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Weekly Round-Up: 21st September 2018
In England on 1 October, the criteria for what kind of House in Multiple Occupation (HMO) needs a mandatory licence is being extended. The UK Government announced in May 2015 that it would be changing the criteria for Mandatory HMO Licensing in England in a bid to address poor conditions and overcrowding in the private rented sector. This means that from October this year, all HMOs must be licensed if they house five or more occupants, from at least two unrelated households irrespective of the number of storeys that the property has.
Local Authorities will determine whether a property meets a specific test to conclude whether it will need to be licensed. This includes: ‘The Standard Test’; ‘The Self-Contained Flat Test’; and ‘The Converted Building Test’. Previously a large HMO had to have a mandatory licence when it housed five or more occupants from at least two unrelated households, but only if the property had at least three storeys. Since 6 April 2016, all large HMOs have had to be licensed with the local Council, typically licences last for a maximum of five years.
If a property is currently licensed under a mandatory or additional scheme, the existing licence will remain valid until it expires. This means that Local Authorities must only enforce existing conditions of the licence until expiration. These landlords should receive necessary information from their Council about the new requirements prior to the expiration of their current licence. The new mandatory licensing conditions will then apply from the renewal of the existing licence. Further changes mean that rooms used for sleeping in will have to adhere to minimum room sizes. For example where there are children aged 10 and under the room size is 4.64 square metres, a person aged 10 and over is 6.51 square metres and where its 2 people aged 10 and over the room size is 10.22 square metres.
Operating without a licence, failing to comply with an Improvement or Overcrowding Notice, breaching conditions of the HMO licence, and breaching Management Regulations will be a criminal offence and can result in prosecution with an unlimited fine or a Fixed Penalty Notice of up to £30,000 and a Rent Repayment Order (RRO) of up to 12 months’ rental income. Landlords should also be made aware, that where they have a licensable property and they fail to attain a licence, they will not be able to issue tenants of that property with a Section 21 notice.
In the slow lane
According to the Office for National Statistics, the UK House Price Index average house prices in the UK have increased by 3.1% in the year to July 2018 (down slightly from 3.2% in June 2018). This is the lowest UK annual rate since August 2013 when it was 3.0%. The annual growth rate has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018. Introduced in June 2016, it includes all residential properties purchased for market value in the UK. It should be noted that, as sales only appear in the UK HPI once the purchases have been registered, there can be a delay before transactions feed into the index.
This slowdown in UK house price growth over the past two years is driven mainly by a slowdown in the south and east of England. The lowest annual growth was in London, where ONS data indicate prices decreased by 0.7% over the year, down from an increase of 0.3% in the year to June 2018.
The average UK house price was £231,000 in July 2018. This is £6,000 higher than in July 2017 and £2,000 higher than last month. On a seasonally adjusted basis house prices in the UK increased by 0.3% between June 2018 and July 2018, compared with an increase of 0.5% in average prices during the same period a year earlier (June 2017 and July 2017).
Detached houses showed the biggest increase, rising by 4.6% in the year to July 2018 to £352,000. The average price of flats and maisonettes increased by 0.6% in the year to July 2018, to £208,000, the lowest annual growth of all property types. Weaker growth in UK flats and maisonettes was driven by negative annual growth in London for this property type. London accounts for around 25% of all UK flats and maisonette transactions.
Protect the young
New data from Barclays has revealed that young people are five and a half times more likely to fall victim to scams than those over 65, with 30 per cent of 18-24-year-old scam victims not believing ‘there is not much to do’ to protect themselves in future. However, impersonation scams, where a criminal pretends to be from the police or the victim’s bank and asks the victim to make a payment, sees the largest concentration in the over 65s. These can be particularly devastating, with a third of cases reported to Barclays over £5000.
Nearly two thirds of high value shopping scams are from London, East and South East England, whilst Plymouth, Sheffield and Southampton are also identified as scam hotspots with one in 10 people (11 per cent) in the cities having been scammed in the last year. Looking at the last five years, this figure in London jumps to one in five people (19 per cent), 17 per cent of people in Plymouth and one in 10 (13 per cent) people in Sheffield. Looking at the UK as a whole, this translates to one in five people being a victim of scam, with exactly half of the victims (50 per cent) under the age of 34.
Barclays top tips for preventing scams include never share your PIN, Passcode or Password with anyone – even if they claim to be from the police or your bank, do not click on any links, or open any attachments in emails from people you don’t recognise, and no genuine bank or the police would ask you to transfer money to a ‘safe account’ – so ignore anyone who asks you to do this, whether it’s by phone, email or any other method.
Millions of UK adults do not feel financially resilient and would not be able to manage a financial shock or loss of income, according to a new report from Zurich UK. Developed with neuroscientist Dr. Jack Lewis, the Cost of Resilience examines the impact that money, including having products designed to protect and insure against loss, have on feelings of resilience.
According to the research, one in three (34%) adults, the equivalent to more than 17.6 million adults across the UK, say they would not be able to recover quickly from an unexpected financial shock, such as an unanticipated period without household income or a sudden need to spend a significant sum. A further one in seven (15%) have no idea whether they would be able to cope or not. Yet, the report found that almost a quarter (24%) of UK adults have no savings to fall back on and almost the same number (26%) do not feel in control of their life.
While a third said they would struggle to recover from a financial shock or loss of income, only one in ten (11%) have Income Protection, a financial product that shields your pay against being unable to work through illness or injury. Instead, people are more likely to have insurance for their home (71%), holidays (70%) and mobile phone (18%). The report also found that should an individual experience a financial shock or loss of income, UK adults would struggle to make financial sacrifices, with giving up the family home (51%), car (37%) and holidays (23%) proving the most difficult. More than one in ten (11%) have no idea of the impact a financial shock would have on their household income and they wouldn’t know what sacrifices they’d have to make.
At its meeting ending on 12 September 2018, The Bank of England’s Monetary Policy Committee (MPC) that sets monetary policy voted unanimously to maintain Bank Rate at 0.75%. In their most recent economic projections, set out in the August Inflation Report, the MPC anticipates GDP to grow by around 1¾% per year on average over the forecast period, conditioned on the gently rising path of Bank Rate implied by market yields at that time.
Although modest by historical standards, the projected pace of GDP growth was slightly faster than the diminished rate of supply growth, which averaged around 1½% per year. According to the MPC, CPI inflation remains slightly above 2% through most of the forecast period and in anticipated to reach the target in the third year.
The BoE highlighted that UK GDP grew by 0.4% in 2018 Q2 and by 0.6% in the three months to July, with the unemployment rate falling to 4.0% and the number of vacancies rising further. Regular pay growth has risen further to around 3% on a year earlier. CPI inflation was 2.5% in July. The Bank is still concerned about further protectionist measures by the United States and China, which, if implemented, could have a somewhat more negative impact on global growth than was anticipated at the time of the August Report. The MPC continues to recognise that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal. Since the Committee’s previous meeting, there have been indications, most prominently in financial markets, of greater uncertainty about future developments in the withdrawal process.
The Committee judges that an ongoing tightening of monetary policy over the forecast period is still appropriate to return inflation sustainably to the 2% target however any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.
Learning the hard way
With nearly two-and-a-half million students planning to start or return to university this September with as much as £3,000 worth of possessions, the Association of British Insurers (ABI) is urging students to make sure their valuables are insured and to protect their belongings against theft or damage as the new year kicks off. Given the National Union of Students estimate that 1 in 5 students are victims of crime while studying at college or university, the ABI is issuing top tips to remind students of what they should be doing to keep their possessions protected:
The first is to check an existing home insurance policy to see whether cover can be extended to cover possessions at university, or there may be insurance cover already in place in student halls. There is a word of warning to check the limits on the value of possessions in these policies and if too small, students should consider taking out a separate policy. The ABI also encourages Students to avoid leaving valuables like laptops unattended when they are out and about, as this increases the chance of theft.
Valuables at home when the room or property is unoccupied should either be hidden or kept out of view. Students can security mark their valuables with their details or register them on www.immobilise.co.uk, a police-supported national property register, to help police identify valuables if they do go missing.
Finally for those moving into student halls, to minimise risk, remember to shut windows and lock the door when out of your room. For those moving into private accommodation, make sure your front and back doors are strong and secure, with good quality locks.
With students taking on average more than £3,000 worth of stuff with them to university, it’s vital they make sure they have proper protections in place. Students moving into privately rented accommodation may be unaware of the burglary risk in their area and ensuring the right cover is in place will mean one less thing to worry about further down the line.
The residential remortgaging market saw its strongest July in over a decade, as homeowners pre-empted the latest Bank of England rate rise by locking into attractive fixed-rate deals according to UK Finance, the trade body representing High Street Banks. There was also considerable growth in remortgaging in the buy-to-let sector, showing that while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market. The number of first-time buyers has returned to modest year-on-year growth. However, according to UK Finance, affordability remains a challenge for many prospective borrowers, underlining the importance of clarity over the future of schemes such as Help to Buy.
In numbers there were 46,900 new homeowner remortgages completed in the month, some 23.1 per cent more than in the same month a year earlier. The £8.7bn of remortgaging in the month was 26.1 per cent more year-on-year. There were 32,600 new homemover mortgages completed in July, some 3.8 per cent fewer than in the same month a year earlier, the average homemover is 39 and has a gross household income of £57,000.
There were 31,400 new first-time buyer mortgages completed in July, some 1 per cent more than in the same month a year earlier and 5,500 new buy-to-let home purchase mortgages completed in the month, some 14.1 per cent fewer than in the same month a year earlier. There were 14,700 new buy-to-let remortgages completed in the month, some 7.3 per cent more than in the same month a year earlier. By value this was £2.4bn of lending in the month, 9.1 per cent more year-on-year.
A new report by Public Health England titled The Health Profile for England report has highlighted that, as a society, people are living longer with life expectancy in England reaching 79.6 years for men and 83.2 for women. We are also healthier at every age group than ever before however, stubborn inequalities persist – in the richest areas people enjoy 19 more years in good health than those in the poorest areas.
A major theme of the Health Profile for England report is future trends in health, which will aid policymakers to prioritise efforts to prevent ill health not just deal with the consequences. Some of the most notable findings suggest that the number of people aged 85 years old or more has more than tripled since the 1970s and will include more than 2 million people by 2031. The death rate for dementia and Alzheimer’s disease – already the leading cause of death in women – may overtake heart disease in men as early as 2020 and is likely to become the leading cause of death in men too
The number of people with diabetes is expected to increase by a million – from just under 4 million people in 2017 to almost 5 million in 2035 and in the last 7 years, smoking prevalence has dropped by a quarter to 15% and as little as 10% of the population could still be smoking by 2023. UK women’s health is faring worse than their European counterparts, ranked 18th lowest out of 28 EU member states for premature death. UK men are doing better by comparison and are ranked 10th.
Low back and neck pain and skin disease (dermatitis, acne and psoriasis) are the 2 leading causes of morbidity for men and women, with hearing and sight loss also ranking highly for both sexes. Mental health problems and substance use affect younger adults the most, accounting for more than a third of the disease burden in those aged 15 to 29 years.
The new report also shows that good public health is not defined by health policy alone – a high-quality education, a well-designed and warm home, a good job and a community to belong to are just as important.
According to the latest analysis by UK Finance, July saw steady growth in gross mortgage lending, driven largely by remortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise. Card spending has also strengthened, reflecting increased expenditure during the holiday period and an uplift in retail sales due to the World Cup and warm weather. However UK Finance suggest that the broader economic outlook remains mixed, with households continuing to see their incomes being squeezed by rising inflation. This may explain the shift towards deposits held in instant access accounts, as consumers opt to keep their money close to hand.”
Putting more detail on the figures, UK Finance published gross mortgage lending figures for the total market in July of £24.6bn, some 7.6 per cent higher than a year earlier whereas the number of mortgage approvals by the main high street banks in July fell by 0.8 per cent compared to the same month a year earlier. Within this, remortgaging approvals were 2.8 per cent higher than for the same period a year earlier. There was a fall in house purchase and other secured borrowing of 0.6 per cent and 11.7 per cent respectively.
Credit card spending was 8.1 per cent higher than a year earlier, with outstanding levels on card borrowing growing by 5.3 per cent over the year. Outstanding overdraft borrowing was 4 per cent lower compared to the same time last year and personal deposits grew by 1.2 per cent in the last 12 months. Deposits held in instant access accounts were 3.8 per cent higher than a year earlier.
Back to school
Providing their children with a good education is a priority for most parents and is often on the list of key considerations for families looking to decide where to live. While there is most definitely a premium attached to some neighbourhoods surrounding the best state schools across the country, there are also many that come in under the county average, particularly outside of London and the South East where homes remain more affordable versus average earnings according to the latest research from Lloyds Bank. House price growth in areas with top performing state schools has significantly outpaced the rest of the country in the last five years for example house prices near top schools grew by 35% (£104,365), compared to the English average of 20% (£49,082) over the last five years. The average house price in areas close to top performing state schools is now £400,850 compared to the average of £293,824 – a difference of £107,026.
Two thirds (21) of the top performing schools are in locations where average house prices have grown by at least £80k in the past 5 years and half (10) of which are in Greater London. House prices in the postal districts of the top 30 schools are on average £30,968 (8%) higher than other locations in the same county (or local authority in London). The largest premium (149%) is nearby to Beaconsfield High School in Buckinghamshire (ranked 29th) where homes are now worth over £1million when compared to the county average of around £600k. This is twice the premium of Cheshire, home to Altrincham Grammar School for Girls (ranked 10th) and Loreto Grammar School (ranked 20th) which has the next highest house price premium when compared to the country average (£434,756 compared to £249,829 or 74%).
Out of top 30 schools, 11 are priced under the English average. Properties close to the High School for Girls in Gloucestershire (ranked 19th) are £129,982 (44%) below the county average, followed by King Edward VI Handsworth School in the West Midlands (ranked 6th) at £86,953 (42%) below the county average and Kendrick School in Berkshire (ranked 12th) at £135,919 (32%) below the county average. The most affordable are properties near King Edward VI Handsworth School in the West Midlands (ranked 6th) where house prices are just 3.7 times average local earnings.
The average house price in the postal areas of the top 30 schools is nearly 10 times (9.9) average local earnings – compared to 7.9 across England. Homes close to the Henrietta Barnett School in Barnett (the best performing state school in the country) are the least affordable at 22.2 times gross average annual earnings in the area.
Support for the bereaved
High funeral costs have left many families taking on a mountain of debt, with research showing a huge increase in the amount being borrowed by the bereaved over the last five years. The Mutual Insurer Royal London are calling for more support to be offered to families struggling to pay for funeral costs, and as a result being forced into debt.
This new research from Royal London reveals that the average cost of a funeral is £3,757, with costs having stabilised this year (£3,784 in 2017). The Royal London National Funeral Cost Index, in its fifth year, shows that London has consistently been the most expensive region in the UK for a funeral, with the average funeral costing £4,838. Kensal Green, in London, remains the most expensive location, with the average cost of a funeral at £7,489. Burial funerals in Kensal Green have also increased and now cost almost £12,000. Northern Ireland also remains the least expensive region, with a funeral in Belfast costing an average of £2,950.
One in 10 (12%) took on debt to pay for a loved one’s funeral, with the average amount of debt taken on by individuals rising to an all-time high of £1,744. Of those who struggled with funeral costs, three in 10 (28%) people borrowed money from friends and family and one in five (21%) took on debt. Sadly, one in 10(9%) continue to sell possessions to give their loved ones a decent send-off.
Families struggling with funeral costs could be entitled to help from the Government to pay for necessary costs but the research found that the support offered is inadequate. Funeral director’s fees, a coffin, hearse and collection and care of the deceased are not seen as necessary costs by the Government and only up to £700 is offered to bereaved families to cover costs. This leaves bereaved families with an average shortfall of £1,500 if they use the services of a funeral director.
In the fifth year of Royal London’s research into funeral costs, the average cost of a UK funeral has risen by 6%, from £3,551 in 2014 to £3,757 in 2018. Individual funeral debt has increased at a much higher rate – 34% – in the last five years, with people now taking on an average debt of £1,744, compared to £1,305 in 2014.
Public Health England (PHE) is calling for adults across the country to take a free, online Heart Age Test, which will provide an immediate estimation of their ‘heart age’. If someone’s heart age is higher than their actual age, they are at an increased risk of having a heart attack or stroke. Cardiovascular disease (CVD), with stroke and heart attack being the most common examples, is the leading cause of death for men and the second leading cause of death for women.
A quarter (24,000) of CVD deaths are in people under the age of 75, with 80% of these preventable if people made lifestyle and behaviour changes to improve their heart health (around 19,200 deaths per year – the equivalent to 50 deaths a day or one every 30 minutes). Knowing their heart age helps people to find out whether they are at risk and consider what they can do to reduce this risk. High cholesterol and high blood pressure can both increase someone’s heart age, making them up to 3 times more likely to develop heart disease or have a stroke. In England, one in four adults have high blood pressure, yet a further 5.6million are living with the condition undiagnosed, placing millions of lives at risk of premature death and ill health.
The Heart Age Test asks a number of simple physical and lifestyle questions and provides an immediate estimation of someone’s heart age, as well as a prediction of the risk of having a heart attack or stroke by a certain age. It also gives suggestions on lifestyle changes to help people reduce their heart age such as losing weight, quitting smoking, exercising regularly and cutting back on alcohol. The Heart Age Test has been completed more than 1.9 million times and four out of five (78%) people have a heart age higher than their actual age. Worryingly, 34% have a heart age over 5 years and 14% at least 10 years over their actual age.
The Association of British Insurers’ (ABI) most comprehensive analysis yet into insurance fraud published this week highlights that every minute an insurance fraud is now detected in the UK. For the first time, the ABI’s annual detected fraud figures include data on application fraud – where details such as age, address, or claims history are deliberately miss-stated.
A total of 562,000 insurance frauds were detected by insurers in 2017 and of these there were 113,000 fraudulent claims, and 449,000 dishonest insurance applications. The number of dishonest insurance claims, at 113,000, were valued at £1.3 billion. The number was down 8% on 2016, while their value rose slightly by 1%. The fall in number reflects the industry’s collaborative work in detecting and deterring fraud.
The number of organised frauds, such as staged motor accidents, fell 22% on 2016, with frauds worth £158 million detected. This reflected the work of the Insurance Fraud Bureau (IFB), who are currently investigating a rising number of suspected frauds, and the Insurance Fraud Enforcement Department (IFED). IFED is the specialist police fraud unit investigating insurance fraud, such as staged motor accidents and illegal insurance advisers (so-called ghost brokers). Since its formation in 2006, IFED has secured over 400 court convictions for insurance fraud. The value of fraudulent detected motor insurance claims, at £775 million, rose by 4% on 2016. The number of these frauds, at 67,000, showed a small rise.
Fraudulent property insurance claims fell. The number detected dropped by 11% on 2016 to 22,000, with a value of £100 million. Insurers detected 449,000 cases of confirmed or suspected application fraud, where people lied or withheld information to try and get cheaper cover. Motor insurance made up the bulk of dishonest applications, with typical lies including the nature of the applicant’s occupation, and driving record, where previous claims and motoring convictions were not disclosed.
A cyclist claimed £135,000 compensation from a council for injuries he said he sustained when he fell off his cycle after hitting a pothole. However, evidence showed that the accident happened when he fell off on a slippery road at another location. He was jailed for three-and-a-half years. In another example, a bodybuilder, who claimed £150,000 for a back injury, was exposed when he was filmed doing a press-up challenge. He was ordered to pay £35,000 in legal costs. The ring leader of a gang who staged a bus crash to try to get £500,000 in insurance pay-outs for fake injuries was jailed and banned from driving for two years. Using a rental car, he staged the crash, following which eight of his fellow fraudsters on the bus claimed for fake injuries to necks and hips. Finally a student was convicted after attempting to claim £14,000 through six invented claims following a trip to Venice, including the alleged loss of an iPod, laptop and designer watch.
It was only relatively recently, in 2015, that the Financial Ombudsman (FOS) shared their insight into banking complaints involving telephone fraud. In those days it appeared that as older people were more likely to use landlines meant they were particularly at risk of “no hang up” scams.
But, according to their latest review in today’s connected world, it’s often loopholes in new technologies, rather than in old ones, that fraudsters are using to their advantage. FOS highlight that the first step toward being scammed for an individual may be putting their details into an identical, but fake banking website – or responding to a text message that, on the face of it, looks like it’s from their bank.
Unlike most other complaints FOS see, complaints about fraud and scams involve – whether it’s accepted or suspected – the actions of a criminal third party. So it’s understandable that, in many cases, both the bank and their customer tell FOS in strong terms that they’re not responsible for what’s happened.
This makes it harder for FOS to reach an answer that both sides are happy with. But it doesn’t mean usual standards don’t apply. As case studies from FOS illustrate, they will expect to see clear evidence that banks have investigated thoroughly – and reflected hard on what more might have been done to protect their customers and their money.
FOS also often hear from banks that their customers have acted with “gross negligence” – and this means they’re not liable for the money their customer has lost. However, according to FOS, gross negligence is more than just being careless or negligent. And as their case studies show, the evolution of criminals’ methods – in particular, their sophisticated use of technology and manipulative “social engineering” – means it’s an increasingly difficult case to make.
If there’s anything to be salvaged in the wake of fraud and scams, it’s what everyone can learn about how they happened and what needs to change.
Eating a large meal could help detect early signs of metabolic conditions such as type 2 diabetes, according to new research the British Heart Foundation part-funded, published in the journal Cell Reports. A team of researchers, led by Dr Samuel Virtue and Professor Toni Vidal-Puig of the Cambridge University Metabolic Research Laboratories and the Medical Research Council’s (MRC) Metabolic Diseases Unit, have made the observation whilst studying a gene called PPARy2. This gene controls the formation and function of fat tissue, which stores energy in the form of fat.
Researchers found that in mice that lack PPARy2, lipids – a form of free fat – were not sufficiently stored in fat tissue and were redirected to other organs, which is an early sign of metabolic disease and diabetes. Although the young mice without PPARy2 looked ‘healthy’, they went on to develop insulin resistance (the process that underlies early diabetes) as they got older. The glucose tolerance test (GTT) is a diagnostic test used routinely to detect diabetes. A glucose drink is taken after a period of fasting and the test measures how well the body’s cells are able to absorb glucose.
When the team performed the GTT on the mice without PPARy2, the results were similar to normal mice. But when they replaced the glucose in the GTT with a large, fatty meal – equivalent to eating a Christmas dinner – signs of metabolic disease emerged, including 10 times the levels of insulin found in normal mice given the same fatty meal, increased blood glucose and increased blood fatty acids. The researchers believe this is because PPARy2 is especially important in clearing free fats from the blood quickly after a high fat meal by storing them inside fat tissue. In mice without PPARy2, the fat tissue was overwhelmed by the high fat meal and the lipids built up in the blood or were redirected to other organs, eventually leading to insulin resistance as the mice aged.
Together with Professor José Manuel Fernández-Real, of the University of Girona, the team also demonstrated that PPARγ2 levels in humans are lower in obese individuals, demonstrating that their findings could also be relevant to humans. The study was jointly funded by the British Heart Foundation (BHF), MRC and Wellcome.
UK Finance has published their data showing mortgages lending by their members in 2017. The figures show their members’ gross mortgage lending in the latest calendar year and balances outstanding at the end of 2017, rounded to the nearest £100 million and ranked on the same basis. This means that the very smallest lenders, those with under £50 million of lending, do not feature in the figures. The data accounted for some 97 per cent of the total mortgage market – as published by the Bank of England.
For 2017, gross lending totalled £257 billion, up four per cent on 2016. This was lower than the 11 per cent growth seen in 2016. However, within this UK Finance have seen increased competition for business. This year there are 65 lenders in their results for gross lending, up from 60 lenders the year before. The largest lenders saw more modest growth. Although Lloyds has continued to increase lending activity with a seven per cent rise compared to 2016, the next three lenders on the table (Nationwide Building Society, Royal Bank of Scotland and Santander) all saw lower volumes than in 2016, compared to the previous year and corresponding contractions in market share.
Despite this, there was no change in the top ten gross lending table, with all lenders retaining the same rankings as in 2016. Lloyds Banking Group remains at the top of the balances outstanding table, despite a decrease in book size of one per cent. RBS had an increase of seven per cent for their balances outstanding, allowing them to overtake Barclays on the table and become the lender with the fourth largest mortgage assets in the UK. Below the top five, HSBC, Coventry, Virgin Money and TSB all increased their market share of outstanding mortgage assets.
2017 was a good year for the mortgage market with more lenders competing for business, and gross lending continuing on an upward trend. In their our most recent market forecasts, UK Finance predicted gross lending of £260 billion in 2018 – an increase of about two per cent. Lending in the early months of 2018 has, so far, outpaced their forecasts, driven largely by stronger-than-expected remortgage activity. The uncertainties UK Finance set out last year – not least those relating to the UK economy – remain; these have the potential to affect the path of lending for the rest of this year and beyond. However, the market has shown this year that, yet again, it is competitive and robust enough to continue to help UK mortgage customers as their needs change.
Girls are getting more pocket money than boys for the first time in a decade, averaging £7.09 a week according to the Halifax Pocket Money report. The average weekly amount boys receive has dropped by 14p since last year to just £6.91, 18p less than the girls receive.
The overall average amount of pocket money children receive has also dropped for the first time in four years. The average weekly amount kids receive is now £7.01p, a 3p drop from last year’s average. Halifax estimates this equates to a national weekly pocket money deficit of £235,405 or enough money to buy 21,420 LOL dolls. When it comes to how parents dish out the dough, cash is still king, with 84% of parents giving cash to their kids, compared with only one in five (19%) paying it directly to their bank account, and just 3% paying it via a pocket money app.
The majority of parents still encourage their kids to save up the old fashioned way, with the piggy bank keeping a place in many homes, as 60% of parents say they still use one themselves, and three-quarters (76%) of kids say they use one too. Around a third (36%) of parents said they give their children enough pocket money to enable them to understand the value of money and the benefits of saving. It seems to be working too, as more than half (54%) say they believe their children are good at managing money, and four in five (80%) say they feel their kids understand the value of money. Only a quarter of parents (28%) make their children earn their pocket money by doing housework and chores, and nearly half (48%) would withhold pocket money if these jobs are not done properly.
Half (51%) of parents said they would stop giving pocket money as a way to punish bad behaviour, on a par with grounding as one of the most commonly used ways parents try to keep behaviour in check. It seems boys’ expectations to be higher earners start from an early age too, as just over half (51%) said they believe they should be given more pocket money, compared to just 41% of girls. Over half (53%) of girls said they felt they were given the right amount of money.
While almost a quarter of parents (22%) say they give their children as much pocket money as they can afford, nearly half (43%) say they don’t think their children actually need any pocket money at all. But it’s not just parents who are prepared to part with their pennies, as four in ten (39%) kids say they also receive pocket money from grandparents and other relatives.
The Dedicated Card and Payment Crime Unit (DCPCU) has prevented £25m of fraud and carried out 84 arrests and interviews under caution in the first half of 2018, figures published today reveal.
The DCPCU, a specialist police unit sponsored by the finance industry, achieved estimated savings of £25m from preventing and disrupting fraud in the first half of the year. This brings the total savings from reduced fraud activity to over £540m since the unit was set up in 2002. 26 fraudsters were convicted between January and June 2018 in cases investigated by the DCPCU. This resulted in 33 years imprisonment for those given custodial sentences.
In the same period, the unit has disrupted seven organised crime groups and recovered 8,651 stolen card numbers. In addition, over £122,000 of compensation was returned to victims following the confiscation of criminal assets by the DCPCU.
The DCPCU are warning that criminal gangs are becoming ever increasingly sophisticated taking advantage of new technologies to commit fraud online. But through close cooperation between enforcement and the industry, the aim for the task force is to stay one step ahead and ensure there is no place for fraudsters to hide.
According to the latest statistics from the Association of British Insurers, every week 3,000 holidaymakers every week need emergency medical treatment abroad and are helped by travel insurers with £3.9 million paid out- a six year high. Typical payouts include a £233,000 medical bill for a 15-day hospital stay in the US following a stroke, £185,000 for a 10-day stay in a US hospital to treat a blood clot, and £95,000 for treating a road accident injury in Central America.
The costs of needing emergency medical treatment abroad are exposed this week by the Association of British Insurers (ABI). Analysis by the ABI of the 510,000 travel insurance claims reveals that last year Travel insurers helped 159,000 British travellers who needed emergency medical treatment abroad – the equivalent of just over 3,000 a week with the total medical bill estimated to be £201 million.
The cost of an air ambulance back to the UK alone can be very expensive. Typical claims to cover a return trip to the UK include £35,000 from the US, £12,000 from Majorca, and £25,000 from the Canary Islands. Yet despite such jaw-dropping costs, an estimated one-in-five people admit to having travelled abroad without travel insurance, leaving them unprotected against potentially financially crippling medical bills. Of the total 510,000 travel insurance claims dealt with last year, 159,000 medical expenses accounted for 52% of claims costs, cancellations accounted for 38% and lost baggage or money for 4%.
Fear of financial shock
According to new research released by Zurich UK, it appears that British adults have some thinking to do when it comes to their finances. From the report it is worrying that one in three (34%) do not feel they would be able to recover from a financial shock or loss of income, and do not have the savings in place they need to feel financially resilient. In the findings from its Cost of Resilience study Zurich suggest that the most valuable asset we have is ourselves and our ability to generate an income. Therefore, it’s a concern that nine in 10 are likely to prioritise insuring their mobile phone over themselves.
The report, which was developed with neuroscientist Dr Jack Lewis, also found that 24% of UK adults have no savings, 15% have no idea whether they would be able to cope with a financial shock or not, 11% have income protection, 71% insure their homes; 70%, holidays; and 18% mobile phones and just 37% believe they need to have savings to feel resilient.
The report calls on Insurer’s to encourage people to review their circumstances, assess the solutions available, consider what support exists to protect them and reduce feelings of financial vulnerability. Awareness of products such as an income protection plan, which is designed to provide a regular income if you are unable to work due to illness or disability, needs increasing which in turn could help individuals to feel less vulnerable and more financially resilient.
The report concludes that there is a need to educate people and help them to understand that there are products to ease the stress and worry of a financial shock and loss of income.
121,500 first-time buyers have saved a total of £284,000,000 taking advantage of the government’s cut to stamp duty, according to statistics released this week which cover the period until 30th June this year. Over the next five years, it is estimated that the government’s flagship housing policy will help over 1 million people getting onto the housing ladder.
First time buyers purchasing homes of £300,000 and under now pay no stamp duty at all, and those who have bought properties of up to £500,000 will also have benefited from a stamp duty cut.
This is part of the government’s long-term commitment to make housing more affordable. As part of the Autumn Budget housing package, the Chancellor announced at least £44 billion for housing – which includes at least £15.3 billion of financial support for house building over the next five years – and an aim to build 300,000 new homes a year in the areas that need it, as well as encouraging better use of land in cities and towns.
In addition to government-backed schemes such as the Help to Buy equity loan and Help to Buy ISA, those hoping to make their money go further can open a Lifetime ISA – to either save for a first home, or for later in life.
House price growth
According to the latest research by the Halifax, house prices picked up in July, with the annual rate of growth rising from 1.8% in June to 3.3% in July, the largest increase since last November. The average house price is now £230,280, the highest on record.
According to the Lender house prices in the three months to July were 1.3% higher than in the previous quarter, the fastest quarterly increase, again, since November. While the quarterly and annual rates of house price growth have improved, housing activity remains soft. Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.
In its commentary the Halifax highlight that in contrast, the labour market remains robust, with the numbers of people in employment rising by 137,000 in the three months to May with much of the job creation driven by a rise in full-time employment. Pressures on household finances are also easing as growth in average earnings continues to rise at a faster rate than consumer prices. With regards to the recent rise in the Bank of England Base Rate, we do not anticipate that this will have a significant effect on either mortgage affordability or transaction volumes.
Time to put the rent up?
The most striking feature of the July 2018 Royal Institute of Chartered Surveyors (RICS) survey is the continued reduction of new property being put on the market in the lettings sector with 9% more members and responders seeing a fall rather than rise in New Landlord Instructions. This is the eighth consecutive quarter in which this RICS indicator has recorded a negative number.
This pattern reflects the shift in the Buy to Let market in the wake of tax changes which are still in the process of being implemented, as smaller scale landlords exit the sector. Significantly, the drop in instructions is evident in virtually all parts of the country to a greater or lesser extent.
While the supply of fresh rental stock to the market is increasingly constrained, the Tenant Demand indicator remains resilient. The upward momentum appears to have slowed, but the number of tenants looking for a new home remains in positive territory at a headline level.
One consequence of this imbalance is that expectations for rental growth, and rising rents for consumers, appear to be strengthening again. Over the next twelve months, rents are projected to increase by a little short of +2% nationally, but the shortfall in supply over the medium term is expected to force a cumulative rise of around +15% (based on three month average of responses) by the middle of 2023. East Anglia and the South West are viewed as likely to see the sharpest growth over the period.
According to the latest research from the Office of National Statistics, there were 533,253 deaths registered in England and Wales in 2017, a 1.6% increase from 2016 and the highest number registered annually since 2003. Age-standardised mortality rates (ASMRs) decreased for both sexes in 2017; by 0.4% for males and 0.2% for females. Both the number of deaths and age-specific mortality rates for people aged 90 years and over increased in 2017, by 4.4% and 2.9% respectively; most notably for females.
Demonstrating that more people are dying with cancer rather than as a result of cancer ASMRs for cancers, respiratory diseases and circulatory diseases continued to decrease in 2017, whilst rates for mental and behavioural disorders, and diseases of the nervous system increased by 3.6% and 7.0% respectively. The City of Kingston upon Hull replaced Blackpool as the local authority with the highest ASMR rate in England in 2017, increasing by 7.1% from 2016.
The infant mortality rate increased for the first time in five years to 4.0 deaths per 1,000 live births; the neonatal rate also increased by 3.6% compared with 2016, whilst the post neonatal rate remained the same.
The research shows that the population is both growing and ageing and when you take those things into account, mortality rates decreased slightly from 2016 to 2017, for both males and females. Mortality rates for cancers, respiratory diseases and circulatory diseases have also decreased, however, rates increased for mental and behavioural disorders, such as dementia, and diseases of the nervous system, such as Parkinson’s and Alzheimer’s. This could be partly linked to a better understanding of these conditions, which may have led to better identification and diagnoses. The number of infant deaths decreased in 2017, but because the number of live births decreased more significantly, the infant mortality rate rose for the first time in five years.
At its meeting ending on 1 August 2018, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to increase Bank Rate by 0.25 percentage points, to 0.75% in an attempt to meet its 2% inflation target whilst sustaining economic growth and high levels of employment.
Since the last Inflation Report in May, the MPC felt that the near-term economic outlook had evolved broadly in line with the MPC’s expectations with GDP expected to grow by around 1¾% per year on average over the forecast period. Global demand appears to be growing above its estimated potential rate and financial conditions remain, as the MPC describe it, accommodative.
Unemployment is low and is projected to fall a little further with CPI inflation at 2.4% in June, pushed above the 2% target by external cost pressures resulting from the effects of sterling’s past depreciation and higher energy prices. The MPC don’t expect to hit their target of 2% for another three years. The MPC also continues to recognise that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal or Brexit as it is more commonly known.
It’s clear that this is not the last base rate rise as the MPC suggests, were the economy to continue to develop broadly in line with its Inflation Report projections, that an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon. They have re-iterated that any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.
According to the latest analysis by the Nationwide Building Society, there was a slight uptick in annual house price growth in July to 2.5%, from 2.0% in June. Nonetheless, annual house price growth remains within the fairly narrow range of between 2-3% which has prevailed over the past 12 months, suggesting little change in the balance between demand and supply in the market. Looking further ahead, house price growth will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.
The Society observed that the subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low. Overall, they continue to expect house prices to rise by around 1% over the course of 2018.
Providing the economy does not weaken further, the impact of the small rise in interest rates on UK households is likely to be modest partly because only a relatively small proportion of borrowers will be directly impacted by the change. Most lending on personal loans and credit cards is fixed or tends to be unaffected by movements in the Bank Rate. Similarly, in recent years, the vast majority of new mortgages have been extended on fixed interest rates.
Indeed, the share of outstanding mortgages on variable interest rates (and which are therefore likely to see an increase in payments if Bank Rate is increased) according to the Nationwide has fallen to its lowest level on record, at c35%, down from a peak of 70% in 2001. For example, on the average mortgage, an interest rate increase of 0.25% would increase monthly payments by £16 to £700 (equivalent to c£190 extra per year).
Text or talk?
Ofcom has given us an insight into the communications market in 2018 in their latest research into our changing habits. Interestingly in the UK 5.2% of households’ spend was on communications services (£124.62 per month), with 70% of this on telecoms services. People claimed to spend a total of one day a week online (24 hours), more than twice as much as in 2011 with the the most popular smartphone activities for commuters are sending and receiving messages (43%) and using social media (32%).>
Most adults acknowledged the value of being connected, with three-quarters agreeing that being online helps them maintain personal relationships. But they also acknowledge its drawbacks, such as interrupting face-to-face communications with others. 78% of UK adults use a smartphone with 58% of households owning a tablet and 44% having a games console although these numbers have plateaued in the last three years. Smart TVs were in 42% of households in 2017, up from 5% in 2012 and now one in five households (20%) wear tech such as smart watches and fitness trackers.
Nine in ten people watched TV every week in 2017, for an average of 3 hours 23 minutes a day. This is nine minutes less than in 2016, down across all age groups under the age of 65 and those aged 55plus accounted for more than half of all viewing in the UK. More than half (50.9%) of all radio listening is now digital, mainly due to growth in listening through DAB. 13% of UK households used a smart speaker in 2018; three-quarters of these were Amazon devices.
Nine in ten people now have access to the internet in the home in 2018 however the majority (62%) of time spent on the internet was on mobile devices and interestingly BBC website visitor numbers overtook those of Amazon in the UK in 2018. The BBC had the third-highest number of users after Google and Facebook.
No more than a month
The latest bulletin from the Office of National Statistics highlights the changes in the wealth of the UK population. 12% of respondents to their survey in the period July 2016 to December 2017 reported that they always or most of the time ran out of money at the end of the week or month, or needed a credit card or overdraft to get by in the past year; this was unchanged from the period July 2014 to June 2016.
44% of respondents reported that they would not be able to make ends meet for longer than three months if they lost the main source of income coming into their household; this fell slightly from 46% in July 2014 to June 2016. Worryingly the percentage of 16 to 24 years age group reporting that they would not be able to make ends meet for longer than one month if they lost the main source of income coming into their household was 48%; this was compared with 26% of all respondents.
Almost 1 in 10 (8%) of respondents in the period July 2016 to December 2017 reported that they would be unable to meet an unexpected major expense equivalent to or greater than a month’s income and 44% of employees in the period July 2016 to December 2017 thought employer pensions were the safest way to save for retirement. This is compared to 42% of the self-employed in the period July 2016 to December 2017 who thought investing in property was the safest way to save for retirement.
In the period July 2016 to December 2017, 17% of those aged 16 to 24 years felt that they knew enough about pensions to make decisions about saving for retirement; this was compared with 42% of all non-retired respondents. 63% of eligible employees were aware that they had been automatically enrolled into a workplace pension. Of all eligible employees who reported that they had not been automatically enrolled into a workplace pension, 91% were already enrolled into a pension scheme.
Industry figures on mortgage product transfers alternatively known as rate switches have been published for the first time by UK Finance. The numbers reveal that 390,200 homeowners switched product with their existing provider (product transfers) in the first quarter of 2018 which represents £53.7bn of mortgage debt refinanced internally. These figures do not feature in any market data on remortgaging, or other published gross mortgage lending data.
Of the total number of product transfers, 203,200 transfers, worth £29.5 billion, were conducted on an advised basis and 187,000 transfers, worth £24.2 billion, were execution-only. The figures reflect the Financial Conduct Authority’s (FCA) findings in its interim Mortgages Market Study highlighting that customer engagement is high and the majority of mortgage customer’s switch to a new deal shortly after their previous deal expires. The data also supports the FCA’s observation that most borrowers choose to remain with their current lender when they switch product.
The data suggest that there is a positive outcome for consumers as they can make these transactions in a wide variety of ways to suit their needs. For those who require help in choosing the right product, mortgage advice is widely available from intermediaries, with more than half of borrowers taking advice for their new deal.
First before second
The number of people moving home has dipped in the first half of the year and now account for only around half (49%) of the housing market – the first time homemover numbers have fallen behind first-time buyers since 1995, according to the latest Lloyds Bank Homemover Review.
There were 170,000 homemovers in the first half of 2018, down by 1,700 (1%) compared with the same period last year and down by 33,000 (16%) from the second half of 2017. This inactivity may be being fueled by a shortage of suitable properties for sale but reflects the broader housing market which is showing little sign of movement. The fall in homemover numbers follows a rise in 2017, which reported the highest level of movers in 10 years. This also coincides with a 3% rise in first-time buyers to 175,500, so that for the first time since 1995, just under a half (49%) of all house purchases financed by a mortgage were made by homemovers – down from 62% in the first half of 2011.
Over the past five years, the average price paid by homemovers has grown by 35% (£77,457) from £219,479 in 2013, to £296,936 in 2018 – a record high. The average deposit put down by a homemover has also increased by 31% in the past five years, from £76,303 in 2013 to £99,592 in 2018. Not surprisingly Londoners put down the largest deposit of £189,167 towards the purchase of their next home, which is nearly four times the average homemover deposit of £48,003 in Northern Ireland.
However, whilst Londoners put down the highest deposit in monetary terms, homemovers in the South West and East Anglia contribute the largest deposit as a proportion of average house price – 38% (£117,892 and £116,278 respectively in cash), followed by South East (35%). Of the estimated 23.1 million households in England, 14.4 million (63%) were owner occupiers. This remained unchanged in 2016/17. However, the composition of owner occupation rates has moved towards an increased proportion of outright owners (34%) versus mortgagors (28%), partly explained by large numbers of baby boomers reaching early retirement age. So, whilst homemovers with mortgages are stabilising, the bigger picture may be that this is in part because homemovers who don’t need a mortgage are on the increase.
In 2006-07, about three quarters (72%) of those aged 35-44 were owner occupiers. By 2016-17, this had fallen to half (52%). While owner occupation remains the most prevalent tenure for this age group, there has been a considerable increase in the proportion of 35-44 year olds in the private rented sector (11% to 29%).
Financial fears are creeping into sleeping hours, as new research by Royal London shows money worries are a top cause of nightmares. Two in five (41%) people said money makes them anxious, which can have a big impact on the subconscious. One of the most common types of dreams is teeth falling out (18%). Teeth symbolise power and confidence, with financial concerns leading to nightmares about you losing them as you’re not in control.
The research highlights the link between our dreams and what we get up to when we’re awake; nine in 10 people think real life issues (88%) and their emotions (91%) affect the type of dreams we have. People in the UK take it one step further, with three in 10 (31%) basing real life decisions on dreams or nightmares. Nightmares plague millions of people, with nearly nine in 10 (85%) of us suffering from them. A quarter (23%) suffer from nightmares once a week or more frequently, with falling (40%) and violence (29%) being the more common types of nightmares.
The data also shows a gap between men and women when it comes to dreams, with more than half (56%) of men having based decisions or changed something in their life after a dream in comparison to just a quarter (27%) of women. Two in five men (44%) suffer from nightmares once a week or more frequently in comparison to one in six women (17%). Women (37%) are also more private about sharing their nightmares with other people in comparison to men (27%).
Pets over people
Epoq’s new research into employee-paid and self-paid insurance benefits, reveals that 32% of those surveyed have pet insurance in comparison to 25% with some form of income protection. The research was conducted by Opinium in June 2018 among 1,234 employees from across the UK.
The majority (23%) have paid for the pet insurance themselves, with the remaining 8% receiving it as an employee benefit, in comparison to just 14% of people who choose to pay for income protection themselves (and 12% employer-paid).
This suggests that pet insurance is a form of cover and employee benefit that is valued by employees more than income protection, despite income protection generally considered to be one of the most important forms of insurance for employees to have as it replaces your salary if you can no longer work due to illness or disability.
Employees were more likely to buy pet insurance than critical illness cover (31%), private medical insurance (31%), phone/gadget insurance (30%), dental insurance (25%) or income protection (25%). Bearing in mind all employees surveyed will be earning an income, but not all will have a pet, this seems to be a concerning misallocation of priorities.
This week saw UK Finance publish their data showing mortgage lending by their members in 2017. The data shows members’ gross mortgage lending in the latest calendar year and balances outstanding at the end of 2017, rounded to the nearest £100 million and ranked on the same basis.
This means that the very smallest lenders – those with under £50 million of lending – do not feature in the research. Lenders reported data for both new lending and mortgage balances, and accounted for some 97 per cent of the total mortgage market – as published by the Bank of England.
For 2017, gross lending totalled £257 billion, up four per cent on 2016. This was lower than the 11 per cent growth seen in 2016. However, within this UKK Finance have seen increased competition for business. This year there are 65 lenders in their analysis for gross lending, up from 60 lenders the year before. Growth in new lending was strongest amongst lenders ranked between 21-30 in 2017, who lent £3 billion more for housing than 2016’s 21-30 group – a growth rate of 40 per cent.
The largest lenders saw more modest growth. Although Lloyds has continued to increase lending activity with a seven per cent rise compared to 2016, the next three lenders on the analysis (Nationwide Building Society, Royal Bank of Scotland and Santander) all saw lower volumes than in 2016, compared to the previous year and corresponding contractions in market share. Despite this, there was no change in the top ten gross lending table, with all lenders retaining the same rankings as in 2016.
However, there was movement in the 11-20 group: Paragon climbed from 21st to 19th with an impressive 78 per cent increase in lending activity. Legal and General also made a sizeable jump, moving from 27th to 23rd place following a 67 per cent increase in lending. Other lenders with significant lending growth include: Tesco Bank (71 per cent), Metro Bank (50 per cent), Foundation Home Loans (200 per cent), and Pepper UK (200 per cent). In their most recent market forecasts, UK Finance predicted gross lending of £260 billion in 2018 – an increase of about two per cent. Lending in the early months of 2018 has, so far, outpaced these forecasts, driven largely by stronger-than-expected remortgage activity. The uncertainties were set out last year – not least those relating to the UK economy – and remain; these have the potential to affect the path of lending for the rest of this year and beyond. However, the market has shown this year that, yet again, it is competitive and robust enough to continue to help UK mortgage customers as their needs change.
The Family Gap
While the end of the school year can’t come fast enough for some youngsters, a third of the UK’s parents will be forced to take seven days or more off work this summer to take care of the kids, new research from Halifax has revealed. A fifth (19%) of parents will need to take at least two weeks off work to cover childcare gaps, with many relying on grandparents to step in.
Nearly half of children (44%) have even considered asking their parents to move in with them. This may not come as such a surprise to some as just under a third (31%) of grandparents already look after their grandchildren every week and almost one in 10 (9%) on a daily basis.
Across the country, parents in Northern Ireland are the hardest hit during the holidays, having to take 12.1 days off over the summer break to look after their children, compared to the UK average of 5.6 days. Meanwhile when it comes to having grandparents as house guests to ease the pressure, two thirds of Londoners have considered sharing their home with their parents, compared to only in 20 Scots mums and dads (5%). In reality though, only 2% of grandparents currently live with their children, although this doubles to 4% for Londoners. Grandmas and grandpas are also clocking up the miles to provide valuable childcare cover – commuting for an average on 2 hours 46 minutes each round trip, with those who provide weekly cover racking up nearly 143 hours a year.
The majority of grandparents (55%) live within 30 minutes of their children, while more than one in 10 (17%) are more than two hours away. Grandparents in Wales and Northern Ireland have the longest average travel times of 3 hours and 50 minutes and 3 hours 44 minutes respectively for each round trip, while those in London have the shortest journey, at just under two hours. Moving closer to their family is a priority for more than one in 10 (11%) grandparents, however this drops to 6% where a move is specifically to help with looking after grandchildren. Welsh grandparents are most likely to move to be closer to their offspring (20%), while more grandparents from the South East (13%) than any other region have already moved house to be nearer to their children and grandchildren.
On the other hand, more than one in 10 (17%) grandparents want to keep their current home so they have plenty of space for family visits. Downsizing is still a popular trend among grandparents with an empty nest, with more than one in five (21%) having already downsized and a further fifth considering moving to a smaller property. These options appeal most to grandparents in the North East and Wales (both 55%). The study revealed that pester power isn’t only for younger children – as two-thirds of parents (67%) admit to putting their parents under pressure to help look after their grandchildren. Grandparents also feel some strain, as almost half (47%) admit their children take it for granted that they’ll help out with childcare. Grandparents in London feel the most taken for granted (56%), followed by those in Scotland (54%) and Yorkshire (52%).
Shop till you drop
As the tenth anniversary of Barclaycard introducing contactless technology to the UK approaches in September, the latest insights from Barclays reveals ‘touch and go’ is now the preferred way to pay among British shoppers.
According to the latest analysis more than half (51 per cent) of all transactions up to the eligible spending limit of £30 are now made using contactless, which shaves seven seconds off the time taken to process a transaction compared to Chip and PIN.
The news comes as industry body, The UK Cards Association (UKCA), revealed that credit and debit payments have doubled in the last 10 years, with the increased use of contactless being one of the main drivers of this growth. While contactless card transactions have been continuing to grow over the past few years, data from the Index shows that mobile payments are now also catching on at a rapid rate. The amount spent by users of Barclaycard’s Android Contactless Mobile app has jumped by 90 per cent in 2017.
Shoppers in the midlands and the north of England are increasing their use of contactless more than anywhere else in the UK, with the biggest jumps in spending seen in Derby (up 45 per cent), Chester (up 44 per cent), Newcastle Upon Tyne (up 42 per cent), Coventry (up 42 per cent) and Stoke on Trent (up 41 per cent).
Fear of investing
Inflation can be the big enemy of savers, eroding the value of their hard-earned money according to Scottish Friendly. Even if inflation ticked along at the level the Bank of England tries tirelessly to keep it at (2%) it could nonetheless have a significant impact over time on money sitting in cash if interest rates are lower than inflation.
Currently, inflation is 2.4% and the very best easy-access cash savings rate paying just 1.33%2. Why then do savers not act and switch some of the money they have in cash to other investments which could potentially generate higher returns above inflation? In their study, Scottish Friendly recently found that half of all British savers are now suffering from ‘investophobia’, opting to leave their money in cash despite the reality of rock bottom rates.
A phobia can lead people to make decisions that aren’t easy to understand, or which may indeed appear to be irrational to an outsider. Scottish Friendly’s findings suggest that many savers may be acting in a similar fashion when it comes to investing. Indeed, more than two-thirds of the savers in the research are aware that interest rates on savings accounts are less than the current rate of inflation, but the fact that they are losing money in real terms seems to do little to change their minds. Furthermore, 53% of respondents said they wouldn’t consider investing in stocks and shares even though inflation reduced the value of the money they have in secure cash savings.
Why such behaviour? The most common reason cited by almost half of respondents was the fear of losing money via investing and certainly investing is not without risk and the value of investments can go down as well as up.
According to the latest research from the Halifax, house prices continue to remain broadly flat, with the annual rate of growth marginally slowing from 1.9% in May to 1.8% in June. Activity levels, like house price growth, have softened compared with the final months of last year and mortgage approvals have been in the low range of 63,000 to 67,000 since the start of the year, whilst home sales have remained flat so far this year. This is in contrast to the continuing strength of the UK jobs market with job creation still strong and pressure on household finances easing as real income growth edges up.
Figures suggest, at the half way stage of the year, the annual rate is within the Bank’s forecast range of 0-3% for 2018 and they continue to see very positive factors of continuing low mortgage rates, great affordability levels and a robust labour market. The continuing shortage of properties for sale should also continue to support price growth.
UK home sales grew by 1% to 99,590 in May but in the three months to May sales were 4.8% lower when compared to the same three months a year earlier. This weakness reflects the slowdown seen in mortgage approvals over the past year. Completed sales since December according to HMRC seasonally adjusted figures have held steady, averaging close to 99,000 per month.
After falling for 26 months in succession, new instructions edged up in May. Furthermore average stock of homes for sale on estate agents’ books held broadly steady, albeit close to historic lows. On the demand side, new buyer enquiries fell again, although the pace of decline has slowed since the start of the year.
Here Comes The Sun
In its latest report on the Mortgage Market, UK Finance have reported that the mortgage market is seeing a pre-summer boost, driven by a rise in the number of first-time buyers and strong remortgaging activity. There is also a particularly encouraging increase in homemovers, after a period of relative sluggishness in this important segment of the market.
The statistics indicate that there were 32,200 new first-time buyer mortgages completed in the month, some 8.1 per cent more than in the same month a year earlier. The £5.4bn of new lending in the month was 12.5 per cent more year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000. For Homemovers, there were 31,100 new mortgages completed in the month, some 4.4 per cent more than in the same month a year earlier. The £6.6bn of new lending in the month was 4.8 per cent more year-on-year with the average homemover being 39 with a gross household income of £55,000.
Completed remortgages totalled 36,000 in the month, some 7.1 per cent more than in the same month a year earlier. The £6.3bn of remortgaging in the month was 6.8 per cent more year-on-year. There were 5,500 new buy-to-let home purchase mortgages completed in the month, some 9.8 per cent fewer than in the same month a year earlier. By value this was £0.7bn of lending in the month, 22.2 per cent down year-on-year.
There were 14,600 new buy-to-let remortgages completed in the month, some 15 per cent more than in the same month a year earlier. By value this was £2.3bn of lending in the month, 21.1 per cent more year-on-year.
Affordability remains a challenge for some prospective buyers and this is reflected by a gradual increase in loan to income multiples, Meanwhile purchases in the buy-to-let market continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.
One Claimed Every Minute
The Association of British Insurers (ABI) has revealed that the number of travel insurance claims made in 2017 increased by 30,000 year-on-year to 510,000, costing £385 million and amounting to one claim every minute throughout the year. This is the highest amount paid since the £455 million Icelandic ash cloud pay-outs of 2010 and was largely driven by a significant rise in cancellation claims.
After a slight (£2 million) increase, medical expenses still make up a majority of the £385 million claims paid, despite an 11% increase in the value of claims for trip cancellations from £130 million to £145 million. Medical expense continue to be the most expensive type of claim, with an average of nearly £1,300 and many claims climbing to the tens of thousands of pounds.
The significant increase in cancellation claims was driven by notable airline disruption, restrictive bad weather at home and abroad, as well as the cost of the average family holiday increasing by more than £500 in 2017 according to estimates from Travelex. This further highlights the importance of buying travel insurance as soon as the holiday is booked – not at the last minute. Travel insurance acts as a guardian angel when overseas and should be an essential element of a holiday shopping list. Insurers are paying out £1 million every day to cover the unexpected costs of illness, injury or cancellation. Medical expenses can often cost tens of thousands of pounds, whilst the large increase in cancellation claims shows just how important it is to purchase cover as early as possible.
Changes to State benefits covering mortgage payments during prolonged loss of income due to sickness will not lead to a mortgage protection pay-out being means-tested against any benefit entitlement, a request for clarification from the Department for Work & Pensions (DWP) by the Building Resilient Households Group has revealed.
The introduction of a Support for Mortgage Interest Loan (SMIL), which came into effect on 6 April 2018, increased the need for mortgage holders to consider protection in order to protect payments in the event of long-term sickness absence or due to other causes. SMIL is help towards paying the interest payments on your mortgage or other loans for home purchase, repairs and home improvements. This help is in the form of a loan. Before 6 April 2018, SMIL was paid in the form of a benefit. However, now it is paid as a loan. Until now there was uncertainty as to how a received insurance pay-out would be treated under the new system. According to Building Resilient Households Group, the DWP has confirmed that any income received from an insurance policy specifically intended to cover mortgage payments will be disregarded when entitlement to means-tested benefits is assessed. This applies to both legacy benefits and Universal Credit.
The DWP also pointed out that two provisos should be noted. Firstly, if insurance pay-outs are restricted to the payment of a mortgage (direct to lender) they will be fully disregarded, but if the claimant has choice over how to spend the payments then any portion which DWP judge to be intended and used for mortgage cover will be disregarded.
Secondly, if a claimant applies for a SMIL their insurance pay-out will be taken into account when their offer of a loan is considered – however this is unlikely as people receiving an insurance pay-out covering mortgages would generally have no need for a loan.