Monthly Archives: February 2015

Weekly Round-up, 27th February 2015.

Time for a castle?

According to the latest English Housing Survey by the Department for communities and local government, in 2013-14, the owner occupied sector remained the largest tenure. But for the first time, the proportion of households who owned outright was larger than the proportion who owned with a mortgage.

There were an estimated 22.6 million households in England. Overall, 63% or 14.3 million were owner occupiers, of which 33% (7.4 million) owned outright and 31% (6.9 million) buying with a mortgage. This has changed from 2012-13, when equal proportions were owned outright and with a mortgage. The private rented sector remained larger than the social rented sector with 19% (4.4 million) of households renting privately, up from 18% in 2012-13 and 11% in 2003. The proportion of households renting social housing remained steady at 17% (3.9 million).

In 2013-14 young households aged 25-34 were more likely to be renting privately than buying their own home with almost half (48%) of all the households rented privately, up from 45% in 2012-13. The proportion in this age group living in the private rented sector has more than doubled from 21% in 2003-04. Over the same 10 years, owner occupation in this age group dropped from 59% to 36%.

Average weekly private rents in London were consistently higher than outside of London from 2008-09 to 2013-14 at an average weekly private rent of £281 in London and £145 outside of London. There was a smaller difference between average weekly social rents in London (£125) and outside London (£87).

Almost twice the proportion of working households received housing benefit in 2013-14 than in 2008-09. In 2008-09, 19% of social renters in work received Housing Benefit, increasing to 32% in 2013-14. For working households in the private rented sector the proportion increased from 7% to 14% over the same period.

Known changes?

They were billed as the most radical pensions reforms in a generation – sweeping Government changes in the last Budget that would liberate millions of people in planning for their retirement. Yet new research from Octopus Investments (‘Octopus’) reveals that a staggering six in ten adults are not aware of some of the basic facts behind the massive restructuring of pensions coming in to force this April.

To gauge public understanding of the forthcoming changes almost a year after they were announced, Octopus polled a nationally representative sample of over 2,000 adults, presenting them with eight statements about the pension reforms and asking them to identify which were true.

While all statements were, in fact, completely accurate, the number of people who identified them to be true was shockingly low. Just 22% of people polled are aware that those over 55 will be able to take advantage of pensions flexibility when the reforms come into effect in April.

The low levels of awareness of some of these key facts only improved slightly for those that are potentially nearing retirement. Less than one in three (29%) of those polled those aged 55+ is aware that they will be able to take advantage of increased flexibility with their pension after April 2015, and only one in four people (25%) know that they are entitled to free guidance to help them make sense of their financial options at retirement.

In their latest analysis of the retirement market the Association of British Insurers (ABI) found that the retirement income market continues to change as more savers are waiting to make a decision.

The number of drawdown contracts sold by ABI members is slightly lower than last quarter but has more than doubled compared to Q4 2013, with a reduced average pot size. The value of drawdown contracts sold by ABI members is over 50% that of the value of annuity sales, compared to around 20% a year ago.

The number of annuities sold fell by 28% on the last quarter, and by 64% compared to Q4 2013. The percentage fall in the number of annuities sold is greater than the percentage fall in the value of annuities, suggesting that more people with smaller pension pots are deferring or taking cash.

Internal annuity sales have fallen by 54% compared with same quarter a year ago, and sales of external annuities have fallen even further. This means that there are now a greater proportion of internal annuities (62%). This compares with 52% during the same quarter in 2013.

These figures suggest that savers with larger pension pots are continuing to buy annuities, while others are entering drawdown with smaller funds than in the past. More people are clearly taking cash, but many are still making an active choice to buy an annuity with a small pot. This reflects the diverse needs and preferences of the population.

Keep on moving

Property sales in the first ten months of 2014 were 21% higher than in the same period in 2013, according to new research by Lloyds Bank. This was the highest for this period since 2007 with the number of sales in England and Wales during January through to October 2014 totaling 760,000.

There has been a considerable improvement in sales since the market reached the depth of its recession in 2009. Sales in the first ten months of 2014 were 60% higher than in the same period in 2009. Nonetheless, sales remained more than a quarter (27%) below the levels achieved at the height of the boom in 2007. All regions saw a rise in sales in 2014 with the biggest increases compared with 2013 in the East Midlands (26%), West Midlands (25%) and the North West (25%). The smallest rise was in Greater London (11%). This is consistent with house price inflation where it is clear that the market has slowed sharply in the capital since last summer.

In contrast, London has recorded the biggest pick-up in sales over the past five years as a whole with a 74% gain between 2009 and 2014. All regions have seen rises of at least 50% over this period with the smallest rises in East Anglia (51%), the North (52%) and the South West (52%).

Sales in all regions, however, remain lower than 2007 levels with transactions in the northern regions furthest below: the North (-41%), the North West (-37%), Yorkshire & Humber (-35%). The strongest recoveries have been in southern England: the South West (-19%), East Anglia (-20%) and the South East (-22%).

The overwhelming majority of towns in this survey – 97% – saw an increase in sales between 2013 and 2014. The majority of regions recorded an increase in all towns. London, however, experienced a decline in sales in a fifth (22%) of its boroughs. In contrast, all towns in the country saw a decline in sales in 2008.

The name’s Bond

According to the latest statistical release from the British Bankers Authority, personal deposits at high street banks declined in January possibly due to the take-up of pensioner bonds which became available during January.

Annual growth in personal loans and overdrafts (+3.9%) continued to rise, to the highest rate since late 2008 whilst lending to non-financial companies increased by £1.1 billion, largely due to higher borrowing by the retail trade, professional services and construction sectors.

Mortgage approvals were little changed in January compared with December, but were still 20% down on a year ago. Despite slower demand in the second half of 2014, the overall mortgage stock is 1.4% higher than a year ago.

Don’t forget to vote

The Financial Reporter Industry Awards returns for its sixth year to once again represent the most transparent, definitive awards programme in the industry. It has been an exceptionally busy and exciting year for all of us in financial services – and with this in mind, the awards recognise quality and good practice.

Last year’s awards saw more voters than ever before, with 3,600 people casting their vote – a figure which has increased each year since the programme begun, and one which the magazine hopes to beat this year.

At HomeLoan Partnership we are aiming at making it 4 in a row with in the Best Mortgage Network Category but we can only do that with your support. To cast a vote visit the Financial Reporter website.

And finally…

Don’t just leave a tip

A baby and thousands of pounds in cash are among the items left by forgetful passengers of a taxi firm. Boro Taxis, one of the largest taxi firms in the north-east of England, has been trawling through its records to pinpoint the most unusual things found by staff.

One forgetful customer managed to leave a baby behind after a trip. The youngster, believed to be less than a year old, was taken to a police station after the passenger failed to return. Other finds included £6,000 in cash belonging to a Middlesbrough businessman. The money was found in a bag by a Boro Taxis car cleaner. Contact details were found in the bag and it was reunited with its owner, who gave the car cleaner a £30 reward.

Another taxi collected an elderly woman to take her to the post office. Seconds after dropping off the lady and driving away, the driver noticed a brown envelope on the back seat. He stopped to investigate and found it contained £1,000. He immediately returned to the post office and handed the envelope to the lady. The driver said she was in such a state of shock, she did not say anything – not even thank you.

The Top ten weirdest lost property found by Boro Taxis are: 1. Baby, 2. Two dead mice, 3. £6,000 – mixture of pounds and American dollars, 4. £1,000 in brown envelope, 5. Goldfish in plastic bag of water, 6. Violin, 7. False teeth, 8. Artificial leg, 9. Large tent, 10. Zimmer-frame.


Toxic protection an opportunity?

The unintended consequence of the payment protection insurance miss-selling scandal has been to create a toxic connotation for the word protection. That’s the conclusion of Jonathan Evans, the chairman of the All Party Parliamentary Group for Insurance and Financial services at a recent meeting to discuss welfare reform with representatives from the ABI, Unum, Zurich and Aviva.

But is he right?

Those of us in the industry know that we missed an opportunity when the mortgage market review discussions focused on defined affordability criteria:- income, expenditure and possible changes to a financial situation over a typical 5 year window. No consumer will ever answer the question of “do you see any significant change to your circumstances” with “There is a probably a very real statistical risk I may die or have a serious illness which could seriously impact on my family or my ability to have income to meet my daily living expenses”. We all know when the economy is growing we all have a perception that people live forever and health is not an issue.

So what prevents us from designing propositions that bring together the mortgage and income protection? Is it a fear of bundling, of customer confusion, of pricing; or is it a fear of future regulatory intervention having experienced the impact of combining single premium PPI and secured loans. I’m not sure but what I do know is that when I’m driving my car I always have enough diesel going into the tank, and when I’m at risk of running out there are enough warning lights and indicators to force me to go to a petrol station to fill up. So is it time for the lending industry to help with clear warning messages on all of its documentation?

“Your home may be repossessed” is becoming a “health warning” that we all take for granted, similar to that old adage “smoking seriously damages your health” statement became overlooked on cigarette packaging. The Government woke up to the benefits of reducing smoking on the NHS and became a lot more aggressive with its communication tactics, blank labels, photos of the consequences, and TV advertising; it was no longer about the enjoyment some people had from the nicotine. Should we as a lending and protection industry follow the same route and demonstrate the impact of our wealth warning rather than great headline rates and pictures of happy homeowners? The long term benefits to families and the government budget of protecting income through insurance is easily identifiable – people being able to afford alternative treatment to the NHS, staying in their own homes rather than being forced into social accommodation, and the wealth creation that comes from a strong insurance sector. Surely it’s time for us all to create a world where the right income protection is the first thing a consumer asks for when sitting in front of an adviser and not the last attempted sale when it’s been worked out that there is enough money left over after the mortgage has been paid. “How do I stop smoking” becomes “How do I make sure I don’t get evicted” should carry the same aspirational outcome.

Mr Evans said: “In meetings I have highlighted the great damage the word protection has had from the whole of the PPI scandal and the tragedy that that has coincided with a time when probably more people have needed protection than ever before.” With this recognition of the problem is now an opportunity to make the income protection a solution rather than a product, and create incentives when taking it out in conjunction with a mortgage? Help to Buy had a significant impact on the housing market, is it time for the Government to look at a “Help to stay in” policy – we all know people who have used up all their savings for a deposit and can’t find emergency pot for times of trouble, an insurance solution is the only means to provide a robust financial future.

From the flames of PPI we need to create the phoenix of a fully protected consumer for the homeowner, tenant and landlord. Let’s hope the Government is open to reducing the toxic nature of the two letters I and P, whatever the order they come in and however many times they get repeated.

Neil Hoare, Commercial Director

Weekly Round-up, 20th February 2015.

Rent to buy

According to research by the Halifax, first-time buyers in the UK are £742 (9%) a year better off with their own home compared to those who rent. The average annual buying cost (including mortgage payments) associated with a first-time buyer buying a three bedroom house stood at £6582 in December 2014; £62 (or 9%) lower than the typical annual rent of £7203 paid on the same property type.
With the price of a typical first-time buyer home rising by 8% in 2014, the difference has narrowed from £80 (12%) to £62 since 2013 as the average monthly buying costs grew by £46 while average monthly rents increased by £28. However, at the same time, the number of first-time buyers increased by an estimated 22% in 2014, with 326,500 first-time buyers getting on the ladder – the highest annual total since 2007 (359,900).

In 2014, first-time buyers in London have, in cash terms, experienced the largest benefit from buying rather than renting a home. The average monthly cost of £1,275 for those who have bought compares to an average monthly rental price of £1,387; a saving of £112 a month (£1,338 over the year) or 8%. The second largest difference is found in the North West where first-time buyers were paying 17% less a month (£109 a month or £1,304 annually) than the typical private tenant in the region. The smallest differences between the monthly cost of buying and renting are in the East Midlands (£6 or 1%) and the South East (£15 or 2%).

Five years ago the average monthly cost of buying was £15 higher than the typical rent paid (£576 versus £561). Since 2009 the substantial improvement in the affordability of buying relative to renting largely reflects a 28% (£159) rise in average monthly rental costs over the past five years. This increase was twice as fast as the 14% (or £83) rise in average monthly buying costs.

Don’t touch

Spending on contactless cards more than trebled over the last year to reach a record £2.32 billion in 2014, according to data published by The UK Cards Association. The new figures reveal a year of major growth in contactless usage, with the total spend in 2014 more than double that of all the previous six years combined. Year-on-year, annual spending rose by 255 per cent from £653.4 million in 2013.

UK consumers used their contactless cards 319.2 million times last year, with 10 contactless transactions taking place every second. The total number of contactless transactions jumped from 100.4 million in 2013. The annual contactless figures for 2014 also show that there are 58.0 million contactless cards in circulation in the UK, a 52.2 per cent rise compared to December 2013. This is split between 36.9 million debit cards and 21.2 million credit or charge cards.

The average contactless transaction is now for £8.26, as at December 2014. Overall, debit and credit cards now make up a 75.8 per cent share of total retail sales, up from 51.6 per cent in 2004.

2 up,1 down – a committee call

With inflation being more than one percentage point below their target the Governor of the Bank of England sent an open letter to the Chancellor describing, among other things, the horizon over which the Monetary Policy Committee (MPC) thought it appropriate to seek to return inflation to the target. The latest minutes from the MPC noted that, with inflation below the target and unemployment above its long-run sustainable rate, there was no immediate benefit between returning inflation to the target and its immediate economic activity. Indeed, for inflation to return to the target, it would be necessary to eliminate the remaining degree of “economic slack” or capacity in economic output. The Committee therefore judged it appropriate to return inflation to the target as quickly as possible after the effects of energy and food prices movements had abated. In practice, this meant that the Committee would seek to set monetary policy so that it was likely that inflation would return to the 2% target within two years.

So it was a no change again although for two members, the immediate policy decision remained finely balanced: given the outlook for inflation beyond the short term, both concluding that there could well be a case for an increase in Bank Rate later in the year. All members viewed it as more likely than not that Bank Rate would increase over the next three years, however one member thought that the next change in the stance of monetary policy was roughly as likely to be a loosening as a tightening.

Market expectations of the future path of interest rates could be adjusted to reflect an even more gradual and limited path for Bank Rate increases than was currently priced. The fact that the UK banking sector was now operating with substantially more capital than in the immediate aftermath of the crisis gave some comfort meaning that reductions in Bank Rate to below 0.5% were therefore less likely to have undesirable effects on the supply of credit to the UK economy than previously judged by the MPC.

Brandon the Builder

Housing Minister Brandon Lewis welcomed new figures showing a rise in the numbers of homes being built across the country. The latest housebuilding figures show starts on new homes in 2014 totaled 137,010 – 10% higher than in 2013 and at their highest annual total since 2007.

And in London, starts in 2013 to 2014 were the highest since 2005 to 2006. Overall 700,000 new homes have been delivered since the end of 2009 – and over 200,000 of which have been since the launch of the Help to Buy scheme.

The 2008 economic crash devastated the housebuilding industry, bringing building levels to their lowest since the 1920s and leading to the loss of a quarter of a million jobs. Help to Buy has now assisted over 77,000 households have become homeowners with a fraction of the deposit they would normally require. Local housebuilding has increased over the past 6 years, and permission was granted on 240,000 homes in the year to October. Since 2010 nearly 217,000 affordable homes have been delivered with a further 275,000 planned by 2020.

With low interest rates and mortgages more affordable, the numbers of first-time buyers are at a 7 year high. Building hotspots across the UK include Croydon, where starts increased by 251% from 593 in 2013 to 2084 last year, Cornwall where building is up by 58%, Leeds, up 84% on new starts and Selby where the rise is almost 300% to 1,106 new starts in 2014.

Slow start for January

The Council of Mortgage Lenders estimates that gross mortgage lending reached £14.3 billion in January. This represents a 14% decrease from December’s gross lending total (£16.6 billion) and is 11% lower than the £16.1 billion lent in January last year.

Commenting on market conditions, CML chief economist Bob Pannell says: “The softer pace of approvals through the second half of last year contributed to the relatively weak pace of mortgage lending in January. Although seasonal factors will continue to weigh on activity levels for a while longer, we expect the underlying picture to pick up over the coming months, in line with stronger earnings and employment, gentle interest rate trends and recent stamp duty changes. As we forecast at the end of last year, gross mortgage lending remains on course to reach an expected £222 billion this year.”

And finally…

It’s only Monopoly money

The makers of classic family board game Monopoly are giving away 80 limited edition sets that will contain real money. To celebrate the game’s 80th anniversary in France, the game company behind Monopoly has replaced the paper money usually found in the games with euros, and one lucky player could end up purchasing a set worth over €20,000.

Board game manufacturer Hasbro has placed real money in 80 French sets, out of 30,000 junior, classic, electronic and ‘vintage’ varieties, one of which will have all its paper notes replaced by real money to the tune of €20,580.

Hasbro France brand manager Florence Gaillard said: “We wanted to do something unique”. Ms Gaillard said the idea came from customer feedback, with many telling the company – which has manufactured the popular family game since 1935 – they wanted to find real money in their packs.

The selected games were carefully packed up in total secrecy in the eastern French town of Creutzwald, ensuring they appeared exactly the same as ‘normal’ versions. Ms Gaillard press they did encounter one problem: packing the games full of real money, while not affecting the weight of the box, did make the packaging bulge – providing a clue to the canny customer.

Motorists are looking forward to the next version where they hope the same “fake to real” treatment is applied to the board pieces however animal lovers have expressed concerns about plans for the metal dog.

No change.

So the MPC minutes are out following the news that there is consideration of a bank base rate fall – like a crossword puzzle it was a 2 up 1 down position with the answer being two words (2,6), no change. The committee were resigned to the fact that there is no hope of inflation returning to 2% for some time whilst the fuel prices and grocery shopping continues to cost less this year; suggestions are now that pricing for a base rate rise has been built in for quarter one 2016. It will be interesting times if a rate rise coincides with a new Key Facts and plenty of European banking directives being delivered.

House builders have been busy according to the latest ONS data with seasonally adjusted starts are now 74 per cent above the dark times of the March quarter 2009, but we still have got some way to get back to 2007 where laid foundations were 39 per cent higher. Whether it’s a shortage of bricks or people to cement them together, with employment at its highest for some time I suggest the former, completions are 36 per cent below their March quarter 2007 peak. We still aren’t building enough new homes although annual housing starts were up 10% totalling 137,010 in the 12 months to December 2014, completions in England totalled 118,760 in the 12 months to December 2014, an increase of 8 per cent compared with the previous 12 months. Help to Buy’s timeline through to 2020 has given some level of confidence to the new build market so we should see the sector continue to deliver growth as long as the land is available. With many of the major supermarkets reviewing their expansion strategies, it will be interesting to see how many car parks and retail space becomes readily available for residential property development in the next few years.

Neil Hoare, Commercial Director

Weekly Round-up, 13th February 2015.

The Governor gives his view

In his latest view on the UK Economy, Mark Carney, Governor of the Bank of England highlighted that Inflation is now at its lowest level since the introduction of Inflation Targeting two decades ago and likely to fall further.

First, oil prices have halved since six months ago. Second, central banks around the world have provided additional stimulus most notably the ECB and third, partly as a consequence, global real interest rates have fallen further. In the United Kingdom, output growth remains solid and domestic demand growth robust.

Unemployment has continued to fall, reaching its lowest level for more than six years, with half a million new jobs created in the past year and growth rates of wages mean unit labour costs are beginning to pick up. According to the Bank, the combination of rising wages and falling energy and food prices will help household finances and boost the growth of real take home pay this year to its fastest rate in a decade. This will support solid growth in consumer spending.

Of course it takes time for monetary policy to affect the economy – its peak effect is generally estimated between 18 and 24 months – so the MPC can do little to offset the effects of recent falls in energy and food prices on headline inflation. In fact, in the MPC’s judgment, the appropriate time horizon to get inflation back on in its target of 2% is within the next two years.

Mt Carney feels this can be accomplished by adjusting the pace and degree of Bank Rate increases in coming years. Indeed market expectations of Bank Rate increases have fallen notably since November. On the upside, the MPC is alert to the risk that lower oil prices provide a greater-than-assumed stimulus to real incomes which could mean a Base Rate rise. On the downside, the MPC is vigilant to the risks of disappointing global growth or any signs that low inflation begins to affect inflation expectations and wage growth, leading to a change in the pace and degree of Bank Rate increases, an expansion of the Asset Purchase Facility, or there is a cut of Bank Rate further towards zero.

The prospect of limited and gradual rate increases may not make the headlines, but they will likely be consistent with the continued normalisation of the UK economy and with meeting the 2% inflation target.

Photo ID

From this month, Lloyds Banking Group is introducing a new service to allow customers to provide their identification documents and likeness to those documents remotely using a camera enabled computer, mobile or tablet. The Group will be the first major UK bank to roll out the new service meaning that on the occasions when identification documents are required as part on an online application, customers can provide these without needing to visit a branch.

The service utilises technology found in social media but is new to the banking industry. Customers will get real time feedback as to the readability and suitability of their documentation.

The new electronic identification and verification checks will start to be rolled out to customers from next week, beginning with those looking to add an additional party to an existing account. Once it has been opened up for all current account applications, the system will also be made available to all savings and credit card customers of Lloyds Bank, Halifax and Bank of Scotland by this summer.

Debt rising

Households in the UK took on an average of £395 of additional consumer debt in 2014, new analysis by The Money Charity shows – the biggest growth in any year since 2004.

Average consumer credit debt stood at £6,322 in December, up from £5,938 at the end of 2013. In 2013, the average increase was just £50 – but as the recovery continues, consumers are rediscovering their appetite for credit cards, overdrafts, and personal loans. Total lending, including mortgages, grew by £1,081 in the year, the most since 2008. At the height of the property boom this was growing by over £4,000 per household per year.

In total, people in the UK owed £1.466 trillion at the end of December, of which nearly nine tenths was mortgage debt. Other highlights of the research include 57% of credit card balances are bearing interest – the lowest proportion ever with the average household owing £2,287 in credit card debt. The average first-time buyer deposit is now 119% of the average salary.

Screening is key

Nine in 10 people think that cancer screening is ‘almost always a good idea’ despite the fact that screening uptake is lower, a Cancer Research UK study in the British Journal of Cancer shows.

The researchers, from Cancer Research UK’s Health Behavior Research Centre at University College London interviewed almost 1,900 people aged 50-80 years old about their views on cancer screening. They found that people in the UK are overwhelmingly positive about cancer screening, with half of all people (49 per cent) saying that they would even want to be tested for a cancer if it was incurable. Three in five people (59 per cent) also deemed it irresponsible to not take part in cancer screening.

But people were much less knowledgeable about the risks of screening. Half (49 per cent) were unaware that some cancers are slow-growing and unlikely to cause any problems during the person’s lifetime.

Screening – especially breast screening – can pick up these cancers leading to people being treated unnecessarily as well as enduring the shock of being diagnosed with cancer even though it would never have harmed them. Despite this 45 per cent of those asked said they would want to be screened for these cancers.

The researchers highlighted the difficulties this causes in helping people understand the balance of risks and benefits, and promoting informed decision making about cancer screening.

In the UK there are national screening programmes for cervical, breast and bowel cancer. In England, 58 per cent of people take up bowel screening, 78 per cent take up cervical screening, and 77 per cent take up breast screening.


Punny sotries

In Monty Python, scientists find the world’s funniest pun: ‘My dog has no nose. How does it smell?’ ‘Awful’. This year, British comedians are going to try the unimaginable feat of doing better than Monty Python at UK Pun Championships in Leicester this week, part of Dave’s Leicester Comedy Festival.

Comedian Lee Nelson says, ‘Hosting the UK Pun Championships was a right laugh but next year’s is going to be twice as much pun.’ So how are the competitors shaping up? Here are some of their best:

It wasn’t much fun having a broken neck, but now I can look back and laugh.

Jousting. What people from Birmingham ask bees. In Iran everyone’s scared of spiders, but in Iraq no phobia.

If Catwoman decided to go to Nepal, what would Catman do?

A tourist on the London Underground asked “Could you tell me how to get to the airport via Barking?” So I pointed at a map and woofed.

According to the BBC, sheep were spotted wandering round Chelsea wearing silk headscarves. Must be a Sloane ewes day.

My doctor told me that I have to stop drinking French liqueurs as they’re causing my internal organs to fill up with melted cheese- apparently absinthe makes the heart grow fondue.

I read a book about World War II that was only 4 pages long- it was Abridged Too Far.

Marvin Gaye kept a sheep in my vineyard. He’d herd it through the grapevine.

Down dooby doo down down.

So the Governor of the Bank of England has been giving a shipping forecast on the UK economy: Inflation low, turning negative growing again 2 years; Base rate low, could go down, rising more slowly, not soon; GDP strong, getting better, general public feeling swell. Base rates featured in just one line in a 3 page introduction to the February Inflation Report but grabbed the headlines across the news wires as Mr Carney summarised his letter to the Chancellor on a below target inflation rate. Of course this throws the fixed versus discount debate into the mix, we’ve never known such a confusing marketplace with the possibility that base rates mays go down as well as up.

Unfortunately the current historically low product pricing doesn’t seem to be igniting the UK mortgage customer’s appetite – new Council of Mortgage Lender data on the characteristics of lending in November 2014 show a decline in lending trends to first-time buyers, home movers and remortgaging, from the heights of November 2013; one bright spark – a year-on-year increase in buy-to-let lending although repossessions in the non-regulated space were slightly higher than residential. Obviously it’s easier to recover a home which doesn’t come under the rules of MMR or the poor PR as a result of a family evicted from their home.

Finally with an election on the horizon, is the Industry aligning itself behind David and George? The Intermediary Mortgage Lenders Association are accusing the industry as being “too conservative” with renewed optimism in the mortgage industry for growth in 2015 being overshadowed by post-financial crisis regulation, according to the latest Intermediary Lending Outlook research. Almost three quarters (74%) of brokers take this view, which is backed by nearly two thirds (65%) of lenders.

Neil Hoare, Commercial Director

The Mortgage Industry backs the Technology Revolution.

At a recent conference Santander for Intermediaries managing director, Miguel Sard, said: “I’m a little worried when we identify innovation with risk appetite. We need to avoid the mistakes of the past. I believe innovation is important but a big part of it is how we treat customers and technology is key. We need to be able to adapt to a new world.”

Stephen Smith, director mortgage club and housing at Legal & General, agreed innovation shouldn’t be confused with a move up the risk curve. “There must be many ways in which lenders and intermediaries can serve their customers better simply in the way business is done and in the design, and particularly the flexibility of mortgage products. So innovation, and indeed specialism does not need to mean more risk, just better understanding, better products and better service.”

Financial services director of Countrywide Nigel Stockton, agreed new technology will re-sculpt the mortgage market landscape. “Technological change is coming. Mortgages are sold 90% face-to-face and 10% via the web right now. That’s going to change and you’re foolish if you don’t think about that. I ask, what are Google going to do in this space as they’ve got more mortgage leads than any other provider?”

Chris Tanner, CEO of HomeLoan Partnership, believes that any Network which thinks its membership can carry on meeting customer needs in an increasingly digitized and connected age with outdated technology is missing the central point of being their strategic business partner. Tanner comments: “It is up to the Network to turn a vision of the future into reality, to help its membership really meet customer needs whether that’s through more effective education, greater communication or through the administrative efficiencies that the latest technology offers.”

Tanner continues: “We have all seen the growth of tablets and mobile technology, how consumers are more confident in their interaction on-line, and just how their expectations have grown in terms of multi-channel touch points. On the other side, we know lenders want greater quality of packaging. Both requirements can only be achieved effectively by having a relationship with your customer that goes beyond the single visit every 2 years. The technology platform we are launching shortly answers a lot of the challenges of modern day consumer and lender needs creating an effective and efficient consumer focused mortgage and protection adviser who is fit for the tomorrow we all see on the horizon.”

Click here to watch our new CRM trailer video.

Weekly Round-up, 6th February 2015.

Payday loans proving popular

Pay day loans are often advertised as being quick and convenient ways of borrowing money when customers are between paydays. New research* conducted on behalf of the Debt Advisory Centre found that over 3.5m people across the UK used this type of borrowing in the past 12 months. And interestingly, 44 per cent of these people used it to pay for everyday essentials, such as food and travel, suggesting they had no other option – or at least thought they didn’t. 34% of respondents who had taken out a loan used the money to pay their rent or mortgage, almost 1 in 5 went on holiday with the cash and 5% simply wanted an expensive way to treat themselves to something special.

*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 20th January and 27th January 2015, of whom 635 were in Scotland. Figures have been extrapolated to fit ONS mid-2013 population estimates of 50,371,000.

Roll with it

Political detachment among Britain’s young people could not only see millions missing out on having their say in the general election this year, but also hamper their financial wellbeing, leaving them vulnerable to identity fraud and even hinder them getting passports.

New research from global information services company, Experian, reveals one in three young Britons (aged 18-24) is not registered on the Electoral Roll, a situation that could have implications well beyond the ballot box. Among those who are on the Electoral Roll, a fifth admit that they were registered by someone else, such as a family member or their university. This comes as analysis of the latest voter registration numbers revealed a 47 per cent fall in the number of young people registering on the Electoral Roll.

And electoral indifference appears not to be limited to the nation’s youngsters. One in three people (31%) claim that they do not vote and this is their main reason for not registering on the Electoral Roll.

This latest research from Experian reveals that many Britons are in the dark about exactly how much not registering to vote can affect them. Banks, financial institutions, government bodies and other organisations use the Electoral Roll as a crucial tool to help verify people’s identities, and whether someone is registered can be a key consideration for lenders when deciding whether to grant credit.

In addition, many online services, such as retail websites also use the Electoral Roll to help check people’s name and address, yet just over half do not know that not being registered at their current address could negatively impact their credit rating, 6 out of 10 are unaware that it could help protect them from fraud and identity theft and a similar proportion do not know that it could hinder their access to online services. A quarter (24%) do not see why they should register.

Need the money?

Almost one in four (24%) homeowners remortgaging an existing property in December increased the size of their loan by more than £1,000 to free up capital to pay off other debts or spend elsewhere, according to research from LMS. Just shy of two-thirds (64%) did so to take advantage of the new lower mortgage rates that are currently on offer.

LMS, surveyed customers opting to remortgage at the end of the year and found that of those increasing their loan amount, almost one in six (17%) did so by as much as £10,000. Releasing equity in their home meant that 19% were able to fund home improvements, while almost one in ten (9%) said they would use the extra capital to consolidate their debts. A small number of homeowners also said they planned to use the money to help their children onto the property ladder (1%).

At the other end of the spectrum many customers were motivated by the potential savings on offer by remortgaging. Nearly two-fifths (37%) who remortgaged were able to make a monthly saving of up to £500 and 3% were able to save more than £500. More than three-quarters (77%) took advantage of the opportunity to switch lenders, while just 4% were encouraged by their existing lender to stay with them.

*LMS December Remortgage Report – average amount of equity withdrawn hit £28,200, the largest amount on record.

Findings are based on 681 respondents to a LMS customer survey in December 2014.

Percentages will not add up to 100 as respondents are able to select more than one option.

4th February, World Cancer Day

World Cancer Day takes place every year on 4 February and is the single initiative under which the Union for International Cancer Control (UICC), its members, and partners unite together in the fight against the global cancer epidemic.

Under the tagline ‘Not beyond us’, World Cancer Day 2015 took a positive and proactive approach to the fight against cancer, highlighting that solutions do exist across the continuum of cancer, and that they are within reach. The campaign explored how those involved in the fight against cancer can implement what they already know in the areas of prevention, early detection, treatment and care, and in turn, open up to the exciting prospect that there can be a positive impact on the global cancer burden – for the better.

World Cancer Day 2015 was articulated around four key areas of focus, Choosing healthy lives, Delivering early detection, Achieving treatment for all and Maximising the quality of life.

Supporting World Cancer Day International Health Care Group Bupa urged employers to encourage their people to reduce their risk of cancer with relatively simple lifestyle changes, such as exercising and stopping smoking. 14% of the employees surveyed said they had taken action on their lifestyle because of a health campaign run by their employer, so it is clear the workplace has great potential for encouraging lifestyle changes and improving global health.

Of the 17,800 employees from the UK, Australia, New Zealand, Poland and Spain who took part in the study, only 4% said their employer had run a health initiative relating to cancer. Only one in ten (11%) said their employer had run a stop smoking programme, and only 13% said their employer had run an initiative about exercise.

This contrasts with over a quarter (28%) of the employees surveyed, who said that they would like their employer to provide more guidance or information about exercise. Employees would also like guidance or information from their employer about cancer (16%) and stopping smoking (13%).
Of the 1,762 employers who were surveyed, over a third (38%) said that preventing cancer among employees is a priority for their organisation, but this is clearly not reflected in the initiatives currently being offered.

5,000 employed adults in Australia and 200 employers of higher managerial level in Australia were surveyed online during November 2014 by OnePoll. 1,000 employed adults in New Zealand and 162 employers of higher managerial level in New Zealand were surveyed online during November 2014 by OnePoll. 2,800 employed adults in Poland and 200 Polish employers of higher managerial level were surveyed online during November 2014 by OnePoll. 5,000 employed adults in Spain and 200 Spanish employers of higher managerial level were surveyed online during November 2014 by OnePoll.4,000 employed UK adults and 1000 UK employers of higher managerial level were surveyed online during November 2014 by OnePoll.

And finally, HMRediCulous

A pensioner who received an unpaid bill of more than £4.7bn says the tax man must have mistaken him for tycoon Richard Branson.
Doug Yeomans, 78, from Shardlow, Derbyshire, said the letter from HM Revenue & Customs ordered that a direct debit of almost £950m a month would be taken out of his account for the next five months to pay off the debt. The father-of-two said “I was a bit shocked when I saw the amount, I’m used to hundreds, not billions. They probably got me mixed up with the Chancellor of the Exchequer or Richard Branson, I don’t know.” George Osbourne was unavailable for comment.

Although business in the construction industry is picking up, the former builder said he found the demand for £4,742,354,255 waiting for him in a letter at the weekend ridiculous: “I could manage the £255 if I sold my Peugeot 206 and I’ll have to cut down on my shopping at Asda. It’s such a ridiculous figure I wasn’t too worried, I don’t know where they got their figures from.”

When Mr Yeomans got through to the Revenue, they admitted having made a mistake. “You can get an interview with the Pope easier than getting through to them,” he said. A spokesperson for HMRC said they were very sorry for the error and stated “We don’t talk about individual cases but when we make mistakes we aim to put them right fast and apologise.”

Another month, another half.

It’s the week that the Bank of England Monetary Policy Committee (MPC) met to decide on interest rates and unsurprisingly for the 70th occasion where the words from the Governor was “no change.” For many of us March 2009 seems a lifetime ago when the base rate hit its historic low, especially now that economic indicators are pointing at growth, mortgages are available again, albeit to the right people and even Lloyds Bank is suggesting that they may be back to paying a dividend on its shares. The fly in the ointment is inflation with fuel prices down, utility bills falling and a price war in the supermarkets. When we see the MPC look to replicate an announcer at a railway station and pick the words “all change please” is currently anyone’s guess.

One item of good news for homeowners but probably not for the first time buyer is that, according to the Halifax, house prices in the three months to January were 1.9% higher than in the preceding three months. This appears to be the first increase in the quarterly rate of increase for six months. Annual price growth also picked up to 8.5% from 7.8% in December, but remained significantly below last July’s peak of 10.2%. Whether this is the impact of the Stamp Duty reforms – properties that were priced to be under the interest rate banding but had expensive carpets and curtains are now just priced without extras, or if it’s just natural increases in value is unclear.

The Halifax are predicting house prices to grow between 3% to 5% in 2015 compared to 8% in 2014 suggesting that the Government’s intention to limit property prices through loan to income and debt to income measures is having some traction. Of course there is always the old adage of supply and demand, we don’t have enough of the right housing stock therefore prices are going to rise. With European Banking rules being introduced ready for March 2016, the already announced “accidental landlord” regulation to kick in, a general election and a shortage of sellers in the market, it’s a “watch this space” for property in 2015.

Neil Hoare, Commercial Director