Monthly Archives: April 2016

Weekly Round-up, 29th April, 2016.

An Update from Robert Sinclair, CEO AMI.

The Association of Mortgage Intermediaries has now received their annual fees consultation from the FCA. According to AMI it makes difficult reading with little to encourage firms. Having seen increasing costs for MMR and the Mortgage Credit Directive it appears that this must now be sustained to fund activity to ensure the mortgage market is competitive and to supervise the sub-£1bn second charge market.

Robert Sinclair comments: “To say that the Canary Wharf grandees may have lost the plot, looks generous. What is causing firms most difficulty are the levies from the compensation scheme. These will continue at last year’s levels, but will continue to hurt firms with their scale. Whilst it is important that consumers are protected from bad advice, the scale of these payments is something else. Because good mortgage firms write protection, they are caught within the life and pensions class, which has to bear the costs of poor investment advice within Self Invested Personal Pensions. This makes as much sense as car manufacturers picking up the bill for failed shipbuilders. Later this year we have the chance to change this and we need to ensure that the mortgage sector speaks strongly on this to reduce these damaging costs on firms.”

However, whilst these are significant costs on firms, AMI have advised firms that they have to ensure that they can fully justify any fees charged to consumers. Being transparent is not enough particularly where the customer may be at a vulnerable point with their finances. In the Industry there appears to be small group of firms who see those looking for debt consolidation or second charge loans as requiring significantly more work and are therefore subjecting them to large broker fees. The FCA advise that they are seeing some broker fees at large four figure levels. They will be looking to firms in that area to be giving robust and well evidenced advice, and be able to justify such fees in a market where many firms in the first charge market work without broker fees. This will be an area of continuing scrutiny and it is up to all market players including lenders to ensure that the fees added to loans are fair and justifiable.

On-line DIY.

Almost half (43%) of UK adults have turned to digital technology to develop new skills at home, with privacy and flexibility driving the online uptake.

The fourth annual Halifax Insurance Digital Home Report found that a range of skills traditionally passed down between generations are now learned either online or through apps. Two-thirds (66%) have learned or improved their cooking skills in this way, almost as many (61%) have developed DIY and home maintenance skills, and a third (30%) headed online for sewing tips. In addition, activities which previously would have involved face-to-face instruction are also now being developed online, with exercising (54%), learning a musical instrument (26%) and learning a foreign language (40%) proving popular.

A widespread desire for flexibility and privacy is behind the move to digital learning. Nearly all who learn online do so in the privacy of their home (96%), and over half (54%) of respondents reveal that having the opportunity to learn on their own is the primary reason they use digital resources rather than traditional methods. UK adults also value the flexibility offered by online learning; almost two thirds (60%) of online learners say they prefer learning in this way so they can do it at their own pace, and a quarter (27%) like being able to track their progress themselves. They are also able to learn at times that suit them; people spend an average of 8.4 hours a month developing a skill online, most often at evenings (59%) and weekends (37%).

Prices edgy.

According to the Nationwide UK house prices edged up 0.2% during the month of April, and the annual rate of house price growth moderated to 4.9% from 5.7% in March. The slowdown returns the annual pace of house price growth to the fairly narrow range between 3% and 5% that, according to the Building Society, had been prevailing since the summer of 2015.

The latest report indicates that there was a surge in the number of residential property transactions in March (which includes mortgaged and cash purchases) ahead of the introduction of the additional stamp duty levy on second properties from 1 April 2016. There were 165,400 transactions in March which was an all-time high, some c11% higher than the previous peak of c149,000 recorded in January 2007.

Cash purchasers appear to have become a more significant part of the market since the financial crisis, accounting for around c35% of all transactions since 2008 (compared with around 25% in 2006/7). Cash investors would have also been better placed to buy properties in the relatively short period of time between the stamp duty announcement at the November Autumn Statement and the implementation of the tax changes on 1 April.

Prices edgy.

Aviva has released its 2015 claims statistics, confirming that £839 million was paid to protect UK families in 2015 and, with around £2.3 million was paid every day, it works out at £1,600 every minute.

More than 23,000 customers and their families benefited from protection payments including more than 15,000 life and terminal illness, over 4,000 critical illness and almost 4,000 income protection. 92.5% of critical illness claims were paid – amounting to almost £303 million with just 1.6% of critical illness policies declined due to non-disclosure. For life claims, over 98.9% were paid amounting to £500 million to the families of life insurance customers who died or were diagnosed with a terminal illness. 92.4% of income protection claims were paid, with a total of over £35 million. These figures are reported as a combined business (Aviva and Friends Life).

Working Bonus.

Fathers working full-time get paid a fifth more than men with similar jobs who don’t have children, according to a new report published by the TUC this week. The report shows that dads who work full-time experience, on average, a 21% ‘wage bonus’ and that working fathers with two kids earn more (9%) than those with just one.

The findings are in stark contrast to the experience of working mothers, says the report. Women who become mothers before 33 typically suffer a 15% pay penalty. The report explains that this fatherhood ‘wage bonus’ may be down to dads working longer hours and putting in increased effort at work in comparison to men without children. Labour market figures show that men with children work slightly longer hours on average than those without. In contrast mothers, even those in full-time jobs, tend to work shorter hours than similar women without children.

The TUC says another factor for the fatherhood premium may be positive discrimination. The report highlights international studies which found that CVs from fathers were more highly scored than identical ones from non-fathers, suggesting that employers view dads as more reliable and responsible employees, whereas CVs from mothers were marked down against those from women without children.

And finally…

The Chase had one of its funniest ever blunder this week, when a contestant displayed a staggering lack of geography knowledge. Barbara from Swansea was taking part in the cash builder round before taking on Jenny ‘The Vixen’ Ryan, when she made the TV blooper. Bradley Walsh asked: “Haymarket and Park are main train stations in which Scottish city?” The pressure of the TV studio must have got to the contestant, who blurted out the answer: “London”.

It wasn’t the only embarrassing moment in the episode as Barbara’s team mate Adam remained adamant that the UN agreement was signed in 1066, somehow muddling it up with the Battle of Hastings. The Chase has a history of some of TV quiz show’s funniest ever answers. “What member of the crow family, native to the UK has a bare face?” The answer Russell Crowe. According to one contestant a £2 coin issued in 2015 was criticised for a ‘schoolboy error’ because it showed King John holding a mobile phone. When asked to name the television naturalist the ‘Attenborough-asaurus’ dinosaur is named after, the contestant gave the answer “Erm, Attenborough… pass.”

And finally, in a multiple choice conundrum (apparently) in 2009, Sunderland scored against Liverpool when the ball deflected in off an ice cream van, not a sunbathing German or the correct answer a beach ball.

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Weekly Round-up, 8th April, 2016.

Water, water everywhere.

A world-first insurance scheme designed to help people who live in flood risk areas get affordable home insurance launched this week. The trade body for the industry, the Association of British Insurers (ABI) has published its top tips for homeowners wanting to take advantage of the fact that they can now get home insurance which protects them from the catastrophic effects of water damage.

Flood Re is not a home insurer itself but will work behind the scenes with existing insurance companies so that people who own and live in homes that are most likely to flood can shop around more easily to find policies with affordable premiums and excesses.

A list of the insurers that will be using Flood Re from Monday is now available on the Flood Re website with more to be added in coming months.

It’s a ten from Len .

According to the latest Halifax House Price Index, prices in the three months to March were 10.1% higher than in the same three months a year earlier and House prices in the latest three months (January-March) were 2.9% higher than in the preceding three months.

House prices rose by 2.6% between February and March. This more than offset February’s 1.5% fall. The quarter on quarter change is a more reliable indicator of the underlying trend as monthly house price changes can be volatile.

Flat prices have risen more sharply than prices for other property types since 2008, according to recent separate Halifax research. The 57% increase in the average price of a flat is significantly higher than the 37% rise for all residential properties over the period. Detached homes recorded the smallest rise (20%). Terraced and semi-detached houses saw price rises of 38% and 34% respectively.

A considerable proportion of the national rise in flat values has been due to the rapid increase in flat prices in London (62%); flats represent a much higher share of the property market here than elsewhere; half of sales in the capital (50%) are of flats compared with the UK average of 17%.

Too Good.

A new report from Citizens Advice, ‘Too good to be true’, reveals a mismatch between people’s confidence in spotting a scam and their ability to do so. Three in four (76%) said they are confident they can identify a pension scam but just 12% were actually able to do so when a scam was presented to them. The new research highlights how scammers’ tactics are shifting away from pension liberation schemes offering high rewards and moving towards free pension reviews and advice as a first step towards tricking people out of their pension pots.

The report also reveals people are particularly at risk of scams from phone calls, post and emails which come out of the blue. As many as 10.9 million consumers have received unsolicited contact about their pension in the last year. Almost two thirds of consumers (64%) say they would consider an unsolicited offer about their pension and many would only consult informal sources about whether the approach is genuine.

When asked how they would check whether a pension offer was legitimate, almost half of those who would consider an unsolicited offer about their pension (45%) say they would look up a company’s website and over a third (36%) would discuss with family. Only one third of people (33%) say they would make sure the company is listed on the Financial Conduct Authority’s online register, which is the best place to check whether a company is authorised to give regulated advice.

Buy to Let Highlighted.

The Bank of England’s Financial Policy Committee (FPC) published minutes its meeting in March this week in which it highlighted that the growth in mortgage lending had continued to be driven by the buy-to-let sector. The outstanding stock of buy-to-let mortgages, by value, had risen by 11.5% in the year to 2015 Q4, while the stock of lending to owner occupiers was unchanged. There had been a further increase in the number of buy-to-let mortgages of 6% in January, compared to December 2015, ahead of planned changes to stamp duty. Buy-to-let mortgages now accounted for 17%, by value, of the stock of total secured lending.

The Prudential Regulatory Authority (PRA) have undertaken a review of lenders’ underwriting standards in the buy-to-let market. It had revealed that some lenders were applying standards that were somewhat weaker than those prevailing in the market as a whole. In response to the review, the PRA Board have now issued new guidelines for testing the affordability of interest payments, including a minimum stressed interest rate to be used when lenders conduct affordability tests.

Brit’s Abroad.

A man concerned by Spanish nudists and a homesick expat asking where he could buy English bacon are among the most bizarre consular calls made by Britons abroad in the past year, the Foreign and Commonwealth Office (FCO) has said. The operators, who should only be contacted in emergencies, were also contacted by a lady in Lebanon looking for help recruiting an English butler and a man in Singapore asking for assistance obtaining illegal employment.

The unusual calls also included a man in South Korea asking what he could do with his old pound notes and a woman expressing her disappointment that the British Embassy had not sent someone to give her a tour of St Petersburg on her arrival in Russia.

Almost half a million calls were made to the FCO’s consular service in the past year.

Weekly Round-up, 1st April, 2016.

City View.

Home affordability – the ratio between average city house prices and average gross local earnings – across UK cities has hit its worst level in eight years, according to Lloyds Bank’s Affordable Cities Review.

The report shows that the average UK city house price has risen by 8% from £196,229 in 2015 to its highest ever level of £211,880 in 2016. This has resulted in average affordability in the nation’s cities worsening in the last 12 months from 6.2 to 6.6 times gross average annual earnings; the third successive annual decline in affordability.

The latest figures from Lloyds Bank also reveal a significant North – South divide, with 17 of the 20 least affordable cities located in southern England – with only Lichfield, Leicester and York appearing in the Top 20 outside of the South. By contrast, all of the 20 most affordable cities for homebuyers are outside of southern England.

Affordability in UK cities is, on average, now at its worst level since the average house price to earnings rose to 7.2 at the height of the last housing market boom in 2008.

Rules Tighten.

The Prudential Regulation Authority (PRA) has launched a consultation paper (CP) into its expectations of minimum standards that Lenders should meet when underwriting buy-to-let mortgage contracts.

According to the regulator, the proposals seek to ensure that Lenders both conduct their buy-to-let business in a prudent manner and prevent a marked loosening in buy-to-let underwriting standards. The CP has proposed a set of expectations for firms that underwrite UK buy-to-let mortgage contracts where the land is intended to be occupied as a dwelling on the basis of a rental agreement, in pounds sterling, regardless of whether the borrower is an individual or limited company.

It follows a PRA review of underwriting standards in the buy-to-let sector which covered 31 firms (c.92% of the market) which highlighted concerns about lenders’ growth plans in the sector and what steps are being taken to meet their targets.

Remember 2008?

The Council of Mortgage Lenders (CML) estimates that gross mortgage lending reached £17.6 billion in February. This is 5% lower than January (£18.5 billion) but 30% higher than February last year (£13.6 billion) and the highest lending total for a February since 2008 when gross lending reached £24.1 billion.

According to the CML, the recovery in lending is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by government schemes and competitive mortgage deals. But while there may be a slight current boost to lending as some transactions seek to complete before the 1 April tax changes in the buy-to-let-sector, this is likely to be followed by a slight fall in activity. The CML highlights affordability pressures continuing to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently.

What’s wrong with Bolton?

Research by leading online estate agent, eMoov.co.uk, has identified the worst place to have bought a house in England and Wales since the turn of the century where home ownership is concerned. eMoov analysed data from the Office of National Statistics charting the median house price across England and Wales by quarter, since Q1 of 2000.

Despite the majority of UK homeowners enjoying a consistent increase in property values since the start of the new millennium, not everyone has been so lucky. The center of Bolton (016*) is the only location of some 7,207 in England and Wales, that has seen a decrease in the average property value over this time period. At the start of the new Millennium the average house price in the center of Bolton was £77,202, just under £8,000 less than the UK average.

However, despite peaking at £105,608 in Q1 of 2008, the current average house price in the area has dropped -9% from the start of 2000, now at just £70,621 – considerably lower than the UK average of £221,254.

Seek and you will find

Jobseekers have faced crazy questions during an interview, including being asked to guess how many nappies are bought every year, and how long it would take to clean every window in London.

The questions, ranging from the wacky to the totally irrelevant, were unearthed by jobs site Glassdoor from thousands revealed by UK candidates.

A candidate for a sales assistant in Portsmouth was asked which magic power she would like to have, while a software engineer in London was asked to guess how he would fit an elephant into a fridge.

A man going for a job as a telecoms manager in London was asked how many people born in 2013 were named Gary.

Susan Underwood of Glassdoor said: “Employers are asking tough interview questions to test a job candidate’s critical thinking skills, see how they problem-solve on the spot and gauge how they approach difficult situations.”

Glassdoor said job candidates should be prepared to tackle any question during an interview.

British Pathe: “The house of a dream” (1931)

“The house of a dream. Filmed at Amersham. For centuries houses have been built to meet the needs of each age. Today, we dream of houses open to sun and air, embodying everything that modern science can offer.”

Written and filmed in 1931 (apologies for some of the out-dated commentary), it seems the home-owning aspirations of Britain haven’t change all that much in the past 85 years.