Weekly Round-Up, 20th July 2018

Lloyds top the table

Pound CoinsThis week saw UK Finance publish their data showing mortgage lending by their members in 2017. The data shows members’ gross mortgage lending in the latest calendar year and balances outstanding at the end of 2017, rounded to the nearest £100 million and ranked on the same basis.

This means that the very smallest lenders – those with under £50 million of lending – do not feature in the research. Lenders reported data for both new lending and mortgage balances, and accounted for some 97 per cent of the total mortgage market – as published by the Bank of England.

For 2017, gross lending totalled £257 billion, up four per cent on 2016. This was lower than the 11 per cent growth seen in 2016. However, within this UKK Finance have seen increased competition for business. This year there are 65 lenders in their analysis for gross lending, up from 60 lenders the year before. Growth in new lending was strongest amongst lenders ranked between 21-30 in 2017, who lent £3 billion more for housing than 2016’s 21-30 group – a growth rate of 40 per cent.

The largest lenders saw more modest growth. Although Lloyds has continued to increase lending activity with a seven per cent rise compared to 2016, the next three lenders on the analysis (Nationwide Building Society, Royal Bank of Scotland and Santander) all saw lower volumes than in 2016, compared to the previous year and corresponding contractions in market share. Despite this, there was no change in the top ten gross lending table, with all lenders retaining the same rankings as in 2016.

However, there was movement in the 11-20 group: Paragon climbed from 21st to 19th with an impressive 78 per cent increase in lending activity. Legal and General also made a sizeable jump, moving from 27th to 23rd place following a 67 per cent increase in lending. Other lenders with significant lending growth include: Tesco Bank (71 per cent), Metro Bank (50 per cent), Foundation Home Loans (200 per cent), and Pepper UK (200 per cent). In their most recent market forecasts, UK Finance predicted gross lending of £260 billion in 2018 – an increase of about two per cent. Lending in the early months of 2018 has, so far, outpaced these forecasts, driven largely by stronger-than-expected remortgage activity. The uncertainties were set out last year – not least those relating to the UK economy – and remain; these have the potential to affect the path of lending for the rest of this year and beyond. However, the market has shown this year that, yet again, it is competitive and robust enough to continue to help UK mortgage customers as their needs change.

The Family Gap

FamilyWhile the end of the school year can’t come fast enough for some youngsters, a third of the UK’s parents will be forced to take seven days or more off work this summer to take care of the kids, new research from Halifax has revealed. A fifth (19%) of parents will need to take at least two weeks off work to cover childcare gaps, with many relying on grandparents to step in.

Nearly half of children (44%) have even considered asking their parents to move in with them. This may not come as such a surprise to some as just under a third (31%) of grandparents already look after their grandchildren every week and almost one in 10 (9%) on a daily basis.

Across the country, parents in Northern Ireland are the hardest hit during the holidays, having to take 12.1 days off over the summer break to look after their children, compared to the UK average of 5.6 days. Meanwhile when it comes to having grandparents as house guests to ease the pressure, two thirds of Londoners have considered sharing their home with their parents, compared to only in 20 Scots mums and dads (5%). In reality though, only 2% of grandparents currently live with their children, although this doubles to 4% for Londoners. Grandmas and grandpas are also clocking up the miles to provide valuable childcare cover – commuting for an average on 2 hours 46 minutes each round trip, with those who provide weekly cover racking up nearly 143 hours a year.

The majority of grandparents (55%) live within 30 minutes of their children, while more than one in 10 (17%) are more than two hours away. Grandparents in Wales and Northern Ireland have the longest average travel times of 3 hours and 50 minutes and 3 hours 44 minutes respectively for each round trip, while those in London have the shortest journey, at just under two hours. Moving closer to their family is a priority for more than one in 10 (11%) grandparents, however this drops to 6% where a move is specifically to help with looking after grandchildren. Welsh grandparents are most likely to move to be closer to their offspring (20%), while more grandparents from the South East (13%) than any other region have already moved house to be nearer to their children and grandchildren.

On the other hand, more than one in 10 (17%) grandparents want to keep their current home so they have plenty of space for family visits. Downsizing is still a popular trend among grandparents with an empty nest, with more than one in five (21%) having already downsized and a further fifth considering moving to a smaller property. These options appeal most to grandparents in the North East and Wales (both 55%). The study revealed that pester power isn’t only for younger children – as two-thirds of parents (67%) admit to putting their parents under pressure to help look after their grandchildren. Grandparents also feel some strain, as almost half (47%) admit their children take it for granted that they’ll help out with childcare. Grandparents in London feel the most taken for granted (56%), followed by those in Scotland (54%) and Yorkshire (52%).

Shop till you drop

Credit CardAs the tenth anniversary of Barclaycard introducing contactless technology to the UK approaches in September, the latest insights from Barclays reveals ‘touch and go’ is now the preferred way to pay among British shoppers.

According to the latest analysis more than half (51 per cent) of all transactions up to the eligible spending limit of £30 are now made using contactless, which shaves seven seconds off the time taken to process a transaction compared to Chip and PIN.

The news comes as industry body, The UK Cards Association (UKCA), revealed that credit and debit payments have doubled in the last 10 years, with the increased use of contactless being one of the main drivers of this growth. While contactless card transactions have been continuing to grow over the past few years, data from the Index shows that mobile payments are now also catching on at a rapid rate. The amount spent by users of Barclaycard’s Android Contactless Mobile app has jumped by 90 per cent in 2017.

Shoppers in the midlands and the north of England are increasing their use of contactless more than anywhere else in the UK, with the biggest jumps in spending seen in Derby (up 45 per cent), Chester (up 44 per cent), Newcastle Upon Tyne (up 42 per cent), Coventry (up 42 per cent) and Stoke on Trent (up 41 per cent).

Fear of investing

Pound coinsInflation can be the big enemy of savers, eroding the value of their hard-earned money according to Scottish Friendly. Even if inflation ticked along at the level the Bank of England tries tirelessly to keep it at (2%) it could nonetheless have a significant impact over time on money sitting in cash if interest rates are lower than inflation.

Currently, inflation is 2.4% and the very best easy-access cash savings rate paying just 1.33%2. Why then do savers not act and switch some of the money they have in cash to other investments which could potentially generate higher returns above inflation? In their study, Scottish Friendly recently found that half of all British savers are now suffering from ‘investophobia’, opting to leave their money in cash despite the reality of rock bottom rates.

A phobia can lead people to make decisions that aren’t easy to understand, or which may indeed appear to be irrational to an outsider. Scottish Friendly’s findings suggest that many savers may be acting in a similar fashion when it comes to investing. Indeed, more than two-thirds of the savers in the research are aware that interest rates on savings accounts are less than the current rate of inflation, but the fact that they are losing money in real terms seems to do little to change their minds. Furthermore, 53% of respondents said they wouldn’t consider investing in stocks and shares even though inflation reduced the value of the money they have in secure cash savings.

Why such behaviour? The most common reason cited by almost half of respondents was the fear of losing money via investing and certainly investing is not without risk and the value of investments can go down as well as up.

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