Weekly Round-up 21st December 2016

Keep on lending

The Cohouses-on-coinsuncil of Mortgage Lenders (CML) has published its latest mortgage lending forecasts reporting gross lending of £21 billion in November – up by an estimated 3% on October, and also 3% up on a year ago.

The CML’s lending forecasts for 2017 have been revised downwards from the previous expectations of a year ago, reflecting economic uncertainties as well as new tax burdens and regulatory changes in the housing and mortgage markets. The CML now expects gross lending of £248 billion in 2017 and £252 billion in 2018, with net lending of £30 billion in each of those years.

According to the CML, the mortgage market remains resilient but is likely to plateau rather than grow much for the next couple of years, whilst property transactions look set to drift down slightly. The trade body does not expect house prices to fall, with net lending unlikely to get above £30 billion next year.

House Price

In its latest review of the housing market, the Office for National Statistics has suggested average house prices in the UK have increased by 6.9% in the year to October 2016 (down from 7.0% in the year to September 2016), continuing the strong growth seen since the end of 2013.house-price-growth

The average UK house price was £217,000 in October 2016. This is £14,000 higher than in October 2015 and unchanged from last month. The main contribution to the increase in UK house prices came from England, where house prices increased by 7.4% over the year to October 2016, with the average price in England now £233,000. Wales saw house prices increase by 4.4% over the last 12 months to stand at £147,000. In Scotland, the average price increased by 4.0% over the year to stand at £143,000. The average price in Northern Ireland currently stands at £124,000.

The East of England is the region which showed the highest annual growth, with prices increasing by 12.3% in the year to October 2016. Growth in the South East was second highest at 9.1%, followed by London at 7.7%. The lowest annual growth was in the North East, where prices increased by 2.7% over the year.

Rate Pressure

According to the latest Moneyfacts UK Mortgage Trends report, there is a slightly mixed picture for average mortgage rates currently, as although the five-year fixed rate continues to fall, the two-year equivalent remains unchanged – and there are signs that next year could signal the start of rate rises once again.

Analysis by Moneyfacts suggest the average two year mortgage rate remained at 2.34% this month, signalling the first month of zero movement since January this year. Despite remaining at a record low, this lack of movement halts the run of rate reductions that had been recorded since June, and hints that a change could be on the way.

Their data shows that 17 banks and building societies have increased rates in the last month, including lenders such as Nationwide, Halifax, TSB, Virgin Money and HSBC – and the latter even withdrew its record-breaking 0.99% two-year deal.

According to Moneyfacts the average five-year fixed rate continued to fall, down by 0.02% to a fresh low of 2.96% but the company is warning that the wholesale cost of funding combined with economic uncertainty could leave many providers finding they have no option but to begin raising rates.

Competition

The Financial Conduct Authority (FCA) has launched a market study to consider whether competition in the mortgage sector can be improved to benefit consumers. The FCA wants to understand whether consumers are empowered to choose on an informed basis between products and services and are in a position to understand whether these represent good value for money.

The market study will explore two questions, at each stage of the consumer journey, do the available tools (including advice) help mortgage consumers make effective decisions and do commercial arrangements between lenders, brokers and other players lead to conflicts of interest or misaligned incentives to the detriment of consumers?

The FCA will also review whether there are opportunities for better technological solutions to problems they identify, including greater use of digital channels to deliver information or advice. The FCA will be engaging with a wide range of market participants about their experiences and the regulator aims to publish an interim report in summer 2017, setting out its analysis and preliminary conclusions. This will provide stakeholders with an opportunity to comment prior to publishing a final report in early 2018.

What’s in a word?

Theresa May famously declared that “Brexit means Brexit”, but now the Oxford English Dictionary (OED) has come up with its own definition. Six months after the Prime Minister first delivered the elusive explanation, lexicographers have clarified that “Brexit” is “the (proposed) withdrawal of the United Kingdom from the European Union, and the political process associated with it”.

The definition continueunion-flags: “Sometimes used specifically with reference to the referendum held in the UK on 23rd June 2016, in which a majority of voters favoured withdrawal from the EU.”

“Brexit” has been added to the OED this month, noting the “impressive” speed with which it became widely used.

Lexicographers said the word filled an empty space in the language, but is now used globally to describe the phenomenon – appearing in many foreign language newspapers.

Grexit – to define “the (potential) withdrawal of Greece from the eurozone monetary union” – was added as well.

The OED has also included the American slang “get your freak on” – meaning to “engage in sexual activity, especially of an unconventional or uninhibited nature” and “to dance, especially in an uninhibited, wild, or exuberant fashion” in its latest update. “Glam-ma”, a glamorous grandmother, and “verklempt” – meaning to be overwhelmed with emotion – will also now feature among the dictionary’s 829,000 words, senses and compounds.

A selection of surfing terms such as “break” – a “place in the sea where waves break” – and “bomb” to mean a “very large, powerful wave” have also been added. The OED constantly reviews potential words to include in the dictionary – assessing if they have been used a number of times independently and for a reasonable amount of time before they can be included.

2017-12-22T09:11:39+00:00