Weekly Round-Up: 30th March 2018
Remortgage leads the way
Gross mortgage lending in February is estimated as £19bn. According to the February 2018 UK Finance update on lending, this is 4.9 per cent more than a year ago but it is still below 2017’s monthly average of £21.4bn. The data shows that in February re-mortgage approvals are up over 9 per cent in both number and value compared to February 2017.
The figures suggest an increase in re-mortgage approvals compared to last year. There is speculation that interest rates will rise later on in the year and as a result, borrowers are looking to lock into attractive deals. UK Finance has also seen a continued rise in credit card spending which reflects the growing number of transactions carried out using cards. In conjuntion to this, it has been document that other forms of borrowing such as overdrafts are continuing to fall.
The trade body highlights that real wages continue to be squeezed by inflation, impacting on consumer confidence and retail sales but suggest that the pressure on household incomes should ease in the coming months, as the effect of the fall in sterling begins to fade and the strong labour market leads to a better outlook for wage growth.
In February, we have seen modest year on year growth of commercial lending which is driven by investment within the manufacturing sector. Credit balances have risen at an even faster rate as companies build reserves in the face of economic uncertainty and its effect on longer term business confidence.
Be in control!
Causes of cancer can be placed into two rough camps: those which can be controlled and those which can’t. The latter includes signals such as random changes to people’s genes as they get older, or hereditary mutations. By their nature, there’s not much anyone can do about these risks. But for the many causes that people do have some control over, such as smoking, there’s a potentially life-saving chance to act. Armed with information about what increases risk, people can make changes that stack the odds of avoiding cancer in their favour. Politicians can see where action is needed most. The goal of new data Cancer Research UK released this week is to provide that information.
The data comes from a new landmark study led by Cancer Research UK researchers. It looks at the things in people’s lives that cause cancer and calculates how many cases in the UK are linked to each of these risk factors. Cancer Research UK have done calculations like this before, but this new research uses all the latest available data and evidence to give more accurate estimates. Because some risk factors have become more common since the previous analysis and others have become less common, it’s important to update these figures. The findings, published in the British Journal of Cancer, show that more than 135,000 cases of cancer could be prevented in the UK each year largely through lifestyle changes – that’s around 4 in 10 cases. And while what’s behind these cancers may not come as a surprise, the results confirm how the things we do each day can add up.
The team did this for all the modifiable risk factors and found that in total, more than 135,000 cases of cancer could be prevented through changes such as stopping smoking, keeping a healthy weight and eating a healthy diet. Enjoying the sun safely, avoiding certain substances at work, protecting against certain infections and cutting back on alcohol can also help.
It’s important to say again that this research can’t tell what has caused or will cause an individual’s cancer. The data come from comparing large groups of people. So, while research has shown that, for example, being overweight can increase the risk of cancer, it doesn’t mean you will definitely get cancer if you are overweight. And this is true for the other risk factors as well.
Twice the customers
According to the latest analysis by the Equity Release Council, the volume of new customers taking out equity release plans in 2017 was almost 10,000 more than in the previous year, as the number of people unlocking housing wealth for the ﬁrst time increased by a third. As a source of retirement ﬁnance, equity release is now helping more than twice as many new customers as it was ﬁve years ago. More new plans were agreed in the second half of 2017 than in the whole of 2012.
All strands of equity release activity – across new customers, returning drawdown customers and further advance customers – grew in the second half of the year compared with the ﬁrst, with the 14% rise in overall customer numbers driven by a 20% increase in new customers and a 19% increase in further advances. Returning drawdown activity was more consistent, with the number of returning customers rising 5% from 12,585 in H1 to 13,209 in H2.
Growing interest in the equity release market from consumers is a sign that more homeowners consider housing wealth to be a potential source of ﬁnance in later life, and are ﬁnding an increasingly ﬂexible range of products enabling them to unlock some of its value. One sign of this shifting mindset is that back in Q2 2016 just 29p of housing wealth was unlocked by over-55s for every £1 of savings accessed via ﬂexible pension payments, following the introduction of ‘pension freedoms’ a year earlier. This rose to 38p of housing wealth for every £1 of pension payments over the whole of 2016, climbing again to 47p during 2017 and reached 56p in Q4 2017, as property becomes increasingly important as a supplementary source of retirement ﬁnance.
Weekly Round-Up: 23rd March 2018
On Debt Row
According to the Royal Society for Public Health, Vision, Voice and Practice, two thirds (67%) of smokers said that the stress and worry associated with their debt caused them to smoke more. Nearly half (49%) of people who drink alcohol said that they drank more as a result of the stress of having debts. This rose to 62% of people who had used at least one payday loan. The survey titled Life on Debt Row highlights the impact of Debt on behaviour.
Just under half (47%) of respondents (57% of payday loan users) said they did less exercise because owing money meant that they couldn’t afford the costs involved and 65% (80% of payday loan users) said that they were less physically active because they felt too depressed. Over half (60%) of participants – 70% of payday loan users – said they ate less healthily because they couldn’t afford healthy food and two thirds (65%) – 76% of payday loan users – said that feeling depressed led them to eat less healthily while in debt. Over half (53%) of those surveyed skipped meals and three quarters (76%) said that their sleep quality declined. Both of these rose when looking solely at individuals who had used at least one payday loan over the previous 24 months (67% and 87% respectively). Seven percent of respondents said that being in debt led them to take illegal substances for the first time or to increase their usage of illegal substances.
All findings were worse for those who said they had struggled to make their repayments. Eighty percent of smokers smoked more; 61% of alcohol drinkers drank more; 81% did less physical activity because they felt too depressed; 92% said their sleep quality decreased and 81% ate less healthily because they felt distressed about their debt.
Research by Halifax suggests the typical mortgage payment accounted for less than a third (29%) of homeowners’ disposable income in the fourth quarter of 2017 compared to almost half (48%) in 2007 (Quarter 3). This means mortgage affordability levels for first-time buyers and homemovers have dropped by 40% since the 2007 peak. This means mortgage affordability levels for first-time buyers and homemovers have dropped by 40% since the 2007 peak.
The significant improvement in affordability since 2007 has been driven predominantly by historically low mortgage rates, despite the first base rate rise in a decade last November. With average house prices rising by 3% in the past year, mortgage affordability marginally improved in the last quarter of 2017, edging down from 29.6% in 2016.This is comfortably below the long-term average of 35%,, remaining low due to a further dip in mortgage rates during 2017 from an average of 2.09% in Q1 to 1.98% in Q4.
There have been substantial improvements in affordability in almost all local authority districts (LADs) since 2007, with mortgage payments falling by at least 30% as a proportion of average earnings in 35 areas. Three-quarters (74%) of all districts have seen an improvement of at least 15 percentage points over the period.
The 10 most affordable local areas are all in northern Britain, whilst the 10 least affordable areas are all in the South. Whilst the comparison of mortgage affordability over the last 10 years shows a vast improvement, when looking only over a five-year period, affordability – on this measure – has actually deteriorated. Whilst the average mortgage rate has fallen from 3.7% in 2012 to 1.98% at the end of 2017, average house prices have grown by 40% in the same period.
Nearly three quarters (74%) of first-time buyers’ mortgage applications via intermediaries resulted in a completion during Q4 2017, according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA). This compares with just over half (53%) a year earlier, as first-time buyers benefitted more than any other customer group from improving access to mortgage finance during 2017.
The quarterly IMLA report – which uses data from BDRC – examines consumers’ success rate in securing a mortgage via the intermediary channel, by tracking their progress from initial expression of interest (seeking a ‘decision in principle’) through to completion. In doing so, it compares the fortunes of intermediaries dealing with first-time buyers, homemovers, remortgagors, buy-to-let (BTL) borrowers and applicants for specialist loans.
UK Finance data recently showed that first-time buyer numbers reached a ten-year high in 2017 . IMLA’s report suggests that this was helped by nearly nine in ten (88%) applicants securing a mortgage offer in Q4 2017 for the third successive quarter, up from 73% a year earlier. More than four in five (84%) of those offers in Q4 2017 went on to complete, compared to 72% twelve months before.
Across 2017 as a whole, 87% of first-time buyer applications resulted in an offer and 81% of those went on to complete: both noticeable improvements on 2016. Overall, it meant that 71% of first-time buyer applicants achieved their aim of securing a mortgage in 2017, compared with just half (50%) in 2016.
On hold for housing
People are putting their lives on hold as they struggle to save towards their ‘dream home’, new research reveals. Almost nine in ten (86%) people living in their first home think it is harder now than a decade ago to make the jump to their second home, according to the Nationwide Building Society poll. The top barriers to moving home by potential second time buyers include finding a home within budget (38%), finding a home in the right location (25%), having a large enough deposit (18%), not being able to cover moving costs (15%) and being in negative equity (8%). One in five (21%) said they have found themselves stuck in a house that is too small for their family or in an area they don’t like due to housing affordability (16%).
The survey of more than 1,000 people in the UK living in their first home found that the average cost of the next property is £370,539, which leaves many buyers still finding themselves in need of a financial helping hand to move. When asked what they would be willing to give up to move up the housing ladder, more than half (55%) said they would forego nights out, followed by eating out (48%) and holidays or weekends away (33%). One in seven (14%) said they would even give up a spouse or partner if it meant they could move up the property ladder, although men (22%) were more likely to choose this option than women (7%). The poll reveals that when it comes to compromising on the next property, a conservatory would be the first item second time buyers would be willing to forgo (35%), followed by a garage (29%), a driveway (22%), and ideal schools (20%). By contrast, the size of the bathroom (11%) the size of the kitchen (11%) and the number of bedrooms (13%) were the least likely items to be struck off the wish list. Just under nine in ten (88%) also said they would consider buying a property that needed renovating if it was significantly cheaper to buy.
Despite the struggles experienced by potential second time movers, one in five (21%) of those surveyed said they weren’t willing to forgo anything at all on the next property they bought. More than half (55%) want their next home to be detached, and more than a quarter (26%) want it to be their forever home (26%). Just over a third (35%) said they were holding out for their dream home.