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Weekly Round-up: 12th January 2018
Off to the races
The Gloucestershire town of Cheltenham saw the highest percentage rise in house prices of any major UK town or city in 2017, according to new research by Halifax. The average house price in the town that’s located on the edge of the Cotswolds and is famous for its horse racing and cultural festivals, was 13% higher than in the previous year, increasing from £277,118 to £313,150 in 2017; nearly five times the 2.7% increase in the UK as a whole.
The seaside town of Bournemouth on the south coast experienced the second biggest rise, with an increase of 11.7%, while Brighton, on the south east coast completed the top three with an 11.4% rise in the past year.
Fifteen of the 20 top house price performers are in London and southern England – these include Crawley (10.4%), Newham (10.2%), Peterborough (10.1%), Gloucester (9.5%) and Exeter (9.1%).
Huddersfield (9.3%) in Yorkshire and the Humber, Nottingham (8.9%) and Lincoln (8.4%) in the East Midlands along with Stockport in the North West (8.2%) and Swansea in Wales (7.7%) are the top performers outside London and the South, making the top 20 this year. There were marginal price decreases in a number of other towns: three in Scotland – Paisley (-3.6%), Dunfermline (-2.2%) and Aberdeen (-1.1%); five in Yorkshire and the Humber – Wakefield (-2.9%), Rotherham (-2.2%), Barnsley (-1.6%), Bradford (-0.4%) and Leeds (-0.4%); one in the West Midlands – Stoke on Trent (-4.0%); Bromley in the South East (-0.6%); Hounslow in Greater London (-0.2%); and Sunderland in the North (-0.2%).
New research from Barclays finds that the average British parent will spend £4,886.28 on birthdays in the seven years their children attend primary school (ages 4-11). And with parents expected to have to fork out an average of £60,000 on the expenses children’s school years bring, from school uniforms, to trips, to extra-curricular activities, the strain on savings is only going to deepen in later life.
The survey of 1,000 British parents with children aged eight years old or below found that parents will typically spend £433.39 on their children’s birthday parties, and £164.65 on presents – with some more extravagant parents buying as many as 50 gifts per birthday. Catering, the entertainment, the activities, party bags and cake are the top 5 most expensive elements of a birthday, parents claim. Birthday spending reaches even more astronomical heights when it comes to the costs parents have to fork out on other people’s children. The research revealed that parents spend an average of £223.05 on party bags alone (£14.87 per bag), with birthdays attended by an average of 15 children.
Perhaps due to peer pressure from parents and children alike, almost half of respondents (49%) said they feel obliged to invite the whole class, raising attendance numbers to a minimum of 27, according to average class sizes in UK Primary Schools. And although some dutiful parents revealed they attend as many as 30 children’s parties every year, the typical parent in the UK will have to take their child to six occasions a year, spending an average of £16 for a gift.
The latest industry figures show the lowest level of sickness absence since records began almost a quarter of a century ago. However Bupa research highlights that millions head into work despite being unwell, with figures revealing that two-thirds (64%) of UK employees have done so in the last twelve months. The findings come at a time when increasing productivity is a strategic goal for most business leaders in 2018. But high levels of ‘presenteeism’ are in fact associated with loss of productivity and reduced performance – as employees who push themselves into work when unwell, risk delaying their own recovery.
Bupa’s research shows that more than one in four (27%) employees ignore their doctor’s orders to stay at home and ‘soldier on’. A third of employees would go to work despite back pain or issues related to their joints and, disturbingly, a similar number (29%) head to work when suffering from mental health issues such as depression. As two of the most common reasons to be signed off work, Bupa’s experts fear these employees risk worsening their health, increasing the likelihood that they’ll need a prolonged period of time off work further down the line.
Although businesses across the UK are starting to recognise that a healthy workforce is more productive, workload pressure is one of the reasons many people head to work regardless of the state of their health. Many felt their to-do list was too long for them to be able to take time off. A quarter (26%) of people selflessly head into work when they are seriously ill because they worry that their absence will be a burden on their team, unaware that this is counterintuitive.
However, others come into work despite being ill because of a lack of trust and they worry that their colleagues would think they were not genuinely unwell and others worry that being off may impact their job security.
The Full Year 2017 report from Key Retirement reveals the highest recorded year both for equity release new plan numbers and total lending. Every quarter of 2017 has witnessed consistent year on year record growth. Sales of plans were 38,995 from 27,666 for 2016, an increase of 41%, whilst Lending increased to £3.01 billion, from £2.15 billion in 2016, an increase of 40%.
The average loan amount has fallen slightly over the period from £77,877 to £77,380 with Drawdown remaining the most popular type of plan accounting for 62% of all new plans (Drawdown and Enhanced Drawdown). Drawdown, which retains accessible further funds, provides potential further borrowing of £910 million in addition to the £3.01 billion in initial advances; giving a total market for the year of £3.92 billion, compared to the total of £2.87 billion for 2016. Lump sum releases have remained steady accounting for 38% of new business the same as for 2016. The average age for those releasing equity was 72 remaining unchanged against 2016.
Away from the consistently top reason for releasing equity of Home/Garden Improvement, featuring high up the list is debt repayment both secured and unsecured. Over 1 in 5 are utilising the funds to repay outstanding mortgages. The average mortgage debt for those releasing equity is £84,000 carrying an average monthly payment of £674. Equity release has become established as a prime option for those looking to clear maturing interest only mortgages, with 2017 witnessing the beginning of the first major wave of maturities.
Whilst many lenders are working hard to lend to older borrowers, reduced incomes in retirement, and tightened mainstream mortgage criteria, still means that many are faced with the only option of selling their home to clear the debt. Increasingly though equity release is providing a robust alternative to meeting this need. 31% of those releasing equity were repaying unsecured debts with the money released. With average credit card balances nearing £11,000 and average monthly payments of £292 to service this debt, the impact of releasing equity to eradicate the burden has a huge impact for many on their retirement income.
TSB have been looking at our New Year’s resolutions and reveal that Brits spend an average of £187 on those that they later give up. The findings show that last New Year nearly one in three people (31%) had given up at least half of their resolutions by the end of January. By the end of March, more than four in ten (46%) had given up their resolutions.
These included activities such as joining a gym or a slimming club, buying new workout clothes, buying fitness DVDs, and buying a bike. There were plans to change diets which meant buying a blender or a juicer, purchasing the latest health food craze, and buying protein shakes. For others it was learning a new skill or hobby.
A quarter (25%) said their resolutions at the start of 2017 cost them more than they had anticipated. The high costs associated with these resolutions mean that nearly a fifth (18%) of Brits think they may end up relying on credit to fund their ‘new year, new you’ ambitions for this year.
Yet, over a third of people (31%) say they want to make a finance-related New Year’s resolution and more than half (58%) said they want to start managing their money better in 2018.
According to the latest figures from the Nationwide Building Society, annual house price growth ended the year at 2.6%, within the 2-4% range that prevailed throughout 2017. This was in line with their expectations and broadly consistent with the 3-4% annual rate of increase which the Building Society expects to prevail over the long term which aligns with their estimate for earnings growth over the coming years.
This figure though marked a modest slowdown from the 4-6% rates of house price growth recorded in 2016. Low mortgage rates and healthy employment growth continued to support demand in 2017, while supply constraints provided support for house prices. However, this was offset by mounting pressure on household incomes, which exerted an increasing drag on consumer confidence as the year progressed.
For Buy to Let the impact of previous policy changes such as additional stamp duty on second homes, changes to tax deductibility of landlord expenses and tighter lending criteria meant that demand from investors remained subdued in 2017.
Rates of house price growth in the south of England has moderated towards those prevailing in the rest of the country with London demonstrating a particularly marked slowdown. Prices in the capital fell in annual terms for the first time in eight years, albeit by a modest 0.5%. London ended the year the weakest performing region for the first time since 2004.
Research from the Halifax suggests that more than one in three of us in the UK received at least one Christmas gift they didn’t like but three quarters (76%) say that they would never tell the person who gave it to them. Scots are the most reluctant to speak up with 82% saying they wouldn’t let on, but one third (33%) of those in North East England would say something. The over 55s are also more likely to hold their tongue (84%) than 18-34 year olds (64%).
And only one in fifteen (7%) Brits return or exchange Christmas presents they didn’t want with almost a third (31%) preferring to store them, 28% gifting them to a charity shop or jumble sale and 23% re-gifting to someone else. Embarrassingly, one in seven (15%) have actually been re-gifted a present from the person they originally gave it to.
When it comes to the sales, many are also taking the opportunity to prepare for Christmas 2018. More than one-third (36%) say they will buy next year’s Christmas cards in this year’s sales, with a third (33%) looking to pick up discount wrapping paper and almost a third (32%) even picking up presents to put under the tree in 2018.
And with the growth of Christmas jumper days in workplaces all over the country, one in seven (15%) will buy a Christmas jumper now for next year, with more than a quarter of 18-34s (28%) leading the way. 27% of those in the North East said they’d buy a Christmas jumper now for next year, but only 8% of Scots and 9% in the East Midlands said the same.
A Liverpool car park fire is likely to result in claims worth £20 million being paid out to motor insurance customers, the Association of British Insurers (ABI) estimated today. Payments have already been made to some of the hundreds of people who lost their vehicles in the blaze on New Year’s Eve, with a number of insurers bringing in extra staff to ensure claims are dealt with as swiftly as possible. Emergency claims lines were open on New Year’s Day.
As well as getting the money to replace their vehicles, customers have also been making claims for the value of belongings which were inside them. Depending on the cover they had, some people will also be able to get money back for other transport costs.
The motor insurance industry paid out £33 million in claims every single day in 2016 but it is highly unusual to have so many vehicles destroyed at the same time at a single location.
UK Finance, the trade body representing major financial institutions in the UK has is slightly more optimistic about the next two years than they were a year ago. In their latest summary of the mortgage market they expect more first-time buyers over the next two years, helped in part by competitive mortgage rates and government housing schemes. UK Finance highlighted that Home movers numbers have recovered a little in 2017, but look set to remain flat over 2018 and 2019, as they have benefitted less from government support and have been largely left to fend for themselves. The number of home owners re-mortgaging with a new lender has grown strongly in 2017, and the expectation is for this to continue over the medium term.
It appears that regulatory and tax changes are amongst several factors that are reducing confidence in the buy-to-let market. This has led to subdued house purchase activity by landlords since the middle of 2016 and it is expected that there will be more of the same over the next two years.
Housing market activity on the whole has recovered somewhat over the last 12 months helped by first-time buyers, but this recovery only brings activity levels back to where they have been since 2014. Looking ahead, UK Finance expect activity to continue flat over the next two years, in part a result of economic uncertainty.
Bank Account switch
The Financial Conduct Authority (FCA) has this week published final rules which will require providers of personal current accounts and business current accounts to publish information that will help customers to compare the service they could receive from different providers.
The new information will help customers, comparison websites and the media to make meaningful comparisons of the services different current account providers offer. By encouraging competition it is expected that the new rules will mean providers will improve their service and performance. Under the new rules, customers will be able to find how and when services and helplines are available, contact details for help, including for 24 hour helplines and how long it will take to open a current account. Consumers will also know how long it will take to have a debit card replaced and how often the firm has had to report major operational and security incidents along with the level of complaints made against the firm.
The Consultation Paper also looked at introducing rules requiring publication of service metrics related to how long it takes to arrange to use powers of attorney. Following the feedback received, the FCA welcomed the industry’s agreement to coordinate the development of a voluntary industry agreement on vulnerability.
Who wants to be a millionaire?
The latest house price data from Lloyds Bank today revealed that sales of million pound properties in northern England strongly outperformed many other parts of the country in the first six months of 2017. Purchases of prime properties in the North West and Yorkshire and The Humber rose by 55% and 45% respectively. Increases were also seen in the West Midlands (up 33%) and the South East (up 15%). Overall, there was a modest drop (-1%) in the number of properties sold for more than a million pounds across Great Britain in the first six months of 2017, in contrast to the same period in 2016, with actual number of sales edging down from 6,684 to 6,613.
Million pound home sales in London fell by 7% from 4,230 to 3,940. Other areas which experienced significant decreases in the number of purchases of premium-priced properties include Scotland (down by 35%), East Midlands (down by 27%) and Wales (down by 31%). This is part of a growing trend as the average price for million pound properties has dropped for three consecutive years, from £1,862,578 (H1 2014) to £1,717,141 (H1 2017), a fall of 8%.
Mirroring the trend of rising sales in the north of England, Yorkshire and The Humber had the fastest price growth over the last year at 5%, increasing from £1,378,578 to £1,452,252. Average prices for houses sold over £1 million pounds in London remained unchanged. The prime market may, however, have been distorted recently by buyers completing purchases before the introduction of higher stamp duty on buy-to-lets and second/additional homes on 1 April 2016.
New research by Royal London has suggested that 5.8 million renters don’t know how they’d cope if they were too ill to work. The survey revealed that almost half (48%) of working private renters have never thought about how they would cope financially with a long-term illness. On top of this, 39% of this group have no savings to fall back on at all, compared with 23% of the wider population.
While 58% of renters do have some savings – albeit less than £2,000 – this wouldn’t offset the average debt per renter, which sits at over £4,600. Indeed, 32% of working renters owe between £2,000 and almost £10,000, with 14% owing £10,000 or more. This means that savers not only don’t have the savings to keep themselves covered during periods of illness or unemployment, they don’t even have the savings necessary to pay off their debts.
Asked what they would do if they were unable to work for three months or more, 48% said they’d apply for state benefits, while 45% stated they would reduce their household expenses and 36% said they would use their savings. Only 4% mentioned income protection.
New research launched today shows that parents will be dreaming of a low-cost Christmas, with 2017 set to be an expensive Christmas for present buying. Parents are expected to fork out an average of £128.80 per child on presents during the festive season according to Barclays – raising the total amount British parents will spend on Christmas presents this year to a projected £141.7m across the nation.
The research of 1,000 British parents showed that the burden could in part be driven by poor financial planning, with a third (29%) admitting to leaving their Christmas shopping to the last minute. And although a third sensibly start saving for Christmas between July and September, a shocking fifth (20%) claim not to save money at all.
But the total cost may reach even greater heights according to the research, with respondents admitting they’d be happy to spend up to 30% more on sold out gifts their children wanted through reseller sites. Even more extreme, one in 10 parents said they would be prepared to spend as much as 80% more on RRP. Revealing the pressure that parents are under at Christmas, one in three admit to dipping into their savings and overdrafts in order to finance presents, with a fifth admitting it is a big financial burden.
Showing just how pressuring many find the festive seasons, two-fifths of respondents (46%) admitted to adopting extreme measures to cut back on spending after Christmas, including skipping meals, saying no to school trips and cancelling holidays.
Ho Ho Ho Help
A study from Scottish Widows’ independent think tank, The Centre for the Modern Family, reveals four in ten (43%) grandparents help their families to fund the festive season, spending a collective £932 million. More than a third (36%) of them make sacrifices to compensate for the extra expenditure at Christmas.
The Silver Supporters report, the second chapter of this year’s series looking at later life finances, reveals that grandparents contribute on average almost £140 towards decorations, festive food and gifts to ease the burden on their relatives. This is in addition to spending more than £400 on gifts of their own for children and grandchildren, bringing total expenditure to almost £550 – equivalent to the average December State Pension payment.
However, one quarter (24%) of grandparents admit they feel more financial strain every year and did not expect to support their family as much as they do. As a result, grandparents have been forced to reprioritise what they’re spending their money on to compensate for extra outgoings at Christmas. Of those who have made sacrifices (36%), action ranges from not treating themselves (90%) to more severe action such as turning the heating off or down (64%) and selling possessions (32%). All too aware of the financial pressures facing younger generations, two fifths (41%) of grandparents admit they feel compelled to contribute because their family could not afford Christmas otherwise. Almost three in ten (29%) also believe that without help, their family would not be able to get together at all.
Additional research found that providing financial support at Christmas is symptomatic of a bigger financial burden. Older generations contribute almost £35bn throughout the year to keep their families afloat; 15% make regular payments to their children to help cover the cost of rent, mortgages and household bills. Individual grandparents say they fork out financial help to the tune of over £2,200 a year, although the vast majority (85%) did not make provision for these outgoings. More than half (53%) feel under financial stress – 14% say this is a direct result of giving financial support to children and grandchildren.
The Association of British Insurers (ABI) has urged the Government to take steps to reduce threats to property as it goes ahead with Budget plans to build 300,000 homes a year in England by the mid 2020s.
Insurers pay out almost £13 million every day for homes and businesses which have suffered damage and loss, but the industry is also committed to efforts to reduce the chances of customers having to claim in the first place.
The Association of British Insurers (ABI) has spelt out its Building Blueprint – ten policy priorities to make all properties less vulnerable to the main threats of fire and weather, which between them account for around 50% of all claims in terms of cost. The growing issue of water leaks within buildings is also included.
Highlighting the fact that insurance is there when the worst happens, to fix your home or to help keep your business afloat after damage the ABI feel it’s better for everyone if major floods and fires can be minimised or prevented entirely. Environmental changes mean the risk of flooding is growing for many parts of the UK, and this year has brought a stark reminder of the worst that fire can do. As it embarks on an ambitious building plan for homes, the ABI feel it is important that Government has a firm eye on the steps it should be taking to help all properties, including businesses, be more resilient in the face of these threats.
According to the latest Halifax House Price Index, prices in the last three months (September-November) were 2.4% higher than in the previous quarter (June-August). This is the fastest price growth, on this measure, since January. Prices in the three months to November were 3.9% higher than in the same three months a year earlier although the annual change in November was lower than in October (4.5%) and House prices rose by 0.5% between October and November, following a 0.3% increase in October marking the fifth consecutive monthly rise. The average price of £226,821 is 3.2% higher than in January (£219,741).
Turning the attention on sales, data from HMRC suggests transactions grew by a modest 2% to 105,260 in October to reach their highest monthly level in 2017. Sales have remained above 100,000 in all months this year. In the three months to November home sales were 7% higher than in the same period a year earlier. Bank of England figures show there were 64,575 mortgage approvals – a leading indicator of completed house sales – in October down from 66,111 in September, a decline of 2.3%. Since reaching the second highest monthly level this year in July approvals have fallen in three consecutive months. Following a couple of months in which new instructions had held broadly stable, the Royal Institution of Chartered Surveyors data shows the supply of homes for sale sharply deteriorating. On this measure, supply has now fallen in 20 consecutive months to October. On the demand side, new buyer enquiries weakened in both September and October, marking the seventh consecutive month this measure has fallen.
Homes in national parks attract a premium of £116,501, according to new research from Lloyds Bank. House prices in the twelve national parks surveyed are, on average, £116,501 above the average for their surrounding county – a house price premium of 46%. The majority (11 of 12) of national parks have higher house prices than the average for their county, with four – the New Forest, the South Downs, the Peak District and the Lake District – attracting a premium in excess of £150,000.
The average house price in a national park of £368,804 is 11.7 times higher than local average gross annual earnings. The comparable ratio for England and Wales as a whole is 8.0. The average house price in national parks across England and Wales has increased by £51,463 (16%) over the past ten years, from £317,341 in 2007 to £368,804 in 2017. The biggest percentage increases were in South Downs (41%) and The Broads (23%). However, the £51,463 increase is £19,998 lower when compared to the average house price rise since 2007 across the whole of England and Wales.
Properties in the UK’s most visited national park command the largest premium with average prices more than double (105% or £186,351) those in the surrounding area. New Forest (86% or £268,856) and the Peak District (84% or £151,969) have the second and third highest premiums. Snowdonia is the only national park where property prices are below the average for the surrounding area (-3% or -£4,936). With an average house price of £180,126, which is 6.8 times local average annual earnings, Snowdonia is the most affordable national park in the survey.
The average house price in New Forest is £581,448, 15.2 times local gross average annual earnings. South Downs is the second least affordable with an average house price to earnings ratio of 14.9, followed by the Lake District (11.5).
Driven by remo
According to the latest statistics from UK Finance, although lending slackened in September, it remained higher than a year ago. Remortgaging was particularly strong, with borrowers seeking to lock into historically low interest rates in advance of the widely anticipated rise in Bank base rate at the beginning of November. Over the last year, the number of loans for remortgaging has been higher than in any period since 2009. Low borrowing rates mean that mortgage repayments as a proportion of income appear to be close to their historic low point. While it is suggested that this ratio may edge upward in the coming months, monthly mortgage payments will remain affordable for the vast majority of borrowers.
On a seasonally adjusted basis, lending to first-time buyers and movers was higher than in August, and there were year-on-year increases by volume and value. Remortgaging held up month-on-month and was stronger than a year ago as borrowers sought to fix their mortgage costs ahead of the widely anticipated increase in Bank base rate. Buy-to-let borrowing for house purchase declined in September but was at the same level year-on-year. On a positive note the proportion of household income used to service capital and interest repayments declined in September for both first-time buyers and home movers to 17.3% per cent and 17.5 per cent respectively.
The typical loan size for a first-time buyer declined from £140,000 in August to £138,016 in September. Their average household income also declined but by a smaller amount proportionately, from £41,259 to £40,826. That meant the income multiple edged down from 3.63 to 3.61. The average amount borrowed by home movers in the UK declined from £182,785 the previous month to £180,000, and the average mover household income declined month-on-month from £56,102 to £55,581. This meant that the average income multiple went down from 3.40 to 3.39.
Buy-to-let activity continued to be driven by remortgaging, which accounted for more than two-thirds of total lending. Buy-to-let house purchase and remortgaging activity in September remained at a similar level seen since the change in stamp duty on second properties introduced in April last year.
CIC guide goes public
The Association of British Insurers has launched a public consultation on changes to its Guide to Minimum Standards for Critical Illness Insurance. Formerly known as the Statement of Best Practice for Critical Illness Cover, the Guide aims to help customers and those advising on the products more easily compare the cover offered by the policy to help them make informed decisions when considering buying critical illness (CI) insurance.
The Guide was initially launched in 1999 and has been periodically updated since then. The proposed changes at this review include taking account of the significant medical advances in the detection and treatment of certain conditions, as well as a changing market that reflects product innovation and rising consumer expectations of CI insurance.
While the guide sets out a minimum standard for all CI products, many insurers feel that it is appropriate to offer customers cover above this standard, and the majority do. They can also provide cover for other conditions beyond the 22 defined in the new Guide hence the need to give customers the necessary information and guidance so they can make an informed choice.
Nothing to get stressed about here
The Bank of England (BoE) has announced the results of their 2017 stress test of the UK banking system. For the first time since the BoE launched its stress tests in 2014, no bank needs to strengthen its capital position as a result of the stress test. The 2017 stress test shows the UK banking system is resilient to deep simultaneous recessions in the UK and global economies, large falls in asset prices and a separate stress of misconduct costs.
The economic scenario in the test is more severe than the global financial crisis. Significant improvements in asset quality since the crisis mean that the loss rate on banks’ loans in the stress test is the same as in the financial crisis.
In the test, banks incur losses of around £50 billion in the first two years of the stress. This scale of loss, relative to their assets, would have wiped out the common equity capital base of the UK banking system ten years ago. The stress test shows these losses can now be absorbed within the buffers of capital banks have on top of their minimum requirements. Banks have continued to build their capital strength during 2017. As a result, the Prudential Regulation Committee (PRC) judged that all seven participating banks now have sufficient capital to meet the standard set by the test.
According to the Chancellor this week the rise in employment is almost at an all-time high driven by full time workers, with unemployment also at its lowest rate since 1975. Growth in the UK Economy has remained solid, but slowed slightly at the start of the year leading to a growth forecast of 1.5% in 2017. It is then predicted to grow at a slightly slower rate in the next three years, before picking up in 2021 and 2022. Inflation is forecast to peak at 3% in the final months of this year, as measured by the Consumer Prices Index (CPI). It will then fall towards the target of 2% over the next year.
Borrowing by the government has fallen significantly from £1 in every £4 that was spent in 2009/10 to £1 in every £16 this year. However the UK still has a debt of over £1.7 trillion – around £65,000 for every household in the country.
The NHS will have an additional £6.3 billion allocated to it with £3.5 billion invested in upgrading NHS buildings and improving care whilst £2.8 billion will go towards improving A&E performance, reducing waiting times for patients, and treating more people this winter.
The Government has abolished stamp duty land tax (SDLT) on homes under £300,000 for first-time buyers suggesting that 95% of first-time buyers who would have paid stamp duty will benefit from the change. First-time buyers of homes worth between £300,000 and £500,000 will not pay stamp duty on the first £300,000 but will pay the normal rates of stamp duty on the price above that. This should save £1,660 on the average first-time buyer property. 80% of people buying their first home will pay no stamp duty but restrictions based on the sale price means that those buying properties over £500,000 do not benefit from the change.
There is going to be £15.3 billion of new financial support for house building over the next five years – taking the total to at least £44 billion. This includes £1.2 billion for the government to buy land to build more homes, and £2.7 billion for infrastructure that will support housing. The target has been set at 300,000 new homes a year, an amount not achieved since 1970 which will be supported by the creation of 5 new ‘garden’ towns. Changes to the planning system should encourage better use of land in cities and towns which it is suggested means more homes can be built while protecting the green belt. An extra £100 million will go towards helping people buy battery electric cars and there is encouragement for all new homes to be built with the right cables for electric car charge points.
When it comes to income, the National Living Wage for those aged 25 and over will increase from £7.50 per hour to £7.83 per hour from April 2018. Over 2 million people are expected to benefit and for a full-time worker, it represents a pay rise of over £600 a year. The National Minimum Wage will also increase dependent on the age of the worker. The personal allowance – the amount you earn before you start paying income tax – will rise from £11,500 to £11,850. This means that in 2018-19, a typical taxpayer will pay £1,075 less income tax than in 2010-11.
Those people aged between 26 and 30 will be able to benefit from a new railcard which it is anticipated will be introduced from spring 2018. Cheap, high-strength cider will be subject to a new band of duty and the duty on cigarettes will increase by 2% above inflation, hand-rolling tobacco duty will increase by 3% above inflation.
Air Passenger Duty will be frozen for all economy passengers and all short-haul flights. It will rise for premium fares on long-haul flights, and on private jets will see an increase in Air Passenger Duty.
Households in need, who qualify for Universal Credit, will be able to access a month’s worth of support within five days, via an interest-free advance, from January 2018 that can be repaid over 12 months. Claimants will soon be eligible for Universal Credit from the day they apply, rather than after seven days and Housing Benefit will continue to be paid for two weeks after a Universal Credit claim. Low-income households in areas where private rents have been rising fastest will receive an extra £280 on average in Housing Benefit or Universal Credit.
In terms of education, schools will get £600 for every extra pupil who takes A level or Core maths and £27 million has been set aside to help improve how maths is taught in 3,000 schools and £49 million will go towards helping students resitting GCSE maths. £34 million will go towards teaching construction skills like bricklaying and plastering and a further £30 million will go towards digital courses using Artificial Intelligence.
Local authorities will be able access a £220 million Clean Air Fund to use to help people adapt as steps are taken to reduce air pollution. This could be used to encourage more people to use public transport or for modernising buses with more energy efficient technology. The fund will be created by a temporary rise in Company Car Tax and Vehicle Excise Duty on new diesel cars.
And finally £1.7 billion will go towards improving transport in English cities. Half will be given to Combined Authorities with Mayors, and the rest allocated by a competition. Those people in Tyne & Wear could see a fleet of new trains, there is potential investment in the Midlands Connect motorway and rail projects and transport links along the Cambridge-Milton Keynes-Oxford corridor may be improved.
Older workers are finding themselves caught in a game of retirement roulette as many are relying on external factors such as a downsizing, an inheritance or even a lottery win to be able to afford a comfortable retirement, Aviva’s latest Real Retirement Report reveals.
A quarter (25%) of over-50s workers are hoping to profit from downsizing to a smaller home or moving to a cheaper area. A similar proportion (24%) are relying on receiving an inheritance to achieve a comfortable standard of living in retirement, which suggests it’s not only younger generations who count on help from family to support their financial needs. More than a fifth (22%) are depending on relatives no longer being financially dependent on them with as many as 1.9 million older workers currently have financially dependent parents or children.
According to the report more than one in ten (13%) or 1.3 million over-50s workers say they are relying on a lottery win to afford a comfortable retirement, despite the odds of winning the National Lottery being just one in 45 million – a sign of their pessimism about their prospects of otherwise being able to retire in comfort.
Over-50s workers say they reached or expect to reach their peak earnings – or the highest amount of income earned during their lifetime – at the age of 51 on average, with this period lasting for an average of 5½ years. Although a third (34%) of older workers save more during this peak earnings period, a fifth (21%) say they have or would spend it on big one-off purchases such as a new car, kitchen or extension. A similar proportion (20%) have or would spend more on everyday living and enjoying themselves. Only 12% say they have or would increase contributions to an existing workplace pension during this time, rising to just 14% among those who expect to retire within the next two years.
Cover at a premium
The Financial Inclusion Commission (“FIC”), a cross-party campaigning body of Members of Parliament, Peers, social-policy leaders and industry experts, has released the findings of its report Access to Insurance, which highlights the gaps in insurance coverage in the UK and sets out a blueprint for widened industry access. The report outlines the extent of those without adequate insurance cover, including that almost 16 million people (35%) are without contents insurance and 60% of those earning £15,000 or less per annum have no contents cover.
Insurance is the forgotten piece of the financial inclusion debate; it gives people the peace of mind to plan financially beyond day-to-day expenditure. The analysis shows that a significant proportion of the UK population is without contents insurance, which arises from a lack of demand from individuals and problems with supply. Being young, having a low income or living in a rented property are all factors for not having home insurance. Moreover, those in social housing tend to be found in areas of higher crime, and renters themselves are less able to afford the annual premiums. A study by the FCA reports that 81% of ‘generation rent’ are without contents cover.
Those in vulnerable circumstances are also likely to lose out: older people, for example, tend not to have the knowhow to handle the industry-wide move online, and younger people struggle with financial capability: 19% of adults find information provided by insurers difficult to understand. For many, contents insurance is made unaffordable because their financial situation prevents them paying often cheaper annual premiums and from purchasing comprehensive cover.
Where is the will?
New research from mutual insurer, Royal London, reveals three in five adults (60%) don’t have a will in place, with a third (33%) not having thought about writing a will. Surprisingly, the research also found that a quarter (26%) of those aged 55 and over have not written a will. Of these, one in six (16%) over 55s with no will have never even thought about writing one.
Co-habiting couples are less likely to have a will, with three-quarters (77%) not having written one compared to those who are married or in a civil partnership (46%). Single adults (45%) and co-habiting couples (32%) are the least likely to have thought about writing a will compared to those who are married or in a civil partnership (22%) and those who have separated/divorced (21%).
Adults with children feel more pressure to write a will, with half (48%) saying they have not written a will but want to write one in the near future. Three in five parents with children under 18 (58%) also haven’t chosen guardians for their children in the event of their death.
Halifax has teamed up with Google to help homebuyers understand perplexing property jargon The new Halifax Jargon Buster website provides relatable, entertaining and easy to understand analogies to help explain common property terms, including ‘stamp duty’, ‘gazumping’ and ‘valuation’. It also provides a dictionary definition and videos.
As part of this innovative campaign, consumers can access the Jargon Buster dictionary using Google Assistant on mobile devices and Google Home, by saying “Ok Google, let me speak to the Halifax Jargon Buster”. This means that users at any stage of the home buying process can search for the mortgage term they are unsure about, and get a response with an analogy.
More than 25 of the top Googled mortgage terms are currently featured on the Halifax Jargon Buster and others will continue to be added. It may come as an unwelcome surprise to homebuyers confused by the term ‘Stamp Duty’ that it is the second largest cost, behind estate agency fees, they are likely to pay when buying a home. Halifax research shows that the national average cost of moving in the UK stands at £11,624, with stamp duty accounting for £2,897; a rise of £393 (16%) over the last year. Stamp duty jumps to just under £16,000 for homemovers in London and, contrary to the national average, exceeds estate agency fees.
Remain Vigilant for False Income and Employment Situations
This week, I’m going to talk about the need for advisers taking the the greatest care when assessing customers’ income and employment. If you are in any way involved in mortgage applications, this will be very relevant to you.
New legislation has increased the risk of an adviser being accused of committing a criminal offence by aiding a customer to evade tax, which ups the ante for adviser risks when combined with potential for application fraud and panel removal.
A recent review carried out by BM Solutions found that almost 9 out of 10 cases contained keying errors or discrepancies when it came to the income declared on the application. In many of these cases, further investigation led to the belief that fraud had been committed.
With the possibility of panel removals still being a major risk to individuals and firms, it still amazes me that advisers will take such a big risk with their livelihoods. Not cross checking the income, failing to do further checks to validate the employment, or simply not collecting enough evidence of income is where advisers are falling down and, as such, they are not taking all reasonable steps to ensure the declared income is genuine.
This remains a problem in the wider industry and even within the HLPartnership network, we still regularly come across situations where customers have lied about their job, their income, their financial history etc. with the adviser failing to notice because they didn’t carry out the most basic due diligence.
Don’t get me wrong; I know the majority of brokers understand the risk and are diligent in taking all reasonable steps to ensure the customer is telling them the truth. However, there are still those who think that it is acceptable to risk their entire career and potentially face fines or even imprisonment, just to make a few hundred quid.
I cannot make it any clearer: HLPartnership will not tolerate fraud and, if the adviser is found to be negligent and hasn’t carried out sufficient checks then this will result in termination of that adviser’s permissions. And if you think you could just go and work elsewhere, perhaps Directly Authorised or under another network, then think again. Regulatory references are detailed and brutally blunt. Panel removals, suspicions of financial crime involvement, suspensions, investigations, industry debt etc. are stains on your reputation that will not wash out.
At the recent Business Development Forum events around the country, we talked about the concerns BM Solutions naturally have over this. They have found, through their review across the industry, the following common, key themes:
Advisers not collecting payslips;
Payslips collected that were not acceptable e.g. not latest payslips or old documents;
Income keyed on the system (employed and self-employed) not matching the fact find or documents collected;
Self-employed income declared but the adviser not collecting corresponding SA302 documents;
Self-employed verification not acceptable e.g. HMRC logo and/or tax reference not showing;
Income from land and property where the adviser didn’t collect SA302, SA105 or P60 / Self-Assessment, where those properties are in the background
Gross annual rental income (GARI) not provided at all or keyed incorrectly e.g. using monthly figures rather than grossing up to annual, using the bank statement which can be the net income if using a rental agent; etc.
Each of these situations could well lead to false declaration of true income, resulting in the application being treated as a fraud. For many situations, particularly property income, it could even be that the adviser is aiding the individual to evade tax, which is a criminal offence in itself and can now result in action taken against advisers personally, as well as the company they work for.
Recent guidance published by HMRC sets out these new offences being committed where a relevant body fails to prevent an associated person criminally facilitating the evasion of a tax.
HLPartnership has a zero tolerance to financial crime within the network and, in effect, these new rules do nothing to change that. But just to be clear (again) HLPartnership will not accept any act that supports an individual customer benefitting from tax evasion. All applications, whether regulated or buy to let, would require the customer to provide legitimate documentary evidence of earnings to support the application. Our policy does not allow a customer to self-declare their income, nor does it enable the customer to proceed without providing the relevant supporting documents, such as payslips, P60s and SA302 documents.
Lenders are ever vigilant to such issues and, of course, BM Solutions will be on high alert following their recent review. If you are not already familiar with their website (www.bmsolutions.co.uk) it’s a good idea to take a few minutes to become acquainted with it.
Of course, every lender’s procedures will vary and it’s not a case of one size fits all. Below are a few points to consider that will help keep you on the right side of the lender’s requirements:
Firstly, before submitting the application, take time to check you have answered everything correctly. Leave it a few hours and come back to it if necessary.
Gather all of the information from the borrower at the first available opportunity, such as their proof of income, identification, proof of deposit and Assured Shorthold Tenancies (AST).
In light of the recent Buy-to-Let tax changes and the new rules for portfolio landlords, you may be required to gather more information on applicants than in previous years. Where the application is subject to manual underwriting, a fully completed Customer Profile Form will need to be submitted – details of which are on the BM Solutions website.
All the correct documentation is worthless however if it is not keyed in or uploaded correctly. Double check the applications before you press the submit button and if you have made a mistake, tell the lender as soon as possible to get it corrected.
If you are in any doubt about how to key the case properly or have any questions, please speak to your relevant BDM for guidance and keep a record of what they advise.
BM Solutions have produced a number of keying guides, available on their website, which will guide you through keying in income for different employment types. For completeness, we’ve also added to these to our website. Click the following links for the guides:
Check payslips. A quick online search shows just how easy it is to obtain ‘replacement pay slips’ and without thorough diligence you may well be fooled. Request the applicant’s most recent payslips and check for any obvious irregularities – are they clear and legible? do they contain any formatting or spelling mistakes? Cross-reference the National Insurance number, employer’s address and tax code against other documents provided and make sure the amount they are credited each month matches the amount on their bank statement.
FPI payments (Faster Payments). If these appear on bank statements you should delve deeper. When did the applicant start to receive these and are they genuinely from their employer? Does the explanation make sense? Do the numbers stack up?
Customer profile. Use your instincts when it comes to scrutinising the applicant. Does it seem feasible how and what they are paid, given their profession or the benefits they claim? Have they started a new or secondary job recently and does this seem workable given their primary job?
Existence of employer. Sometimes the simplest of details catches a fraudster out. Creating an identity for their employer may be something the applicant has overlooked. An online search should show some evidence of their employer, either on Yell.com, Google Street View or Companies House.
Apply the same rules. The same stringent tests should also be applied to self-employed borrowers and those with a second job. Check the applicant’s status within the company – if they are a director or have a large shareholding they may need to be treated as self-employed.
Confirm income. Request the borrower provides evidence of their income, printed directly from the HMRC web-portal. Documents available on there include the applicant’s ‘tax year calculation’ (also known as an SA302) which can be printed for the last four years and their ‘tax year overview’. Scrutinise these in the same way you would a payslip. Is the HMRC logo present and clear? Are the Unique Taxpayer Reference, customer name and tax year all present and correct?
Existence of business. If self-employed, how do they generate business? You should be able to find evidence of this either online or in a local newspaper.
Finally – and arguably most importantly – report anything you believe is suspicious about the case to HLPartnership. We will ask for your suspicions in writing and have a form on the Members Area of our website to make it easier to do. Why do we want it in writing? Because it provides evidence that you have reported your suspicions and have fulfilled your responsibility to help stop fraud or other financial crime. Remember, failing to report a crime is almost as bad as actively being involved yourself, which is why there is a substantial fine and possible prison sentence for turning a blind eye.
Fraud is a plague on our society and it’s simply not worth getting involved either deliberately or through a lack of care with your clients. Please stay vigilant, protect yourselves by checking and validating the information, and if you do suspect something, report it.
The Nationwide Building Society is reporting that the annual rate of house price growth picked up slightly in October to 2.5%, from a revised 2.3% in September, remaining within their 2-4% range that has prevailing since March.
It is suggested that low mortgage rates and healthy rates of employment growth are providing some support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence. One key driver for House price growth is still the lack of homes on the market. Economic growth was a little stronger than expected in Q3, resulting in the Bank Base Rate rate rise last week (to 0.5% from 0.25%).
In today’s mortgage market however, the proportion of borrowers directly impacted by the rate rise is smaller than in the past, in part because the vast majority of new mortgages in recent years were extended on fixed interest rates. The share of outstanding mortgages on variable rates (and which are therefore likely to see an increase in payments when the Bank Rate increased) has fallen to a record low of c40%, down from a peak of c70% in 2001.
Moreover, the 0.25% increase in rates is likely to have a modest impact on most borrowers who are on variable rates. For example, on the average mortgage, the increase of 0.25% would increase monthly payments by £15 to £665 (equivalent to £180 per year). That’s not to say that the rise has been welcome news for many borrowers. Household budgets are under pressure from the fact that wages have not been rising as fast as the cost of living. Indeed, in real terms (i.e. after adjusting for inflation) wage rates are still at levels prevailing in 2005.
Barclays has introduced a new fraud intervention service to its online banking system. Customers tricked into transferring money to a fraudster can immediately get support to fix the situation with one simple phone call. When a payment made online is flagged as suspicious and out of character, Barclays will intervene to ask the customer three questions to identify whether they are a likely victim of a fraudster. For example, ‘Has someone just called you saying they are from your bank asking you to move money to a ‘safe’ account?’
This new step to the online banking process is triggered by suspicious and out of character behaviour, including an unusually large transfer to a new or existing payee. The move comes as Barclays revealed that a third (34 per cent) of UK adults have now been a victim of fraud or scams, falling for this not once, but twice on average in their lifetime. The financial impact of this is huge, with the average amount stolen reaching £893.34 per time.
Furthermore, (33 per cent) of fraud and scam cases have gone unreported to banks and nearly three quarters (72 per cent) were not reported to the police, due to one in four Brit’s being too embarrassed to admit they have fallen victim.
Managing the Mortgage
UK Finance has published its latest set of figures showing that the number of mortgages in arrears of 2.5 per cent or more of the outstanding balance fell again in the third quarter of 2017, but cases of possession edged upwards from a historically low level. At 88,300, the number of loans in arrears was two per cent lower than in the second quarter of the year (90,400) and at its lowest level since this run of data began in 1994. The number of mortgages in arrears of 2.5 per cent or more of the outstanding balance fell again in the third quarter of 2017, but cases of possession edged upwards from an historically low level. At 88,300, the number of loans in arrears was two per cent lower than in the second quarter of the year (90,400) and at its lowest level since this run of data began in 1994.
The number of properties taken into possession in the third quarter nudged upwards to 1,900, the same total as in the first three months of this year. The second quarter total of 1,800 cases of possession had been the lowest since quarterly data began in 2008, and the proportion of properties taken into possession (at 0.02 per cent) has remained unchanged in each period since the second quarter of 2015. Within the total, the number of owner-occupied properties taken into possession increased in the third quarter from 1,100 to 1,300, while buy-to-let repossessions fell from 700 to 600. The last time the number of owner-occupied possession rose was in the first quarter of 2014, when the total increased from 4,900 to 5,000.
Buy-to-let arrears were flat, apart from a small increase in those with higher levels of debt. Overall, the number of buy-to-let mortgages in arrears increased by two per cent to 5,100 (5,000 in the second quarter).
In October, interest from buyers continued to decline with 20% more respondents to the Royal Institution of Chartered Surveyors UK Residential Market Survey seeing a fall in new buyer enquiries over the month. Agreed sales were also reported to have fallen again with 20% more respondents noting a decline in transactions over the month at the national level. Regionally, Wales, Scotland and the North East were the only areas to see any pick-up for agreed sales, while sales trends were either flat or negative across the rest of the UK. Going forward, national sales expectations remain flat over the coming three months, while the twelve month view has turned marginally negative.
Following a couple of months in which new instructions were broadly stable, the latest results point to a renewed deterioration in the flow of fresh listings coming to market (net balance -14%). In keeping with other indicators pointing to a slower market, it is now also taking longer to complete a sale, with the average time rising to 18.5 weeks nationally, up from 16.6 in February 2017 when the measure was first introduced.
In October the survey showed 1% more professionals reporting a price rise nationally rather than fall (+6% in September), although there remains significant differences between regions. Respondents in London are continuing to report a decline in prices, with 63% more respondents reporting a fall rather than rise over the month (the poorest reading since 2009). Similarly, respondents are reporting a weakening picture in the South East, while East Anglia and the North East also returned readings below zero. By way of contrast, the North West of England, Wales, Scotland and Northern Ireland have all reported sentiment consistent with house price gains.
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 the incoming evidence on these and other developments, including the impact of today’s increase in Bank Rate, and stands ready to respond to changes in the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.
On the range
According to the Nationwide Building Society, the annual rate of house price growth picked up slightly in October to 2.5%, from a revised 2.3% in September and remaining within the 2-4% range that has prevailing since March. Low mortgage rates and healthy rates of employment growth are providing some support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence. The lack of homes on the market is providing support to house prices.
The proportion of borrowers directly impacted by a rate rise is smaller than in the past, in part because the vast majority of new mortgages in recent years were extended on fixed interest rates. The share of outstanding mortgages on variable rates (and which are therefore likely to see an increase in payments if the Bank Rate is increased) has fallen to a record low of c40%, down from a peak of c70% in 2001.
One of the many factors that impacts housing demand is population growth. England’s population increased by 11% between 2001 and 2015 (from 49.4m to 54.8m). International migration has been an important driver, accounting for 60% (3.2m) of the change over the period. Between 2011 and 2015, there was a 2% increase in the number of households in England (from 21.3m to 21.9m). The increase has been largely driven by those born outside of the UK, in particular from the EU.
Let the train take the strain out of homebuying
Homebuyers working in London and willing to commute for an hour could save £480,000 on average on the purchase price of their home highlighted in research from Lloyds Bank. Unsurprisingly, homebuyers can get more for their money outside of central London (zones 1 and 2) due to lower property prices. Commuting for an hour can save homebuyers an average of £480,858 (60%).
House prices in a selection of towns about an hour’s train journey away from the capital (including Crawley, Windsor, Rochester, Peterborough and Oxford) are, on average, around £316,000; that is £480,858 lower than the average of £797,158 for a property within travelcard zones 1 and 2. This is also significantly lower (£199,778) than the average property price in zones 3 to 6.
The difference between house prices for commuters travelling approximately 60 minutes would pay for the current annual rail cost (£5,169) for 93 years. Homebuyers looking to buy a home in a town approximately 40 minutes away from central London (including Hatfield, Billericay, Orpington and Reading), will pay an average price of £424,903; still £372,255 (47%) lower than in zones 1 and 2 – and with a lower average annual rail pass costing £3,615. The difference of £372,255 would pay for the current annual rail cost for nearly 103 years with a 20 minute commute saving homebuyers £299,328 (38%).
Some commuters to central London however live in areas that command higher house prices. These include commuters from Beaconsfield, who pay an average of £1,054,215 compared to the average house price of £797,158 for those living in central London, a difference of £257,057. Gerrards Cross (£903,142), Ascot (£824,421), Weybridge (£822,672) and Wimbledon, (£807,574) are also more expensive.
Plan for the worst
New research from Royal London shows only one in four (23%) adults have organised their financial information well enough to allow their loved ones to handle their financial affairs relatively easily on death. One in three adults (33%) have dealt with the financial affairs of someone who has died, yet only a quarter (23%) have their own comprehensive file of financial information.
More than one in 10 (12%) adults admitted that it would be very difficult for anyone to handle their financial affairs after they died. Of those who have had to deal with the financial affairs of a deceased relative, more than two thirds (69%) have their financial affairs well organised compared to those who have never had to deal with this (45%).
When it comes to other concerns, the research found stark differences across age groups in the UK. Those over 55 are three times more worried about their health compared to under 55s. Similarly, under 55s are more worried about money than those over 55. Of those who are worried about money only two in five (38%) consider it as their biggest priority.
Nearly half (46%) of millennials, those aged 18-34, said money was their main worry, yet only a quarter (24%) said saving or making more money was their main priority over the next 12 months.
In the event of a death, most families rely on savings (33%), followed by pension funds (26%) and cash from the sale of a property (21%). Worryingly, one in seven (14%) adults under 55 didn’t know what assets or income their family would live off if they were to die.
In their latest view on the housing market, UK Finance has suggested activity in the housing market has built up modest momentum since the start of the year. The number of transactions has remained just above 100,000 each month since January, supported by recovering levels of house purchase approvals. Their house purchase approvals data which covers just over two-thirds of the market, implies they expect activity to recover a little further as we head towards the end of this year. Looking at activity over the longer term, there’s been little movement in transactions since early 2014.
Within the 100,000 a month average figure, the activity mix has changed. Before March 2016, when the stamp duty change on second properties led to a jump in activity, roughly one-in-ten transactions were by landlords, but in August this year, the comparable figure was closer to one-in-17. Over the same period, first-time buyers have fared better, accounting for a larger proportion of house purchases, helped by government schemes such as the Help to Buy equity loan. Home movers and cash buyers have seen less movement as their share of the market remains unchanged.
More recently though, home mover numbers have shown some signs of growth, helped by low mortgage rates as their debt service costs reach historic lows. Another factor that may have helped home movers is the change to the Prudential Regulation Authority’s macro-prudential policy on loan-to-incomes. This allows lenders to more effectively manage the flow of loans at high income multiples and has coincided with the proportion of home mover loans at or above 4.5 loan-to-income ratio to overtake that of first-time buyers.