans could lead to people losing their homes.

The FCA review covered 10 lenders who represent around 60% of the interest-only residential mortgage market and looked at how lenders are treating these customers to help ensure their mortgages are repaid at maturity. There are currently 1.67m full interest-only and part capital repayment mortgage accounts outstanding in the UK. They represent 17.6% of all outstanding mortgage accounts and over the next few years increasing numbers will require repayment.

In their review, the FCA found that whilst lenders are actively trying to communicate with their customers to understand repayment strategies this was at specific times before maturity rather than targeting those who were considered higher risk. They also found that the processes which customers had to follow to discuss their repayment strategies were, on many occasions, challenging, including delays in getting to speak to advisers, making multiple phone calls and repeating information previously provided.

In 2013 the FCA identified three residential interest-only mortgage maturity peaks. The first peak, happening now, is likely to have more modest shortfalls due to the profile of customers typically being those who are approaching retirement with higher incomes, assets and levels of forecast equity in their property at the end of term. The next two peaks in 2027/2028 and 2032 include less affluent individuals who had higher income multiples at the point of application, greater rates of mortgages converted from repayment to interest-only and lower forecast equity levels; the FCA is concerned that they are more at risk of shortfalls. To help customers the FCA has produced a leaflet encouraging them to take action.

Surprising growth

Cardboard Houses on CoinsAccording to the Nationwide Building Society, the annual rate of house price growth picked up to 3.2% at the start of 2018, compared with 2.6% at the end of 2017. House prices increased by 0.6% over the month, after taking account of seasonal factors, the same increase as December.

Analysing the statistics, Nationwide suggest that the acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months. They highlight the fact that retail sales were relatively soft over the Christmas period, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll. Similarly, mortgage approvals declined to their weakest level for three years in December, at just 61,000 and although activity around the year end can often be volatile, the weak reading comes off the back of subdued activity in October and November (monthly approvals were around 65,000 per month compared to an average of 67,000 over the previous twelve months). There are few signs of an imminent pickup, as surveyors report that new buyer enquiries have remained soft in recent months. The lack of supply of housing continues to be the most likely key factor in providing support to house prices.

The Nationwide expects performance in the housing market to be determined in large part by developments in the wider economy. Brexit developments will remain important, though these remain hard to foresee with the suggestion that the UK economy will continue to grow at modest pace, with annual growth of 1% to 1.5% in 2018 and 2019. Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth. The subdued pace of building activity evident in recent years and the shortage of properties on the market are likely to provide ongoing support for house prices.

City Living

Edinburgh cityHome affordability across UK cities is at its worst level since 2007, according to Lloyds Bank’s Affordable Cities Review, with house prices rising as a multiple of average annual earnings from 5.6 in 2012 to 7.0 in 2017. Over the past five years, the average house price within UK cities has risen by 36% from £171,745 in 2012 to its highest ever level of £232,945 in 2017. In comparison, average city annual earnings over the same period have risen by just nine percent to £33,420. As a result, affordability in UK cities is, on average, at its worst level since 2007, when the ratio of average house price to earnings stood at 7.5.

The least affordable city is Oxford, where average house prices of £429,775 are over 11 times (11.5) annual average earnings. Truro and Exeter are new entrants into the 10 least affordable cities list, both with an affordability ratio of 9.3 with house prices of £259,705 and £274,093 respectively. Leicester (8.1) and York (8.0) are the only cities outside southern England appearing in the top 20 least affordable UK cities. There are six cities with average house prices that cost at least ten times average annual earnings. In addition to Oxford (11.5), these are Cambridge (10.5), Greater London, Brighton and Hove (both 10.2), Bath (10.1) and Winchester (10.0). The London average figure disguises considerable variations across the capital with central boroughs significantly less affordable than the Greater London average.

Stirling is the UK’s most affordable city for the fifth consecutive year. At £186,084, the average property price in the Scottish city is 4.0 times average gross annual earnings, although this figure has increased by 5% (0.2) in the last twelve months. Londonderry (4.1) in Northern Ireland remains the UK’s second most affordable city. Bradford (4.5) is named as the most affordable city in England and Swansea is the most affordable city in Wales (5.4). Lancaster and Dundee are the only two new entrants to the top 10 most affordable cities, sitting in fourth and ninth place, respectively and all of the top 10 are located outside of the south of England.

Wealthy getting wealthier

Pound coinsThe Office for National Statistics has been looking at the wealth of the UK population in their Wealth and Assets Survey this time for the period between July 2014 and June 2016. Aggregate total net wealth of all households in Great Britain was £12.8 trillion up 15% from the July 2012 to June 2014 figure of £11.1 trillion.

The typical household total net wealth was £259,400 in July 2014 to June 2016, up from £225,100 in the previous period (an increase of 15%), and the wealth held by the top 10% of households was around five times greater than the wealth of the bottom half of all households combined. Aggregate total private pension wealth of all households in Great Britain was £5.3 trillion; this has increased from £4.4 trillion in July 2012 to June 2014.

In July 2014 to June 2016, households in the highest income band had a typical household total wealth of £1,039,400. This increased by 17.3% from £886,400 in July 2012 to June 2014. Households in the lowest band of income had a typical total wealth of £32,100 in July 2014 to June 2016. This decreased by 9% from £35,100 in July 2012 to June 2014.

There was a striking increase in the value of net property wealth for households in London compared with all other regions; At £351,000, this is a 33% increase from the £263,000 previously in the July 2012 to June 2014 survey. Total aggregate debt of all households in Great Britain was £1.23 trillion in July 2014 to June 2016 (a 7% increase from July 2012 to June 2014), of which £1.12 trillion was mortgage debt (6% higher) and £117.0 billion was financial debt (15% higher).

Weekly Round-up: 26th January 2018

Quiet December

Stacking coinsAccording to the latest figures from UK Finance, mortgage activity has been building through the year, helped by increasing numbers of first-time buyers. Gross mortgage lending in the month is estimated to have been £20.2 billion, 1.2 per cent more than a year earlier. Credit card spending decreased slightly in the month, with annual growth in outstanding credit at 5.3 per cent.

Business borrowing has continued to moderate through the year, with the manufacturing sector showing only modest annual growth, while construction and property-related sectors have contracted their bank borrowing over the year.

The trade body highlights that December is traditionally a quieter month for mortgages, although the underlying trend of increased numbers of first time buyers, supported by government initiatives such as Help to Buy, continues. Mortgage rates remain low, driven by a competitive market, so they are suggesting customers should shop around for the best deals.

Business lending is up year-on-year, even though December saw the usual seasonal net repayment across all industries and sizes of borrower. However, healthy export levels and an uptick in overall business confidence suggest that in this New Year, there may be an appetite to capitalise on opportunities for growth supported by continued favourable borrowing conditions.

Pension or holiday?

Pound coinsShort term saving is dominating the UK’s savings habits, with two in five (35%) prioritising saving for a rainy day fund over any other financial milestone, according to the latest sentiment research from Foresters Friendly Society.

The findings reveal that less than a third of consumers (29%) view saving to provide a retirement income as a priority, while around a quarter are prioritising saving for a holiday (26%). This long term saving gap is particularly significant amongst millennials (those aged between 18-34) who stand most to gain when thinking longer-term, where saving for retirement ranked even lower on their list of priorities with just 16% building up ‘nest eggs’ for their future.

This short-termism is reflected in their savings choices, highlighting a significant lack of understanding when it comes to deciding how best to achieve these financial goals. More than a third (34%) of UK adults use a standard savings account as their preferred way to save while 27% opt for cash ISAs and 15% just use their current accounts. In the current low interest environment, none of these vehicles is likely to deliver significant returns but shares based options, best suited to early saving, offering the potential for superior returns are not being embraced in significant numbers, with take-up of the Lifetime ISA at 9% and Stocks and shares at just 10%.

This attitude calls for improved education, amongst younger savers particularly, on the importance and benefits of saving early in order to avoid them hampering their future saving progress. Fewer than one in ten (9%), for example, are taking advantage of the benefits from the Lifetime ISA (LISA) which was developed specifically to help those under 40 years old achieve their long-term savings goals.

Driving us crazy

Broken car after an accidentThe relentless rise in the cost of motor insurance continues with the ABI’s latest Motor Insurance Premium Tracker out this week showing that the costs of motor insurance have reached record levels.

The ABI’s Premium Tracker – the only market survey which measures prices consumers actually pay for their motor cover, rather than quotes – shows that in the fourth quarter of 2017: The average price paid for private comprehensive motor insurance was £493. This was the highest quarterly figure since ABI started collecting the data in 2012, up 6% on the same quarter 2016. The average premium paid over the whole of 2017 at £481 was 9% higher than the previous year, and the highest since ABI started collecting this data back in 2012. This added an extra £40 to the average premium.

The average cost of motor cover has leapt by 29% since 2014 and as a consequence the ABI is urging the Government to help reduce the cost of motor insurance by introducing as quickly as possible its reforms to how compensation for large personal injury compensation awards is adjusted (known as the Discount Rate) to ensure a fairer system for claimants and insurance customers, and push ahead with reforms to how lower value whiplash-style claims are handled. Since 2013 there has been a rise in these claims reported to the Government’s Compensation Recovery Unit.

Funeral Costs rising

FuneralNew data obtained by Royal London reveals the number of public health funerals and the average cost of a public health funeral for local councils has risen in the last five years. The data is based on Freedom of Information (FoI) requests submitted to 390 local authorities in the UK. A public health funeral, also known as a pauper’s funeral, is held by a local authority if the deceased has no family or the family are unable to cover the cost of the funeral.

Royal London’s National Funeral Cost Index has found growing levels of funeral poverty as families struggle to meet rising costs. With the average cost for a basic funeral running at £3,784, many families go into debt, with one in six (16%) taking on an average debt of £1,680. Others are simply unable to contribute at all, leaving the local authority to take on the cost of the funeral. The data from 260 local authorities shows there were 3,784 public health funerals across the UK in the financial year 2015/16. The total cost of these funerals amounted to £4 million.

211 councils provided data on public health funerals both for the financial years 2011/12 and 2015/16. This reveals the number of public health funerals has increased by 12% over the last five years. Councils in the East of England saw the biggest percentage increase in public health funerals in the last five years, at 36%. The total cost of public health funerals to councils across the UK increased by 36% in the last five years. The data also shows the cost of public health funerals varied regionally across the UK. West Midlands had the highest cost, with more than £900,000 being spent on funerals in 2015/16. London local authorities saw a 51% increase in the average cost of a funeral, with a public health funeral costing local authorities an average of £1,004 in 2015/16 compared to £666 in 2011/12.