Monthly Archives: September 2015

Weekly Round-up, 18th September 2015.

Mortgage Free?

Many people approaching retirement are finding dreams of an exotic holiday or new car beyond their reach, as around seven million over 50s are still paying off their mortgage, according to research by the Saga Equity Release Advice Service.

Despite working hard and saving all their life one in three over 50s still have a mortgage and on average they will need to find £50,000 to own their home outright and be mortgage free.

While many of those in their early 50s still have years of working life to chip away at their debt, around one in seven people in their 70s are faced with having to use their weekly pension to pay off what’s owed; instead of using it to enjoy their retirement as they had planned. On average these people have £40,000 left to pay.

Shopping around for a new mortgage could help people pay it off quicker but around one in three over 50s say they have never tried to renegotiate their mortgage. Perhaps many haven’t shopped around for a new deal because they think they won’t be able to get one because of their age.

In fact, one in ten over 50s say they are concerned about their lenders maximum borrowing age and it appears they are right to be worried as one in 14 (7%) say they have been prevented from moving their mortgage to a more competitive deal because of their age.

School Fee Planning.

According to the latest research by Lloyds Bank Private Banking, private school fees have increased by an average of 20% in the past five years, a rate of growth that is faster than the increase in the Retail Price Index (17%) over the same period. Since 2010 the average annual private school fee for day pupils has increased from £10,686 to £12,864 in 2015.

Whilst the average fee has out-grown the Retail Price Index by three percentage points it has increased four times faster than the 5% rise in full time gross annual earnings since 2010. In the past year the average fee has grown by 3% whilst both inflation and earnings rose by 1%.

Parents who had sent a child to a private school since 2010 would have incurred an average total cost of £70,3591 in fees over the period. In London this would have been on average £82,350, the highest amount across the country and 46% higher than in the North (£56,400), which was the most affordable region.

The average annual private school fee in 2015 of £12,864 is equivalent to 38% of annual average gross full-time earnings of £34,015; in 2010 the comparable ratio was 33%.

As a result of school fee inflation, there are now several relatively well paid occupations such as pharmacists, vets, civil engineers, and opticians, where someone on the average earnings for that occupation would be now be paying over a third of their gross annual earnings in school fees.

Time to Buy.

Tepilo, the on-line estate agent recently carried out a survey of 2,000 homebuyers, otherwise known as the British Buyer Barometer, to understand the thoughts and feelings of those who have either bought in the past 12 months, are in the process of buying or are planning to purchase within the next year. It appears the average buyer in the UK currently has a budget of £205,221. They have also owned two properties in their lifetime and are most likely to purchase a three-bedroom semi in the suburbs with their partner or spouse.

Of the most important things buyers look for when purchasing a home, location tops the list, with 65% of those surveyed outlining this as their most important consideration. This is closely followed by number of bedrooms (56%) and the size of the garden (41%). In addition, buyers place a keen focus on the layout of a property (34%), the inclusion of a kitchen-diner (29%) and the convenience of a toilet downstairs (19%).

Predictably, having friends and family in close proximity is important to 36% of people, a figure that rises to 65% for those in the North East. As for the size of properties, 45% of buyers opt for three-bed homes, while 27% plump for two-bed abodes. Meanwhile, 18% choose a four-bed property, and less than 5% purchase studios or one-bed houses.

It could happen to me.

Half of UK Consumers questioned for a new study by global insurer Zurich displayed a classic “it won’t happen to me” attitude, believing they have a less than one in ten chance of being unable to work through disability. And nearly two thirds (60%) think the risk for the rest of the population is far greater than it is for themselves, at up to a 3 in 10 chance of becoming too ill or disabled to work.

In reality however, figures show that 16% of the working age population in the UK suffer a disability that prevents them from working* and around 300,000 people a year fall out of work and into the welfare system because of health related issues’. According to the new study, three in four optimistic Brits also believe they’re doing enough to prevent themselves from occupational disability, and 42% feel the best way to do this is to maintain a healthy lifestyle.

But only four in ten have any awareness of how to protect their income should they become unable to work due to health reasons, and few have any protection in place. As well as underestimating their chances of being unable to work because of medical reasons, people also believe that if it does happen it will occur later. Just under half believe that those aged between 45 and 54 are at highest risk when in reality, the likelihood increases from the age of 40 to almost one in five and by 55 as many as 28% can no longer work.

Looking at the impact on their finances, 44% of Brits anticipate their income being cut by up to half if they became unable to work due to disability and only 15% say they could maintain their current lifestyle with this reduction. State benefits are considered to be the main source of alternative income though only a fifth think they would be eligible for support if their household income dropped by 30%. Employers and savings are considered other main sources of income.

Interestingly, payments by insurers are thought to play a minor role with 70% of respondents saying their employers didn’t offer income protection and three quarters having no such cover.

Pin the tail on the Chicken

Studies fitting chickens with prosthetic “dinosaur tails”, looking at the plausibility of fathering 888 children, and discovering the most painful bee sting points on the body are all among the latest winners of “Ig Nobel” awards.

The awards, parodying the Nobel Prizes, are given out each year for the most unusual or trivial achievements in scientific research.

Of this year’s winners, no-one was more deserving than Phd student Michael Smith, from Cornell University in the US, who tested the painfulness of bee stings on 25 locations on his own body. The two most painful places to be stung turned out to be the nostril and upper lip.

The chicken study was conducted to investigate the idea that birds are really surviving dinosaurs that managed to avoid being wiped out by a meteor impact 65 million years ago. Scientists led by Bruno Grossi, from the University of Chile in Santiago, fixed artificial tails to chickens and observed that the birds started to adopt the posture of Theropod dinosaurs – Tyrannosaurus rex and its relatives. The chickens’ centre of gravity shifted and the birds adopted a more dino-like hip-driven gait.

The awards, organised by the humorous scientific magazine Annals of Improbable Research, were presented at a ceremony at Harvard University in the US.


Who knows when change will come?

Healthy Diet

So how many people in the Financial Services World stayed awake overnight analysing news from the States?

The news from across the Pond was that the Fed held their rate at between zero and point two five. With the group meeting just once a quarter all eyes are now focussed on the December meeting to see if a rate rise will take place in 2015. Just like the UK Monetary Policy Committee (MPC), there was just one member who looked for a rise of 0.25%. We know that where the US leads others tend to follow, so we can probably predict with some level of certainty that the MPC in this country will meet again, will make some observations on China, the World, the oil price and probably the state of the UK job market including how unproductive we all are, and then give us an announcement on their change/no change decision.

All this talk in the markets has not dampened the UK mortgage market though, as highlighted by the Council of Mortgage Lenders. The Summer (or lack of it) has created more activity in the housing and mortgage market and its best performance since 2008. The body representing the vast majority of lending institutions in the UK estimates gross mortgage lending hit the magic £20billion mark in August, up 12% on the same month in 2014 and driven by a strong buy to let market. We are still nowhere near the giddy days of 2007/8 where transactions varied between 1.6m and 1.8m each year. Looking at the HM Revenue and Customs (HMRC) metric, the rolling 12 month total is just below its 6 year peak at 1.2 million, still a third off the peak – the debate is whether this is now the new norm or we still have work to do?

Perhaps if you factor in the facts that we are all living longer, moving house less, not building enough and struggling with affordability rules then perhaps we should all agree that there is little more that can be done until a significant rate rise creates a stir. Ultimately there will be a rate rise and it will probably soon, but the definition of soon is still to be determined – a month, a year, or even a lifetime. Who knows when the change will come? All I know is that poor diet is a bigger risk to life than smoking so I’m off for a quick salad, a strawberry smoothie and a good night’s sleep.

Neil Hoare

Commercial Director

Weekly Round-up, 14th September 2015.

Good Schooling.

Parents face parting with almost £41,000 extra to secure a home close to the country’s top performing state secondary schools, according to new research by Lloyds Bank.

In 2015, house prices in the postal districts of the top 30 state schools in England – defined as those secondary schools that achieved the best GCSE results1 in 2014 – were on average £40,728 (13%) higher than the neighbouring locations in their counties.

Overall, average property prices have now reached £344,446 in the postal districts (postal districts being HP9, NW11 or BR6 as examples), of the top 30 state schools in England. This is higher than their county averages (£303,738), by an average £40,728 (13%).

The postal districts of six of the 30 top state schools command a house price premium of over £125,000 compared to their surrounding locations. Homes in the postal district of Beaconsfield High School in Beaconsfield have the largest premium with homes trading at £636,132 (186%) above the average house price in neighbouring areas (£342,166).

House prices in the postal district of The Henrietta Barnett School in Barnet trade at a premium of £418,860 (76%) – the second highest; followed by St. Olave’s and St. Saviour’s Grammar School in Orpington (£180,447) and the Tiffin schools in Kingston upon Thames (£137,665).


According to the Halifax, house prices in the latest three months (June-August) were 3.0% higher than in the preceding three months (March-May). The quarterly rate of change increased from July’s 2.5% but remained below June’s 3.3%. Prices in the three months to August were 9.0% higher than in the same three months a year earlier. This was lower than June’s 9.6% but higher than last month’s 7.8%.

An increase in price of 2.7% between July and August is the biggest monthly rise since May 2014 (+3.8%). Monthly movements, however, can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend.

The average monthly costs associated with buying a three bedroom house in the UK for a first-time buyer was £666 in June 2015; 8% (£56) lower than the typical monthly rent paid on the same property type (£722 a month). With the price of a typical first-time buyer home rising by 8% over the past year, the difference between the cost of owning and the cost of renting has narrowed from £85 in to £56 over the past year.

Spirit level.

On a similar theme acceleration in national house price growth was reinforced by the continued imbalance between falling new instructions to sell and rising buyer demand, according to the August 2015 RICS UK Residential Market Survey.

The RICS price indicator reached a 15-month high in August, with a net balance of 53% more respondents reporting price-rises, and firm-growth being seen across all areas of the UK. Further analysis, using Office for National Statistics’ data as the comparator, indicates that prices now look likely to rise in the region of 6% over the course of 2015, compared with 3% predicted at the beginning of the year.

The strongest price growth is forecast in Northern Ireland, where prices are now anticipated to rise by 11% throughout 2015.

Both near and medium-term price expectations series from the survey are reflective of the imbalance between demand and supply. 37% more members are expecting prices to continue to rise over the next three months and 76% over the coming year. Meanwhile the agreed sales balance edged upwards for the fourth successive month but a more robust recovery in activity is continuing to be held back in part by the lack of stock on the market.

New buyer enquiries increased for a fifth month in succession, with 22% of respondents reporting a rise in demand, led by significant improvements in the West Midlands, Wales and the North West. New instructions, however, have yet to record any meaningful upturn since the middle of 2013, pushing average stock levels to record lows.

Financial shock non-absorber.

Almost one third (32 per cent) of UK adults have experienced a serious financial shock in the past five years such as losing their job or being unable to work due to injury – but only a third (35 per cent) had the right insurance in place to cushion the financial blow according to new research from the Money Advice Service. With many families just one step away from serious financial struggles, the Money Advice Service and Association of British Insurers have come together to encourage the UK to build up a rainy-day savings fund or consider relevant insurance policies to safeguard themselves and their loved ones against financial trauma.

Only a limited number of UK adults have a protection insurance safety net – such as income protection – with just one in five (17%) adults considering it a necessity – despite the same amount (18 per cent) knowing someone who’s standard of life was severely impacted due to not having protection in place.

28% of respondents said they couldn’t afford it, 17% hadn’t considered it, 11% didn’t have dependents and 1 in 10 wanted the cash available now. A further 10% thought they would never lose their job. Eight per cent of people aren’t concerned about what happens to their family’s finances after they are gone. However, 67 per cent of adults confirmed they have people reliant on their income, with children (35 per cent), spouses (26 per cent) and parents (6 per cent) topping the list of dependents. Furthermore, 44 per cent agreed that protection insurance is important to protecting their family. Only one in four adults (39 per cent) are confident that they enough money saved to cover unexpected costs.

For more than a tenth of UK adults (12 per cent), an incident happening to a friend or family member would be a ‘wake up’ call when it comes to considering protection insurance – while 16 per cent say having children would make them take out protection insurance.

Run tortoise run.

A speedy tortoise, fluffy rabbit and ball-catching dog are some of the creatures who have made their way into the record books. They feature in the Guinness World Records 2016 edition alongside alongside some humans who make the cut thanks to their natural gifts.

Bertie, a South African leopard tortoise, has raced his way into the records book by travelling 0.28 metres per second (0.6mph) – the greatest speed achieved by one of his kind – smashing the previous record that stood since 1977.

The feat was achieved at Adventure Valley in Brasside, Durham, in July last year, and is twice as fast as the average tortoise. At his current speed, Bertie could lock 100m (109 yds) in 6 minutes.

Other animal feats include the longest fur on a rabbit, which has been measured as 36.5 cm (14.37 inches) and belongs to two-year-old English Angora rabbit Franchesca from California. Purin, the nine-year-old Beagle from Chiba, Japan, has broken her own previous record of 11, taking the number of balls caught by a dog with paws in one minute up to 14.

Venezuelan Jeison Orlando Rodriguez Hernandez, 20, has been recognised for having the largest feet on a living person – at a size 26, they measure in at 40.1cm (15.8in), for the right foot, and 39.6cm (15.6in) for the left. While a Chinese married couple have been crowned the World’s tallest, with a combined height of 13 ft 10.72 in (423.47 cm).

The record for a sleeping hare is still to be set.

Expressed in Emojis?

So last week saw the interest rate held again, unsurprisingly as the monetary policy committee met and came out on an eight to one for the second meeting in a row. In a language only known to economists and those involved in the central banking world, the MPC stated: “Global developments do not as yet appear sufficient to alter materially the central outlook described in the August Report, but the greater downside risks to the global environment merit close monitoring for any impact on domestic economic activity”.

With the launch of a new site to help parents understand the text speak of their children, this statement roughly translates into: “sad face, sad face, frowny face, confused face, high five, lol, haha”. Of course the interest rate levels and loan to income rules haven’t helped subdue house prices with the Royal Institute of Surveyors and The Halifax both indicating rising prices in the region of between 6% and 9% per annum. So you have first time buyers unable to afford to get on the housing ladder and, if they do manage to put a foot on the rung, the next move upwards quietly moving further away. Each month sees deposits required getting bigger, the gap between 2 and 3 beds go from a double to a king, and pension freedom removing the need to down size.

The calls for more house building are well meant but don’t produce bricks or people to convert them into accommodation. Supply, or lack of it, and demand or too much of it will continue to drive prices above and beyond affordability. At the moment it feels ok with an eight to one on a nought point five but imagine how lenders will move the affordability goalposts when rates start to rise. And when this happens fewer people will be move-againers, fewer renters will want to put down roots and annuities will rise increasing unencumbered at older ages. What a challenge we have to ensure homeownership stays within the reach of the mass population and doesn’t become a preserve of the rich and the landlords.

Neil Hoare

Commercial Director

Weekly Round-up, 4th September 2015.

Route 66.

New data unveiled this week shows that Britons are spending an average of 66 per cent of their monthly income on essential bills and expenses. The research commissioned by ISA and savings provider Scottish Friendly also reveals that four in 10 (42 per cent) people believe they are not able to save any money on their monthly expenditures.

Rent and mortgage repayments were found to be the biggest drain on budgets with an average across the UK of £438 spent per month. However, those in London shell out 32 per cent more than the national average spending £579 per month on accommodation. Nevertheless, only seven per cent of people surveyed believe they can save money on this expenditure.

Things are further compounded for people living in the capital, where they spend 27 per cent more on commuting to work, 40 per cent more on home insurance, 86 per cent more on car insurance and 13 per cent more on food than the national monthly averages.

However, despite so many thinking they may not be able to save on bills, it’s not for want of trying. Nearly three-quarters (74 per cent) of people do regularly seek ways to save money on their essentials. Women are more likely than men to search out a better deal, with 77 per cent saying they do so, compared to 70 per cent of men.

The research also looked at how people would spend any extra savings made through shopping around on their bills. The findings revealed that 35 per cent of people would add any extra money into their savings, with this being a particularly strong sentiment in over 55s, where 40 per cent would put cash aside for a rainy day.

Crazy 88.

The claimed average annual number of cases written by brokers has risen to 88, a number not seen for over seven years, according to the Halifax Intermediaries Broker Confidence Tracker.

The Tracker shows a 14% increase in the average annual number of cases being written in the last quarter. Broken down by type of business, the average broker case mix shows an increase in almost all areas, particularly for first-time buyers (up 4 cases a year to 24) and home movers (up 3 cases a year to 25). The findings showed that broker confidence has also increased, with net confidence close to ceiling levels for their own firm, the intermediary channel, and the overall mortgage industry.

Only 1% of intermediaries reported being ‘not very confident’ in the outlook for their own business, in contrast to the three quarters (76%) that are now ‘very confident’ – the highest level recorded to date. In addition, the Tracker found 71% of intermediaries are now ‘very confident’ in the outlook for the intermediary sector, a rise of 21% over the last year.

The increased confidence among brokers stems from the perceived strengths of their own firms, as a result of rising demand for mortgage advice and improved business flows. Brokers also report seeing a benefit from overall improvements to the wider economy.

Roll Call.

With a record-breaking number of over 470,000 students being accepted into UK universities and colleges this year, the Association of British Insurers (ABI) is issuing a step by step guide to remind students what they should be doing to look after their belongings.

It is estimated that students now take £3,658 worth of possessions to university on average, with 45% of students owning a tablet and 95% of students now owning a smartphone. This can make them a tempting target for thieves.

The ABI is asking students to check their parents’ and university’s policy – some insurers will add students to their parent’s contents insurance but there may be restrictions. It’s important to check with the parent’s insurers to find out if the student is covered and what the policy includes. Some universities may provide insurance to cover students’ possessions in halls of residence and there are also student bank accounts which may offer certain types of insurance, like travel and mobile phone insurance, as part of the package.

Students should also remember that some policies will have set limits on the size of any claim. Making sure that those limits reflect the value of possessions is key as is keeping doors and windows locked when leaving the house to prevent thieves getting in easily.

Keep on Moving.

Research from online estate agency eMoov has identified the best time to sell your home is 2nd September. Google search trends highlight from the start of November until the end of the year, traffic levels to the major property websites Rightmove and Zoopla can decline by as much as 30%. With the average selling time in the UK taking 65 days according to Rightmove, or 55 days on average with eMoov, listing at the start of September gives a two month window in which to sell before buyer activity begins to decline.

The research also found 12% of the nation believe Christmas aids a sale, as people are determined to be moved in time for Christmas and so the process is accelerated by more pro-active buyers. Another driving factor is children and more importantly their schooling. With many schools closing their doors for admission by the start of February, securing that all important property in the catchment area improves the chances of getting the desired school place.

The final factor is the weather. Research indicates that 43% of people believe selling their home in the summer aids the process, whilst 17% agree it is more difficult to sell during the winter months. September offers the best opportunity while the weather is still nice enough to ensure those pictures on property listing websites show the house in the best light.

Questions, questions.

The Local Government Association (LGA) revealed some of the bizarre queries taken by the customer service hubs, which handle more than 50 million calls each year.

While most of the calls are about council tax and parking, the LGA – which represents more 370 councils in England and Wales – said some of the inquiries had left staff scratching their heads.

But whilst councils offer more than 800 services, some requests are simply beyond them especially as they are so often the first port of call for residents who are seeking a solution to their problems. Amongst the number of bizarre enquiries, one caller asked “Do you know how much water I need to cook super noodles?” (Stevenage Borough Council) Another was trying to track down the rules and regulations for hosting a mouse race (Somerset County Council) whilst an elderly lady asked for help on her crossword. Seven letters, James Bond’s cat loving nemesis, begins with B? (Staffordshire County Council).

Bake off fans will recognise the question “What size tin is required for the Mary Berry strawberry tart featured on the BBC?” (Somerset County council) and one person was so much in love they asked “I met a boy whilst on holiday in Ibiza, but I’ve lost his number. He said he lived in Nottingham and his dad is a bin man, do you know him?” (Nottinghamshire County Council). Answers on a postcard to…

The Ostrich.

This week saw the interest-only debate hit the wires again with the Citizens Advice Bureau (CAB) suggesting the problem is bigger than first thought.

In its review of the market 2 years ago, the Financial Conduct Authority suggested that the problem was not systemic; that the vast majority of consumers knew the implications of Interest only and had a plan of some sorts to pay the loan off. But research from the CAB estimates that the figure is higher with 934,000 who have no plan in place to repay the loans, and of those more than 432,000 have not even thought about the issue. This could be because those interviewed were simply getting on with their lives and enjoying the impact the current low interest rates is having on their daily lives. No-one has told them the effect on their mortgage by overpaying, that it’s a great idea to convert to repayment, or didn’t open the letter from their mortgage company telling them the impact of interest-only and their obligations under the contract. And, of course, we have the bigger issue that the Retail Distribution Review has created with many of your typical interest-only customers frozen out from advice on their investments (or lack of them).

The question is whether £500 per year spent on advice is more cost effective than paying down the balance on the mortgage itself? You could argue that people need advice on their pension, investments and general financial wellbeing so a conversation with a qualified financial planner is undoubtedly worthwhile for some, but I imagine for a significant number who went into interest-only due to affordability issues pre-credit crunch, they will not have improved their financial situation sufficiently for the advice to have a sufficient impact. Calculating the size of the problem is irrelevant, 2.4 million mortgages to be repaid according to the Council of Mortgage Lenders, 3.3 million people facing the challenge of repaying them, it’s the solution that needs talking about.

Extending terms, equity release or some hybrid of the two, the generation mortgage or let to buy, pension freedom or a pension boost product with the property in the pot, the ideas are endless and I’m sure there are clever actuaries out there with their calculators out. Ultimately we have to ask customers not to stick their head in the sand and at least ask themselves the question, encourage them to address the situation and at least be honest with themselves. The challenge as I see it can be summed up as; what’s the question, how do we ask it and how much does it cost to provide the answer?

Neil Hoare

Commercial Director

HomeLoan Partnership appoints Martin Sims to further strengthen the network’s Senior Management Team.

Martin Sims, Development Director, HLPartnership

HLPartnership (HLP) is delighted to announce the appointment of Martin Sims as Development Director.

Sims joins from Castle Trust, where he has spent the past four years in charge of the innovative lender’s distribution proposition. Previously Sims has held a number of senior level positions with Kensington and at Legal & General amongst others. Sims brings with him a wide ranging knowledge and expertise of financial services which will further strengthen the Senior Management Team at HomeLoan Partnership.

Christopher Tanner, HLPartnership CEO, comments:

“We understand that as the Network grows we need to bring in expertise that can help our Network members meet the ever demanding needs of their customer base. Martin Sims really understands the need to deliver good customer outcomes and will complement our Senior Management Team with the knowledge he brings to the business. Martin will play a pivotal role in the continued roll-out of our new cloud based CRM system and help members continue to deliver great service to their customers by enabling them to embed cutting edge technology into their business.”

Tanner continues:

“With the focus clearly on Intermediaries to help customers with their borrowing and protection needs, all Networks must evolve and align their proposition to the changing marketplace. Our investment in infrastructure and expertise will mean HLP is in a great position to support members now and in the future.”

Martin Sims comments:

“It’s an exciting time for HLP and its members as both grow in an intermediary led mortgage market and to have the chance to play a pivotal role in that growth is an opportunity could not turn down. Helping deliver the Network’s investment in innovative technology which creates greater efficiencies for members and an enhanced service for customers will ensure that HLP continues to grow. As our Lender and Insurance partners place ever greater reliance on the intermediary in terms of quality, high on my priority list is to ensure HLP carries on delivering both the tools and knowledge to keep our members delivering good outcomes both for the customer and our business partners alike.”