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Weekly Round-Up: 18th January 2019
A mixture of competitive deals and schemes including Help to Buy saw even more first-time buyers get a foot on the housing ladder during November according to the latest analysis of the Mortgage Market by UK Finance.
Meanwhile, the research suggests homeowner remortgaging activity has steadied, after reaching its highest level in a decade the previous month as a large number of fixed-rate deals came to an end. Buy-to-let market new home purchases remain subdued, while remortgaging continues to grow as landlords lock into attractive rates.
In more detail 36,200 new first-time buyer mortgages completed in the month, some 5.8 per cent more than in the same month a year earlier. The £6.0bn of new lending in the month was 9.1 per cent more year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000. This is in contrast to the 1.1% growth in new homemover mortgages completed in the month, and homeowner remortgages completed at 1.3 per cent higher than in the same month a year earlier. The £6.8bn of remortgaging in the month was the same year-on-year.
For Buy to Let, 6,100 new buy-to-let home purchase mortgages completed in the month, and 15,000 new buy-to-let remortgages completed in the month. Remortgaging was 9.5 per cent more than in the same month a year earlier.
On the rise
Retired homeowners released £3.6 billion in new property wealth last year as the market doubled in size in just three years, new data from Key Retirement Solutions revealed. When further advances and additional drawdown are taken into account, figures suggest the market is now approaching to £4 billion, up from the £1.4bn in 2014.
Equity from people’s homes paid out nearly £10 million a day in 2018 with customers releasing an average £76,500 to improve their standard of living in retirement. The statistics indicate that the number of customers using money to help families rose to 27% from 24% the previous year highlighting how property wealth is increasingly supporting a wider range of financial needs for retired people. Money gifted to family and friends is typically being used to clear debts, pay for significant life events such as weddings or to fund house deposits. The figures show other major uses of gifts are to pay for large family holidays, fund university fees or buy cars.
The most popular use remains funding home and garden improvements with 64% re-investing some or all the money in their houses – often to “age-proof” the property. Around one in three (33%) paid for holidays and 31% used some or all the cash to clear credit cards or loans while 22% paid off existing mortgages.
Care takes its toll
Sandwich carers – those who care for both sick, disabled or older relatives and dependent children – are more likely to report symptoms of mental ill-health, feel less satisfied with life, and struggle financially compared with the general population. That’s the conclusion of the Office for National Statistics in its latest study into the Health & Wellbeing of the UK.
Almost 27% of sandwich carers show symptoms of mental ill-health while caring for both sick, disabled or older relatives and children. Around 1.3 million people, now have this responsibility and as a result are more likely to experience symptoms of mental ill-health – which can include anxiety and depression – than the general population (22%), according to the ONS analysis for 2016 to 2017.
The prevalence of mental ill-health increases with the amount of care given. More than 33% of sandwich carers providing at least 20 hours of adult care per week report symptoms of mental ill-health, compared with 23% of those providing fewer than five hours each week. More than 72% of the sandwich generation are aged between 35 and 54 years, while 62% are women. Whereas among the general population, 38% are aged 35 to 54 years and 51% are women. Many sandwich carers are not satisfied with the amount of leisure time they have. Those looking after their relative in their own home – half of whom provide at least 20 hours of adult care per week – are least satisfied. Women sandwich carers are also much more likely to be economically inactive than men – 28% are not part of the labour market, compared with just 10% of men in the same situation. It should be said, though, that the majority of sandwich carers are able to balance their job with caring responsibilities. More than 59% of those providing care at home say this does not prevent paid employment.
Clearly, caring for two generations could have an impact on carers’ finances. One in three sandwich carers say they are “just about getting by” financially, while one in ten are “finding it difficult” or “very difficult” to cope. Meanwhile, only 17% say they are “living comfortably”, compared with 32% of the general population.
The Association of British Insurers this week has set out advice for consumers and businesses who may be affected by a no-deal Brexit. In new guidance drivers are being advised of the need to contact their insurer, arrange what is known as a Green Card and take it with them if they wish to drive their vehicle in the EU in the event of no-deal.
Green Cards would be required under EU regulations as proof of insurance if there was no-deal. The documents are supplied by an insurer and customers are advised to contact their insurer about a month before they travel to get one. Those who travel without one may be breaking the law. The same requirements will apply to EU motorists travelling to the UK. Among those affected include people who drive across the Northern Ireland/Republic of Ireland border, anyone planning to take their vehicle to Europe e.g. a family planning a holiday to France in the Easter holidays and any freight company planning to transport goods into the EU after 29 March.
Although an agreement between the relevant European insurance authorities was made in May 2018 to waive the need for Green Cards in the event of a no-deal Brexit, this has not been confirmed by the European Commission, hence the industry is planning on the basis of Green Cards being required.
This year’s Total Tax Contribution Study for the UK banking sector, commissioned by UK Finance and based on analysis by PwC, found that banks now pay £1 in every £8 of corporation tax in the UK. Total revenue raised by corporation tax for the sector, including the banking surcharge, has increased by 13.6 per cent since last year and is now over four times higher than the levels seen in 2014, despite the UK’s main corporation tax rate falling in that time.
The banking sector’s total contribution to the public finances has risen by £5.4 billion since 2014, while overall banks are now paying the equivalent of over half (50.4 per cent) their total profits in taxes. This is partly a result of sector-specific taxes such as the bank surcharge, which generated £1.8 billion in the 2017/18 tax year, and the bank levy, which raised £2.8 billion over the same period.
This year’s report also includes separate analysis by PwC on the comparative total tax rates faced by a typical corporate and investment bank in five leading global financial centres including London. This research finds that such a bank would face the highest total tax rate in London, reflecting sector-specific taxes in the UK.
As they expected
According to the Halifax, In December the average cost of a home was £229,729 and annual house price growth stood at 1.3%, a stronger monthly growth figure for December which was an improvement from a weak November. Overall, house price growth in 2018 was within the range of 0-3% as the Halifax forecasted at the start of the year.
In 2019, the Bank is expecting continued stability in house prices with between 2% and 4% price inflation. This is slightly stronger than 2018, but still fairly subdued by modern comparison. However, the Bank has tempered its overcast suggesting that this expectation will clearly be dependent on the Brexit outcome, with risks to both sides of their forecast.
Of course, there are a number of other factors that will impact the market in 2019. The need to raise a significant deposit still acts as a restraint for those looking to buy a new home, limiting the number of potential purchasers. This year, the Bank has highlighted mortgage payment affordability as more difficult to predict. There are competing pressures with signs of positive annual pay growth supporting affordability, but risks associated with the potential for higher interest rates are pulling in the other direction. On balance the Halifax do not see affordability pushing house price growth significantly in either direction.
The shortage of homes for sale and continuing low levels of housebuilding both constrain the supply of houses, and in turn support current high prices, which the Bank suggests will continue to inhibit demand in 2019.
New data obtained by Royal London reveals nearly a third of public health funerals carried out were as a result of bereaved families being unable to afford the cost of a funeral. A public health funeral is held by a local authority if the deceased has no family or the family are unable or unwilling to cover the cost of the funeral. The data is based on Freedom of Information (FoI) requests submitted by Royal London to 390 local authorities in the UK.
The data shows nearly a third (31%) of families who turned to their local council for a public health funeral did so because they were unable to pay for the funeral. A basic funeral costs on average £3,757 according to Royal London’s National Funeral Cost Index, which also found one in 10 (12%) went into debt to pay for a loved one’s funeral. Other reasons for public health funerals included the deceased having no family (31%) and families unwilling to pay for the funeral (10%).
Local authorities spent almost £5.4 million on public health funerals in the financial year 2017/18 which is a 3.5% increase on the previous year (2016/17). More than 3,800 public health funerals were carried out across the UK last year, costing councils an average of £1,403. Local councils in the West Midlands spent a staggering £1.3 million on public health funerals, followed by London councils, who spent more than £800,000 and carried out the highest number of funerals (654).
Birmingham City Council in West Midlands spent the most, with public health funerals costing them £990,437. Armagh Banbridge and Craigavon Borough Council in Northern Ireland had the lowest spend on funerals at £275.
Take no Prisoners
In a letter to the Treasury Committee the Financial Conduct Authority’s chief executive Andrew Bailey has indicated that they are planning a change in their rules that could lower the housing costs of thousands of “mortgage prisoners”.
Research indicates that over 140,000 homeowners are trapped on high interest-rate home loans with unregulated or inactive firms, and are unable to switch to a cheaper deal. The Financial Conduct Authority (FCA) has now said it is considering a change to its affordability checks for those who are looking to switch.
Current rules mean that these homeowners are unable to move due to the strict affordability criteria when they apply for a new fixed deal, introduced in 2014. The change would apply only to those in this situation who are not seeking to borrow more on their mortgage, but just want to reduce their costs. Banks and building societies still need to agree to take on these customers.
The FCA said it had identified about 150,000 such customers, about 30,000 were with authorised mortgage lenders, while about 120,000 had mortgages held by non-regulated firms, which include for example Northern Rock and Bradford & Bingley customers. 10,000 mortgage prisoners are with lenders who are still actively operating in the mortgage market. These customers will have received letters during the latter half of last year outlining some of the alternative mortgage deals available from their existing lender.
Overall mortgage borrowing across the residential property market remains stable and the trend in households’ cash savings remains steady, that’s the message from UK Finance, the trade body for High Street Banks.
According to UKF, total credit card spending increased in November while borrowing growth remains constant compared with November last year. The increase in spending, which is largely offset by cardholder repayments, reflects the growing use of credit cards as a preferred form of payment, particularly in travel, as consumers take advantage of stronger customer protection and value-added benefits.
The trade body’s analysis revealed that the number of mortgages approved by the main high street banks in November was 10.6 per cent lower than November 2017 led by a reduction in re-mortgages. Approvals for house purchase were 1.2 per cent lower but remortgage approvals were 20.3 per cent lower. Approvals for other secured borrowing were 12.2 per cent lower.
£11.3bn of credit card spending in November was 7.5 per cent higher than November 2017. Over the past twelve months, the outstanding level of credit card borrowing grew by 5.3 per cent. Personal borrowing through loans and overdrafts grew by 2.5 per cent in the year to November.
More than 10,000 households made claims worth a total of £64 million to deal with the impact of subsidence in just three months of this year, the Association of British Insurers (ABI) has revealed. The figures for July, August and September are the highest level of subsidence claims since the record-breaking heatwaves of 2006 and 2003. The hot weather of 2018 saw some UK regions experience the driest months on record, particularly in the South East which is also well-known for building on subsidence-prone clay soil.
From the previous quarter, the number of claims jumped from 2,500 to 10,000 – rising in value from £14 million to £64 million. This increase of 350% is the highest quarter-on-quarter jump since records began more than 25 years ago. Subsidence usually occurs when the ground beneath a building loses moisture and shrinks. This can be caused by a number of things including prolonged dry spells which cause soil to lose water and trees and shrubs which can absorb significant volumes of water from the soil.
Subsidence is routinely covered by buildings insurance. Each claim is unique depending on the building, circumstance and severity involved so there is no typical approach to repairs. In some extreme cases a home may need to be monitored for a period of time and, if the home is uninhabitable during this process – the insurer may cover the cost of alternative accommodation for the homeowners until they are able to move back in.
Parents are potentially putting their family finances at risk by giving children access to smartphones and tablets without taking simple steps to protect against cyber security risks, new research from Nationwide Building Society shows.
The research highlights that more than one in ten parents (13%) will have purchased a smart device for their children at Christmas – adding to the 70 per cent of children who already have their own devices. The research, which surveyed over 2,000 parents with children aged two to 16, found that one in four (24%) parents admit that they do not know what malware is – with almost three in ten (28%) mums admitting to this lack of understanding, compared to one in eight (12%) dads (please see notes to editors for regional breakdown). Parents also admitted to taking a variety of risks, including not using strong passwords or changing them regularly.
The research also found that despite eight in ten (86%) parents sharing their smart devices with their children, less than half (46%) of parents have talked with their children about the dangers of cybersecurity. In contrast, over three in five (61%) have talked with their kids about their personal safety online. Nationwide’s research found four in ten (44%) parents admitted to not monitoring their child’s use of the internet when using a smart device, which could lead to unexpected consequences. Eight in ten (84%) parents were not confident their children know how to distinguish a fake email from a genuine one or recognise a fake download link (85%).
Despite this, less than half (46%) of parents have talked with their children about the risks of cybercrime – of these, around a third (35%) assume their smart devices are safe, one in ten (10%) don’t think the risks are that high, while eight per cent don’t have the time and a further eight per cent don’t understand the dangers.
Lack of understanding
Official figures show a million workers are off sick for more than a month every year, with new Royal London research showing half (52%) of workers would worry about their income if they were to become too ill to work for longer than a month. 42% do not think £92 a week would be enough to live on if they were to go off sick for a long period of time.
Nearly two-thirds (60%) found their employer’s sick pay policies difficult to understand, with one in six workers not knowing what their employer’s policy is. Employees are entitled to £92.05 a week Statutory Sick Pay (SSP) for up to 28 weeks, yet two in five (42%) didn’t think this was enough to live on if they were off sick for more than a year.
Employers may enhance SSP, but different companies have different policies – a quarter of those surveyed thought the opposite, and mistakenly believed sick pay policies were the same across all companies and industries. Some employers offer contractual sick pay, which is more generous than SSP and you could be entitled to it from the first day of sick leave.
The average UK worker stands to lose almost £450 in pay if they were off sick for a week without contractual sick pay. Employees are therefore being urged to think about how they would manage their finances if they were faced with this situation.
According to the latest UK Residential Housing Survey by the Royal Institute for Chartered Surveyors (RICS), ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market. Highlighting little choice for new buyers and fewer people interested in moving, RICS have suggested that Brexit is impacting sentiment in almost all areas of the UK.
It is evident that both buyers and sellers are playing a cautious game, and, where deals are being done, they are taking longer to reach completion. RICS shares the resounding sentiment of frustration from their surveyors who complete the research and are not surprised by this month’s outcome. Brexit was identified early as having a very politically charged debate, but it is felt that the current style of politics and continuing level of political uncertainty is significantly impacting the housing market and build environment.
Prior to the referendum, RICS research indicated that Brexit would only impact the higher end of the residential market, as the lower and middle market areas are domestically driven. Now, however, it appears that those looking to buy and sell homes across the price spectrum, as well as those looking to invest in the UK’s residential sector, are putting off decisions until there is more certainty.
Off the SVR
In their latest analysis of the mortgage market, UK Finance, the trade body representing major high street lenders in the UK, have said that remortgaging has reached its highest level in almost a decade, as homeowners take advantage of a competitive market and lock into attractive deals. This also reflects the large number of fixed rate mortgages coming to an end, which is expected to continue into 2019.
There has also been relatively strong growth in the number of first-time buyers, with schemes such as Help to Buy providing vital support to those getting a foot on the housing ladder. Meanwhile the buy-to-let market has seen a continued increase in remortgaging and a softening in home purchase activity, in line with ongoing trends in recent months.
There were 50,500 new homeowner remortgages completed in the month, some 23.2 per cent more than in the same month a year earlier. That’s £9.2bn of remortgaging in the month which was 22.7 per cent more year-on-year. And in Buy to Let, There were 15,700 new remortgages completed in the month, some 5.4 per cent more than in the same month a year earlier. By value this was £2.5bn of lending in the month, 4.2 per cent more year-on-year.
Festive thieves are gearing up for a busy festive period of easy pickings warns the Association of British Insurers (ABI). Last December, insurers dealt with the equivalent of 435 domestic burglary claims every day, paying £30 million to customers who were the victims of Christmas crime. That worked out at nearly £2,250 for every domestic burglary.
Easy seasonal pickings for criminals include Christmas gifts left in unattended vehicles, and presents under the Christmas tree invitingly in full view from the outside. The ABI’s advice to beat the Christmas criminals include avoid leaving presents in full view in unattended vehicles, if you cannot take them with you, put them in a locked boot. When putting presents under the Christmas tree, make sure that they are not easily visible from the outside and think twice about what you post on social media. Avoid details of expensive presents like jewellery, and do not advertise if you are going away of the festive period, so leaving your home unoccupied.
If you are going away over the period, make sure your home is left secure. If possible, ask a trusted neighbour or friend to keep an eye out for anything suspicious. Even if only popping round to the neighbours for a festive tipple, always lock your front door and secure any outbuildings or sheds, especially as they may store implements that can be used to break into your home. And remember when out Christmas shopping, be aware of pickpockets, as they love crowds.
New research from Barclays has revealed the British Christmas present run-down, and it’s bad news for grandparents who are set to receive fewer presents than four-legged members of the family. In fact, family pets can expect four per cent more presents that the nation’s grandfathers this year. Over a third (34 per cent) of pet owners admitted they will splash out on Christmas presents for their furry friends, compared to 11 per cent saying they will be buying for grandparents.
While the youngest child is often accused of being the most spoiled in the family, the research shows that it is in fact the eldest child who can expect to do the best out of Christmas this year. Not only will they receive more gifts than any other family member, but they will have the most spent on them – an average of £70.13.
Barclay’s research indicates that the average Brit will purchase 27 presents for their family and friends, typically spending £37 per gift. 65 per cent of Brits say they enjoy buying presents for their loved ones but nearly a third (32 per cent) admit to getting carried away at Christmas. As a result, a huge 68 per cent admit to worrying about their finances around the festive period – unsurprising when research has predicted that Brits will spend £17 billion on presents this Christmas.
The research also revealed that the top five worst presents to receive at Christmas were batteries, underwear, socks, a tie and soap. Nearly a quarter (24 per cent) of Brits have returned an unwanted gift
And 78 per cent of the Baby Boomer generation say children today get far more presents than they did when they were young.
House prices in UK national parks are on average £121,383 more expensive than similar properties in surrounding counties, according to new research from Lloyds Bank. All 12 national parks surveyed have higher house prices than the average for their county. Topping the list is the New Forest – known for its heathland, forest trails and native ponies – with a premium in excess of £300,000. This is followed by the South Downs – the newest national park and often referred to as the lungs of South East England – with a premium of more than £200,000.
The average house price in a national park is now £379,437, meaning homebuyers face paying an extra 47% compared to similar properties in surrounding counties. This is also significantly higher than the average England and Wales house price of £286,336. In the New Forest, the price leaps to £661,957, more than double the county average (an extra 107% or £342,830). At the other end of the scale, homes in Snowdonia – famous for its mountains and rugged landscape – cost on average £189,616, or a premium of just 2% (£4,374).
The average cost of a home in a national park is 11.6 times higher than local average gross annual earnings. The comparable ratio for England and Wales as a whole is 7.8 times average earnings. The New Forest is the least affordable national park, where the average house price is 15.9 times local earnings, while Snowdonia is the most affordable, with the average price 6.7 times local earnings.
House prices in national parks across England and Wales increased by £56,063 (17%) over the past 10 years, up from £323,373 in 2008 to £379,437 in 2018 (17%). The biggest percentage increase has been in the South Downs where prices have risen by 36% (£146,264) over the last decade. In contrast, Exmoor is the only national park where the average price fell over the last 10 years, down 2% (-£6,470) from £337,445 in 2008 to £330,975 in 2018. However, the £56,063 increase is £12,566 lower than the average house price rise since 2008 across the whole of England and Wales.
Spot the cracks
More than 10,000 households made claims worth a total of £64 million to deal with the impact of subsidence in just three months of this year, the Association of British Insurers (ABI) has revealed this week. The figures for July, August and September are the highest level of subsidence claims since the record-breaking heatwaves of 2006 and 2003. The hot weather of 2018 saw some UK regions experience the driest months on record, particularly in the South East which is also well-known for building on subsidence-prone clay soil.
From the previous quarter, the number of claims jumped from 2,500 to 10,000 – rising in value from £14 million to £64 million. This increase of 350% is the highest quarter-on-quarter jump since records began more than 25 years ago. Subsidence usually occurs when the ground beneath a building loses moisture and shrinks. This can be caused by a number of things including prolonged dry spells which cause soil to lose water and trees and shrubs which can absorb significant volumes of water from the soil.
Subsidence cracks usually appear very suddenly, rather than gradually and tend to be diagonal and wider at the top than the bottom. Thicker than a 10p coin, they are often found around doors and windows, and can cause dry wallpaper to rip or crinkle. Subsidence is routinely covered by buildings insurance. Each claim is unique depending on the building, circumstance and severity involved so there is no typical approach to repairs. In some extreme cases the home may need to be monitored for a period of time, and, if the home is uninhabitable during this process – the insurer can cover the cost of alternative accommodation until the homeowner is able to move back in.
Two in three (67%) of people in Britain are set to reduce overall spending this Christmas as the cost of living begins to eat into their ability to spend, a Nationwide Building Society poll has revealed. Nationwide conducted the research as part of its quarterly Spending Report to better understand the impact of Christmas on household finances, at a time finances are under increasing pressure due to rising living costs.
The seasonal poll of over 2,000 UK adults shows that some 67 per cent of people are aiming to rein in yuletide spending this year, with more than one in three (34%) cutting back due to reduced disposable income or tight finances (34%), while around one in six (15%) are concerned about their financial situation next year. Despite efforts to cut back, the cost of Christmas is expected to come to £741 when tallied up – including spending on gifts for family members (£347) and other festive spending (£394) such as parties, drinking out, eating out, decorations, cards, wrapping and clothes shopping. However, when it comes to gender, nearly three quarters (73%) of women aim to curb spending compared to around half (56%) of men.
The poll shows that despite 85 per cent of Brits setting a budget for Christmas, they underestimate the cost of it by around £300, with the average Brit expecting to spend £461 this year – far short of the overall figure of £741. This is supported by the fact that seven in ten (71%) admit to ignoring their budget, with close to three quarters (73%) admitting to getting carried away with spending compared to other times of the year. Brits expect to save money at Christmas by spending less, or nothing at all in some cases, on family and friends. Around half (48%) of those polled plan to spend nothing on their boyfriend or girlfriend, while 28 per cent plan to spend nothing on their husband or wife. Some 16 per cent are refusing to buy for any adult in the family, while one in ten (10%) are doing a family Secret Santa to cut the costs. Just six per cent are willing to cut out giving presents all together.
Children remain unaffected by this year’s planned festive cutbacks, with respondents planning to spend £153 on their kids, which makes up almost half of the present budget for family members, while almost one in five (18%) parents are planning to spend more than £300.
Cost of education
According to the latest research by Unipol into the accommodation for students in the UK, they found that in 2018/19 the overall average weekly rent stands at £147, an increase of five per cent since last year, of 8.9 per cent on 2015/16 and 31.3 per cent since 2011/12. The average for the private sector is £153, 9.3 per cent higher than the university mean of £140. Rent rise rates have exceeded RPI throughout the timeline and have become increasingly detached from the index.
There is no evidence of providers directly pegging rent increases to inflation, even though a significant number cite it as a key point of reference in rent setting. Proportionally, the gap between London and the rest of the UK is in line with earlier survey findings. The overall average weekly rent outside the capital is two thirds (68 per cent) of the average London level.
Unipol highlight the cost of not wanting to share facilities. For en-suite rooms, the 2018/19 weekly price for universities is £145 and for private providers £3 more at £148 per week. Standard stock in universities is markedly cheaper than in the private sector, £117 as opposed to £126. Weekly rents for standard self-catered accommodation have risen strongly in London in both the educational and commercial sectors between 2012/13 – 2018/19, by 44 and 30 per cent respectively. Weekly rents for institutional studios are slightly higher (£197) than for private providers (£193), although they are offered on shorter contract lengths on average. The most expensive rents are in London, the South East, South West and East of England, directly reflecting high land values. Among institutions, Wales, Scotland and the North West are the most affordable markets.
The average annual rent for 2018/19 is £6,366, up six per cent on the previous year and by a third on 2012/13. In London the average is £8,875 and for the rest of the UK £5,928. Since 2011/12, headline rents have gone up 4.8 per cent a year on a compound basis. On average, a student tenant signing up for a full contract term in 2018/19 will have paid £376 more than for equivalent accommodation in the previous year.
It takes, on average, 102 days to sell a property in the UK according to the latest Post Office Money City Rate of Sale report. The report, developed with the Centre for Economics and Business Research (Cebr), looks at the average time it takes for a property to sell in 35 major cities across the UK. Overall the amount of time sellers had to wait before receiving an offer was one week more – increasing from 96 days in 2017.
Homeowners in Scottish cities Edinburgh and Glasgow will see their homes sell fastest in the UK, spending 39 and 48 days on the market, respectively. Glasgow’s market also remains particularly competitive with the fastest house price growth of major UK cities. While properties in both cities remain relatively affordable when compared to the rest of the UK, both have also seen strong population growth which has increased demand for houses in areas with an undersupply of homes.
Properties in London and Blackpool take the longest to sell – taking on average 126 and 131 days. Despite London previously having one of the most competitive property markets, its expensive properties fuelled by years of double-digit house price growth, tend to take longer to sell. Properties over £1 million take 171 days on average to sell in the capital, whereas cheaper properties take only 99 days. Meanwhile, Blackpool sits at the other end of the spectrum; properties are extremely affordable, but it has the oldest average population, and therefore, may not be benefiting from the recent rise in first-time buyer sales on the property market.
Affordability hotspots, Belfast and Swansea, have seen the biggest fall in the time properties spend on the market – 17 and 14 days less than last year, respectively. Supply of housing is relatively low at present in Belfast, meaning there is limited availability of housing stock. Houses there are spending less time on the market before being purchased. Swansea, meanwhile, is affordable and an easily commutable distance to Cardiff, which has sustained demand there and led to a fall in time spent on the market.
Today’s the day
People across the UK are setting out to grab a bargain this week according to the latest Lloyds Bank Spending Power Report. With one in five hoping to save an average of £191 on their Black Friday spending, total savings could reach significant levels by the end of the day.
None are more enthusiastic than Londoners, where 30% will undertake some spending on the day. Those in the North West (22%) and Yorkshire and Humberside (21%) are also looking to take advantage. In the South West, just 13% see themselves splashing the cash, and those in Wales (16%) and the East of England (16%) are also less likely to seek potential bargains.
It’s no surprise that technology is a prime target for spenders, given how expensive these items can often be. Nearly half (45%) said they would buy small electrical goods like mobile phones and laptops, and 34% would be buying larger items such as television. One in four (24%) expect to buy household electrical items such as fridges and washing machines. Items of furniture (13%) and bags and luggage (13%) are also on the pad for savvy shoppers, and some may be weighing up a Christmas proposal with 17% looking for a discount on jewellery.
Black Friday is a fairly recent phenomenon in the UK, and it would seem millennials most likely to take part. 37% of 18-34 year olds plan to make purchases on the day, against just 9% of the over 55s. They are also more eager to make their cash go further and grab a bargain, with the average expected saving reported to be £216, against the £153 over 55s believe they will achieve. Interestingly, youngsters are more likely to be purchasing clothes in the sales (47%).
23 million a day
Motor insurance pay-outs so far this year have reached a record level with over £23 million being paid every day, according to figures out this week (20 November) at the ABI’s Motor Conference. The pay-outs cover theft, own vehicle and third-party property damage, as well as personal injury compensation. Rising repair bills and theft claims are the main driving forces behind the rise.
The ABI’s latest motor claims data collected from its members highlights that, in the first nine months of the year insurers paid out a total of £6.4 billion to private motorists and in compensation to victims of motor crashes, equating to over £23 million every day. This was up 4% on the same period last year, to the highest level since ABI started collecting the data at the start of 2013.
The cost of theft claims, at £271 million, jumped by 32% on the same period last year. The number of claims settled, at 41,000, rose by 11% on last year in part reflecting the widely reported growth in keyless vehicle crime. Repair bills, which at £3 billion so far this year, have risen by 5% on the same period last year. The average repair bill this year currently stands at £2,137 with ever more sophisticated vehicle technology, such as more sensors in bumpers and windscreens, leading to a rise in repair costs.
The UK’s small and medium-sized businesses have created three times more jobs over the past five years than larger businesses, according to new analysis of the latest ONS data commissioned by Santander Business Banking. While firms employing more than 250 staff added around 650,000 net jobs over the five years from 2013 to 2017 (a 4% increase), those employing less than 250 added 1.7 million (a 14% increase) – underscoring just how central SMEs are to the health of the UK economy and the country’s current record high employment levels.
While larger businesses continue to employ more people in absolute terms – 16.47 million people versus 13.96 million for SMEs – Santander’s analysis suggests SMEs will overtake larger businesses as primary employers by 2030 if the five-year growth trend continues at the same pace. However, separate research commissioned by Santander Business Banking has found that significant numbers of young people are failing to recognise the significant job opportunities that SMEs offer. Just a third (35%) of Generation Z and Millennials leaving full time education say they wish to work for an SME, while an even smaller proportion, just one in six (18%), want to work for a start-up or micro business.
In contrast, the most popular career aspirations are to work for a large firm (51%), the public sector (51%) or a global multinational (49%). This is despite nearly two thirds (64%) of Generation Z and Millennials, equal to around five million young adults in the UK, saying they are concerned about their career opportunities on leaving full time education – suggesting that many are potentially discounting the role that SMEs play in the economy.
According to the latest statistics from UK Finance, overall remortgaging for both residential and buy-to-let properties have levelled out after a period of strong growth. This reflects the number of fixed rate loans reaching maturity. Buy-to-let home purchases have eased again in September, suggesting lending in this market remains subdued as a result of recent tax, regulatory and legislative changes. Demand for house purchases for both first-time buyers and homemovers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the South East.
The number of first time buyers was 29,400 in September, 4.5 per cent fewer than in the same month a year earlier. However the £5.0bn of new lending in the month was the same year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000. Those looking to remortgage totalled 35,600 0.6 per cent fewer than in the same month a year earlier. The £6.4bn of remortgaging in the month was 1.5 per cent down year-on-year.
For landlords, purchase numbers fell by almost 20% at 5,200 however at 12,300 new buy-to-let remortgages completed in the month, the number of people looking to secure a new deal remained relatively flat.
Pay your way
Four in ten (40 per cent) Brits know a ‘shirker’ – the friend who has to take the ‘very important phone call’ when the bill arrives. And a third (33 per cent) have fallen out with a pal because of their stingy ways, with one in eight (14 per cent) holding a grudge for a year or more. 51 per cent think ‘shirking’ is one of the most unappealing traits a friend can have, and mates who are tardy with paying back money are considered more annoying (33 per cent) than those who are always on their mobile on nights out (27 per cent) or constantly taking selfies (8 per cent).
The research from Pingit – the app that allows for fast, easy payments and bill-splitting with just a mobile number – comes just in time for the party season. The findings reveal that so-called shirking, or the avoidance of paying your fair share of the bill, is taking a toll on our wallets, too: Over half (54 per cent) of Brits claim they have lent money to pals, never to see it again, and on average, they’re down £74 over the past 12 months due to their frugal friends.
Whilst Brits are happy to let go an average debt of £24, it only takes an extra £3 for friendships to sour – friends get moody when ‘forgotten’ funds hit £27. As a consequence, nearly four in 10 (38 per cent) have avoided nights out with friends who never pay their share, whilst 13 per cent have ended a friendship altogether – all of this despite 50 per cent having been called out for shirking themselves.
Health in the Workplace
70% of employees say they don’t believe that employee mental wellbeing and musculoskeletal issues are taken seriously enough in the workplace, according to the results of a poll carried out recently by Health Cash Plan provider, Health Shield. 2 in 3 say that their business does not provide access to tailored support for mental health or musculoskeletal conditions and only a third have access to a 24/7 helpline to help look after their mental and physical wellbeing.
36% said that when they suffered from a musculoskeletal problem, it contributed to an increase in anxiety and 90% said they’d feel better knowing there was a clear treatment pathway available to help manage a mental health or musculoskeletal issue.
This comes at a time when the UK government is starting to shape policy around the way in which companies could and should be supporting employees with mental health and musculoskeletal issues. It represents part of a wider government objective to get more disabled people into work. In addition to seeking feedback from employers on what good practice looks like, government recommendations were recently published to ensure that companies report on equality of reward and recognition by April 2020.
Almost two thirds of Brits now enjoy using apps to save time (62 per cent) and almost a quarter to save money (24 per cent) when completing everyday activities such as shopping, banking and booking travel. However, one in six say they feel they are missing out on the full benefits of apps due to a lack of confidence and knowledge. Most surprisingly more than one in ten Millennials (25 – 34), usually considered the tech-savvy generation, said this was a key barrier to using apps to help with everyday tasks, according to NatWest research.
When it comes to banking, while more than two thirds of 18-44 year olds have used a banking app, the results show that more could be done to raise awareness of the security measures available, such as remote app locking. More than half of those who haven’t accessed banking through an app said their main concern was over the security of their bank details should their phone be stolen. While more than one in ten non-users (11 per cent) said they would use a banking app if they could get help from a professional in setting it up.
The research shows that once people feel comfortable using digital services, they really benefit and see the positives of saving time and money. But for those who aren’t so familiar with digital services, it can be harder to take that first step.
According to the latest analysis by the Halifax, the annual rate of house price growth has fallen from 2.5% in September to 1.5% in October, which is the lowest rate of annual growth since March 2013. However, this remains within the Lender’s forecast annual growth range of 0-3% for 2018 as prices continue to be supported by the fact that the supply of new homes and existing properties available for sale remains low. Further house price support comes from an already high and improving employment rate and historically low mortgage rates which are creating higher rates of relative affordability. Halifax see this continuing to be the case over the coming months and they remain supportive of their 0-3% forecast range.
HMRC have highlighted that, in the three months to September, sales were unchanged from the previous three months. The volume of residential transactions has been broadly flat over the past year and is likely to remain so in the coming months. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – fell by 1.3% month on month to 65,269 in September.
Finally respondents to the Royal Institute of Chartered Surveyors monthly UK Residential Market Survey continue to cite the mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises as holding back activity to a certain degree. The lack of new instructions coming to market continues to impede activity and new instructions were down for the second consecutive month.
Don’t stand for it
More than 15 million people in the UK routinely miss out on refunds, replacement products and getting problems sorted because they don’t know how to complain with confidence, new research reveals. In a study for the Financial Conduct Authority (FCA), which is encouraging people to check if they were mis-sold PPI and make a complaint before they miss their chance, 28% of Brits admit they put up with situations including queue jumpers, sub-standard meals and poor service because they lack the confidence and know-how to speak out.
The study shows the art of complaining is at risk of dying out, with younger generations the least likely to be proactive about getting problems resolved or their money back. Less than half (46%) of 16-24 year olds would complain about bad service in a restaurant (versus 71% of over 55s) and 16-24 year olds wait for over a week, on average, to complain about an issue, whereas over 55s take 2.5 days to speak up.
The FCA’s research, launched to highlight the upcoming 29 August 2019 deadline for PPI complaints, also shows younger groups are the most likely to leave it too late to complain, with 25-34 year olds twice as likely as over 55s to delay so much that they miss their chance.
Different generations’ views on what it means to complain may be fueling complaining’s status as a dying art. Younger people are more likely to see it as critical and ‘causing a scene’ than their parents, who associate it more with empowerment – taking a stand or making a protest. Just two in five (44%) under 35s relate complaining to ‘getting a good deal’ versus 68% of over 55s. In contrast, more than a quarter (27%) associate it with ‘awkwardness’, compared to just 11% of over 55s.<\p>
Hitting the right note
During an event at the Science Museum to launch the character nomination period, the Governor of the Bank of England announced that the new polymer £50 note will celebrate the UK’s achievements in science.
Mark Carney said that that the new £50 will celebrate the UK’s contribution to science from a wealth of individuals whose work has shaped how people think about the world and who continue to inspire people today. The banknotes are designed to be an opportunity to celebrate the diversity of UK society and highlight the contributions of its greatest citizens. Members of the public have six weeks to nominate a historical character who has contributed to science and influenced UK society. They could have worked in any field of science including astronomy, biology, bio-technology, chemistry, engineering, mathematics, medical research, physics, technology or zoology.
The Governor has also announced the appointment of four experts in the field of science to the Banknote Character Advisory Committee – Dr Maggie Aderin-Pocock, Dr Emily Grossman, Professor Simon Schaffer and Dr Simon Singh. They will join the permanent members on the Committee in creating a shortlist from the range of characters put forward by the public. The Governor will then make a choice from the shortlist and the final decision will be announced in 2019 alongside a concept design for the new note.
Spotlight on General Insurance
The Financial Conduct Authority has announced the launch of a market study into general insurance pricing practices which demonstrates that Insurers must continue to emphasise the core value of Treating Customers Fairly, particularly when it comes to charges faced by customers both new and those demonstrating a level of loyalty. Focusing on two of the most commonly held general insurance products home and motor insurance, the market study is also set to expand the regulator’s emerging work on how insurers use data and information on personal characteristics to price policies across different groups of customers, and particularly those classed as vulnerable.
Alongside the market study announcement, the FCA has also published a discussion paper setting out its approach to considering fairness of pricing in general. Both publications are available on the FCA’s website and have received widespread media coverage, indicating the level of public interest in this topic.
The FCA’s announcement follows concerns identified during its supervisory work, and previous publications such as its July 2018 research note on price discrimination in financial services. The FCA has identified four key issues related to pricing practices on which the market study will focus on consumer outcomes; the fairness of outcomes; the impact on competition; and remedies to address any harm the regulator identifies. The information gathering exercise is due to conclude by the end of January 2019, with an interim report in the summer to be followed by a consultation on any proposed remedies by the end of 2019.
The Office for National Statistics has released the latest data on its UK House Price Index (HPI) tracing house price inflation, the rate at which the prices of residential properties purchased in the UK rise and fall. The UK HPI, introduced in June 2016, includes all residential properties purchased for market value in the UK. According to the data, average house prices in the UK have increased by 3.2% in the year to August 2018 (down from 3.4% in July 2018), remaining broadly stable at a national level since April 2018.
Over the past two years, records indicate that there has been a slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England. The lowest annual growth was in London, where prices decreased by 0.2% over the year, down from being unchanged (0.0%) in the year to July 2018. The average UK house price was £233,000 in August 2018. This is £7,000 higher than in August 2017 and £1,000 higher than last month. On a non-seasonally adjusted basis, average house prices in the UK increased by 0.2% between July 2018 and August 2018, compared with an increase of 0.5% in average prices during the same period a year earlier (July 2017 and August 2017). On a seasonally adjusted basis, average house prices in the UK increased by 0.3% between July 2018 and August 2018
House prices in England increased by 2.9% in the year to August 2018, down from 3.3% in the year to July 2018, with the average price in England now £250,000. House prices in Wales increased by 6.2% over the last 12 months to reach £162,000. In Scotland, the average price increased by 4.1% over the year to stand at £153,000. The average price in Northern Ireland currently stands at £133,000, an increase of 4.4% over the year to Quarter 2 (Apr to June) 2018.
Happy to be Scottish
Happiness levels in Scotland have risen for a third consecutive year, according to the latest Bank of Scotland Happiness Index. The annual nationwide survey asks Scots how happy or unhappy they are in their local communities, to create an official cheeriness barometer ranging between -100 (very unhappy) to +100 (very happy). Overall, Scots are slightly chirpier than last year as the Index recorded a score of 44.9 (an increase of 1.2 points compared to 2017) and 5.9 points happier than they were three years ago.
Anyone looking for their next home might want to consider Central Scotland, with its leafy suburbs and The Helix – home of The Kelpies – as it’s been crowned the happiest place to live. The Highlands & Islands is the second happiest – perhaps partly because of its stark beauty and outdoors community – followed by the Lothians. Clouds may be gathering over West of Scotland though, as it fell to the bottom of the table this year. Getting older doesn’t necessarily mean becoming grumpier as the Index reveals that over 65s remain the happiest age group. They’ve consistently been table-toppers for the past three years. But at the other end of the age scale, 18 to 24 year olds’ happiness levels have grown by the highest number of points in the last year, and over the last three years. Those aged 35 to 44 are at the bottom of the table for the second consecutive year, and 24 points below the over 65s.
Two’s company when it comes to a happy home as for the third year in a row those households with two residents say they’re the happiest. Families of four have slumped four places to the bottom of the table, replacing those living alone, who move up just one position to fifth place. They say money can’t buy happiness but according to the latest Index, the more Scots earn, the happier they are. This year, Scots with a personal income of more than £60,000 are happiest, but last year, the magic number was between £40,000 and £59,999 – it’s moved to second place.
Lost in pension
The scale of the UK’s lost Pensions Mountain is exposed last week by research carried out on behalf of the ABI. In the largest study yet on the subject, the Pensions Policy Institute (PPI) surveyed firms representing about 50% of the private defined contribution pensions market. From this PPI found 800,000 lost pensions worth an estimated £9.7 billion. It estimates that, if scaled up to the whole market, there are collectively around 1.6 million pots worth £19.4 billion unclaimed – the equivalent of nearly £13,000 per pot. This figure is likely to be even higher as the research did not look into lost pensions held in the public sector, or with trust-based schemes typically run by employers.
Insurance providers make considerable efforts and spend millions every year trying to reunite people with lost or forgotten pensions. In 2017 more than 375,000 attempts were made to contact customers, leading to £1 billion in assets being reunited with them. However, firms are unable to keep pace with a mobile workforce that moves jobs and homes more often than ever before, so a digital solution through the Pensions Dashboard is now more important than ever. This would enable anyone to see all their pension savings, including the State Pension, together in a single online place.
Nearly two-thirds of UK savers have more than one pension, and changing work patterns means that the number of people with multiple pensions will increase. People typically lose track of their pensions when changing jobs or moving home. The average person will have around 11 different jobs over their lifetime, and move home 8 times. The Government predict that there could be as many as 50 million dormant and lost pensions by 2050.
Following HM Treasury’s announcement last week, the Bank of England confirmed that it plans to issue a new £50 note. This will be the final note in the latest series, all of which will be printed on polymer. The Bank will announce a character selection process for the new £50 note in due course, which will seek nominations from the public for potential characters to appear on the new note. Having successfully moved to polymer with the £5 and £10 note, the Turner £20 note will be issued on polymer in 2020 and the new £50 note will follow this.
The Bank of England is very excited to be starting the process of introducing a new £50 note highlighting the need to provide the public with high quality notes that they can use with confidence. Moving the £50 note onto polymer is an important next step to ensure that the Bank can continue to improve the notes in circulation, they are cleaner, safer and stronger and harder to counterfeit. And, because they last around 2.5 times longer than paper notes, they are also more environmentally friendly.
According to the Halifax, with the annual rate of house price growth easing to 2.5% in September from 3.7% in August and the quarterly rate of growth remaining at 1.8% for the second month, their analysis is seeing a steadying in house price inflation across these more stable measures. This is set amongst mortgage approvals and completed house sales remaining broadly unchanged, although a gradual pickup in wage growth has helped to support household finances.
The annual rate of growth is near the top of their forecast range for the Lender of 0% to 3% for 2018, as a low supply of new homes and existing properties for sale, combined with historically low mortgage rates and a high employment rate, continue to support house prices.
Quoting HMRC seasonally adjusted figures Halifax supported their assumptions by highlighting that the number of completed UK home sales remained near the monthly average for the past 12 months. On a monthly basis, sales rose between July and August to 99,120. In the three months to August sales increased by 1.2% from the previous three months. The volume of residential transactions has been broadly flat over the past year and is likely to remain so in the coming months.
On the range
Households borrowed an extra £2.9 billion secured against their homes in August the latest analysis from the Bank of England reveals. Net lending has been relatively stable over the past year or so, but this was the lowest monthly secured net lending since July 2016, and the annual growth rate ticked down to 3.1% in August. It has now been around 3% since late 2016, and remains modest compared to the pre-crisis period.
The number of mortgages approved for house purchase – which gives an indication of how much new mortgage lending might be expect to see in coming months – increased to 66,440 in August. This was the highest level since January 2018, although approvals for house purchase have remained within a narrow range in recent years. The number of approvals for remortgaging – which could lead to an increase in gross lending and repayments, with little impact on net lending – increased to 53,125 in August. This data has been volatile recently, and this was the highest since November 2017.
The net amount of new consumer borrowing, excluding mortgages, increased slightly to £1.1 billion in August, up from £0.8 billion in July. Despite this increase, lending remains a bit lower compared to much of the past two years. This weakness reflects subdued net lending for other loans and advances (which includes personal loans, overdrafts and car finance), which increased slightly to £0.7 billion from £0.6 billion in July. Net credit card lending increased to £0.5 billion on the month, in line with the average of the previous 6 months.
A worrying knowledge gap has been highlighted as research reveals a large percentage of people would willingly withdraw their own money at the request of a fraudster posing as the Police. The poll, by Nationwide Building Society, of more than 2,000 people shows that people in the UK are at risk of putting themselves in compromising situations due to a lack of awareness of scams and the ways in which criminals try to trick people into handing over their hard-earned money.
Although the poll shows that fraud education work is getting through to many, with just over a third (34%) indicating they would not fall for the scams posed in the research, three in ten (30%) would still transfer their own money into another account ‘to keep it safe’, if requested to do so by someone they believed to be representing the Police. This is despite the fact that neither the Police nor National Crime Agency (NCA) would ever ask anyone to do this.
It appears goodwill or a sense of civic duty could prove to be the main downfall for unsuspecting victims, with 29 per cent willing to withdraw their own cash from their bank branch or building society in order to hand it over to the ‘authorities’ to check for suspect fingerprints. While the Police or NCA would never request such action, scammers posing as law enforcement sometimes claim that branch staff are engaged in illegal activity in order to dupe their victims into playing an active role in handing over their money. In addition, more than a fifth (22%) of those surveyed would be prepared to withdraw their own money to purchase counterfeit goods from a retailer, hand the items over to the Police and then wait for a refund. Again neither the Police nor NCA would ever request a member of the public do this.
On a regional basis the research shows that Londoners are the most at risk, with more than half (54%) willing to follow any of the requests, followed by those living in the West Midlands (52%), and those in Wales and the North East (both 49%). The survey shows men are far more cautious than women, with more than a third (37%) not prepared to help the Police in any of the ways suggested. This compares to just 30 per cent of women who said the same.
An experience worth sharing
Aviva has published research, commentary and advice to support this World Mental Health day which took place on October 10th. They found that almost two in three (65%) UK adults say they have experienced a mental health condition at some point in their life.
Despite the prevalence of mental health conditions, the taboo persists. Just 52% of UK adults would feel comfortable telling people about their mental health condition and 10% of UK adults believe the stigma surrounding mental health conditions has worsened in recent years. According to the research, three in four (71%) women have experienced a mental health condition at some point in their life, compared to 58% of men.
The most prevalent mental health conditions were anxiety, stress, depression, panic attacks and insomnia. In the same way they would if people were physically ill, Aviva in encouraging people to feel able to speak up when their mental health is impacted, as the stresses and strains of everyday life can take their toll on everyone from time to time.
World Mental Health Day was an opportunity to encourage everyone to get rid of the stigma surrounding this topic and be more aware of the impact of mental health. Aviva say that no one should feel uncomfortable talking about how they feel nor of asking for help to find the best ways to manage their condition which can be as simple as talking to a family member, friend or doctor to tell them how you feel or a couple of minutes meditating and deep breathing can work wonders alleviating stress and anxiety.
Just 30 minutes of physical activity can tackle issues such as stress and insomnia and rather than browsing the internet or watching TV, a more calming activity such as reading or taking a bath can help to combat sleepless nights.