Possession claims second-charge help to buy Mortgage arrears Protection second-charge mortgages Second charge lending Property repossessions second charge mortgage
Marketing No Comments

Homeowner arrears ‘low’ as renters absorb pandemic shock

The share of mortgage borrowers falling behind on debt repayments has remained “relatively low” during the pandemic, but the situation is worse for renters, according to the Bank of England ‘s latest research.

Whilst the proportion of mortgage balances in arrears has continued to resist a sharp rise since the start of the pandemic, the central bank’s quarterly update on household debt highlighted a worse outlook for renters.

“The Covid crisis has had a larger impact on renters’ finances than on homeowners’ finances,” it said.

“Renters were more likely to have lost their jobs or been furloughed, relative to households with mortgages or those who own their home outright.

“Survey evidence also suggests that more renters have seen a fall in income, a pattern which persisted over the crisis.”

Such observations have prompted the central bank to warn that “pressure on renters’ finances may result in defaults and losses for lenders”.

It added: “A fall in rental payments may lead buy-to-let borrowers to sell properties quickly, amplifying house price falls in a downturn.”

The National Residential Landlords Association published research earlier this year which suggested 840,000 private renters in England and Wales could have built rent arrears since March 2020.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Surveying 2,077 private tenants, the membership body found 7 per cent of tenants had built up arrears as a direct result of Covid. Some 18 per cent of those in arrears had rent debts of more than £1,000.

More generally, the research also showed 11 per cent of private renters – between November and December 2020 when this survey was conducted – were unemployed.

Due to the government’s “no ‘one-size fits all’ approach” to rent payments during the pandemic, it concluded that “rent levels agreed in the tenancy agreement remain legally due and tenants should discuss with their landlord if they are in difficulty”.

The Bank of England said in its latest report if “renters cut consumption to keep up with rental payments this could amplify a downturn”.

It continued: “Renters are less likely to have savings compared to mortgage borrowers and spend a significant portion of their income on housing costs.”

This dip in income across the UK’s renting demographic has had a parallel impact on landlords’ income, according to the NRLA.

Out of 1,391 landlords it spoke to at the tailend of last year, 60 per cent said they had lost rental income as a result of the pandemic. And 39 per cent of this majority said those losses were continuing to increase.

With renters and landlords having absorbed the brunt of the pandemic-induced market shock, mortgage borrowers have, in contrast, benefitted from payment deferral schemes.

Since March 2020, the schemes have allowed borrowers to temporarily freeze mortgage and unsecured loan repayments, providing a cushion against any fall in income.

“Though payment deferrals were available to borrowers with either mortgage debt or unsecured debt, they appear to have had more of an impact in supporting those with mortgages,” the Bank of England said.

It cited UK Finance figures, which suggest around one in six UK mortgages were on payment deferrals around their peak in June 2020.

“The widespread use of mortgage deferrals in particular, has helped borrowers to manage temporary changes in their income through the crisis,” the bank concluded.

By Ruby Hinchliffe

Source: FT Adviser

Discover our Second Charge Mortgage Broker services.

UK economic growth Labour squeeze Omicron UK economy Pound UK banks
Marketing No Comments

UK banks’ profits slashed by more than half

Big UK banks’ profits have slid by more than half over the last year, according to a ranking of the world’s largest lenders published today.

UK lenders included in The Banker’s top 1,000 World Banks 2021 experienced a 53 per cent drop in profits.

Losses were attributed to the severe damage the pandemic has inflicted on the UK economy and Brexit uncertainty.

The ranking is based on Tier 1 capital, a key measure of banking strength.

Joy Macknight, editor of The Banker, said: “The UK banking industry has faced significant headwinds over the course of the past year, with the impacts of the Covid-19 pandemic and Brexit uncertainty weighing profitability down.”

HSBC sole European bank in top 10

HSBC is the only European bank to rank in the global top 10 list for the tenth successive year.

The top five ranking UK banks all saw pre-tax profits drop sharply over the last year.

HSBC lost 34.2 per cent, while Barclays’s pre-tax profits slid 28.72 per cent.

Lloyds Banking Group absorbed the harshest hit to pre-tax profits of the top five UK banks, down 71.72 per cent.

Standard Charter lost 56.56 per cent and NatWest Group shifted from profit to loss.

To find out more about how we can assist you with your Second Charge Mortgage please click here

HSBC was the only European lender to rank in the top 10

Global banking powerhouses shake off pandemic pressures
The rankings show the world’s largest banks have remained resilient in the face of the pandemic-induced economic decline.

The world’s largest lenders added 12.7 per cent to their collective Tier 1 capital, reaching $9.9trn, a record high.

Total assets rose 16 per cent, to $148.6trn, while deposits grew 17.1 per cent, to $93.9trn.

Macknight added: “Although profits have shrunk across the globe and many banks’ balance sheets are loaded with allowances for expected loan losses, the world’s banking industry has held up remarkably well and is better capitalised than ever before.”

The banking sector has also performed better during the pandemic compared to the financial crisis.

The top 1000 banks’ combined profits fell 19.2 per cent year-on-year, significantly lower than the 85.3 drop per cent in 2009.

European banks suffer from low rates

Poor economic growth and a record low interest rate environment put downward pressure on Western European banks’ profitability.

Of the largest European economies, banks’ aggregate pre-tax profits contracted 43.71 per cent in Germany, 75.72 per cent in Italy and 47.67 per cent in the Netherlands, while France fell 11.61 per cent.

Spain notched negative pre-tax profits, driven by two of its largest banks, Banco Santander and Bankia, moving from profit to loss.

China now holds almost double the volume of Tier 1 Capital ($2.96trn) as the US ($1.58trn), despite having fewer banks than the US in the rankings.

Profits grew 5.2 per cent in China, compared to a 31.5 per cent and 41.8 per cent drop in the US and Western Europe respectively.

By Jack Barnett

Source: City AM

Discover our Second Charge Mortgage Broker services.

UK GDP Sterling BoE UK economy UK economic growth Pound Sterling
Marketing No Comments

UK economy tipped to bounce back strongly after the pandemic

Economic growth is on course to return to pre-Covid levels by the end of the year, a leading business group is predicting.

But the CBI warned of a “two-speed recovery”, with sectors having different levels of recovery.

Its research among almost 600 firms suggested that in the three months to June, private sector activity grew at the fastest pace for six years.

Manufacturing and distribution activity grew at record rates while growth in business and professional services remained strong, but consumer services activity continued to fall, said the CBI.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Alpesh Paleja, CBI lead economist, said: “With much of the economy having now reopened, we’re seeing a boost in activity across the economy.

“With robust expectations for the months ahead, and real positivity in terms of vaccine uptake, CBI forecasts show that UK GDP is on course to return to pre-Covid levels by the end of the year.

“Where we need to remain vigilant is the emergence of a two-speed recovery.”

The CBI added that sectors such as manufacturing, distribution and business and professional services looked well on the road to recovery, while firms in industries such as travel needed greater support to prevent the loss of skilled jobs.

By Daniel Smith

Source: Essex Live

Discover our Second Charge Mortgage Broker services.

Band of England GDP UK economy UK economic recovery Pound Sterling UK economy
Marketing No Comments

UK economic recovery continues but inflationary pressures build – PMI

The UK economic recovery continued in June, research published on Wednesday showed, prompting a record hike in employment, but inflationary pressures gathered pace.

The IHS Markit flash UK composite output index was 61.7 in June. That was down on May’s final reading of 62.9, and was marginally below consensus for 61.5. But it remains among the fastest rates of expansion seen since the series began in January 1998.

The services business activity index was 61.7, compared to 62.9 in May, while the manufacturing PMI printed at 64.2 against May’s 65.6. The manufacturing output index was 62.0, one point lower than May’s 63.0 reading.

IHS Markit said companies had responded to rising workloads by hiring extra staff “at an unprecedent rate”. The composite employment index hit a record high of 58.5 in June, up on May’s 57.4.

But it also noted input costs and output prices had reached fresh highs, as supply-chain disruptions weighed heavily.

Chris Williamson, chief business economist at IHS Markit, said: “Businesses are reporting an ongoing surge in demand in June as the economy reopens, led by the hospitality sector, meaning the second quarter looks to have seen economic growth rebound sharply from the first quarter’s decline.

To find out more about how we can assist you with your Second Charge Mortgage please click here

“There are some signs that the rate of expansion appears to have peaked, as both output and new order growth cooled slightly from May’s record performance, but full order books and a further loosening of virus-fighting restrictions should nevertheless help ensure growth remains strong as we head through the summer.”

Duncan Brock, group director at the Chartered Institute of Procurement and Supply, said: “As materials were increasingly hard to come by, they once again became more expensive. Record cost inflation last seen in 2008 filtered through to increasing output costs, as manufacturers were unable to absorb these rapid rises any longer.

“In service businesses, consumers were hit with considerably-higher prices for food and hospitality, increasing the threat of soaring inflation in the UK economy this summer.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The PMIs remain one of the most upbeat indicators of the pace of the economic recovery, insofar as they signal only a modest slowdown in month-to-month GDP group in June. Other surveys, however, point to a sharper deceleration.

“The further rise in the composite output price index, to 60.6 – the highest level in its 23-year history – confirms that price pressures are building quickly. Nonetheless, with labour market slack likely to increase in the fourth quarter, when the furlough schemes is wound down, and Covid-related costs to diminish as the country exits the pandemic, we continue to think that the MPC will look through the upcoming bout of above-target CPI inflation.”

Joshua Mahony, senior market analyst at IG, said: “While both manufacturing and services PMI readings weakened in the UK, there are many aspects to be encouraged by, with employment continuing to remain buoyant, and the 12-month outlook remaining optimistic.”

IHS Market surveyed its panel of 650 manufacturers and 650 service providers between 11 and 21 June. Final data will be published by 5 July.

By Abigail Townsend

Source: ShareCast

Discover our Second Charge Mortgage Broker services.

Home repossessions Landlords
Marketing No Comments

Call For Government Action To Avoid Arrears Crisis

Landlords in England are being forced into a corner because tenants are not being given the financial support they need, said the National Residential Landlords’ Association this week.

Many landlords now have to make a choice between accepting no income or resorting to repossessing their property, it claimed.

A high proportion of private landlords have allowed rent free periods during the coronavirus crisis, or allowed rents to be deferred. Six in ten of these have absorbed the lost income by using personal savings. But ‘the goodwill of landlords in the face of mounting rent debts cannot continue without support from the Treasury’, warned NRLA.

Its latest survey estimated that over 800,000 people living in the private rented sector in England and Wales now have rent arrears that have been built up during since the coronavirus lockdown. Of this group, eight in ten were not in arrears prior to the start of the pandemic.

To find out more about how we can assist you with your Second Charge Mortgage please click here

‘To help resolve this crisis, the Government should introduce new measures to bring housing benefit support back into line with market rents’, said NRLA. ‘Government data shows that across the UK, in February 2021, 55 per cent of private rented households in receipt of Universal Credit which included housing cost support, had a gap between that and the rents they paid. The average shortfall was £100 a month. Despite this, the Chancellor froze local housing allowance rates in cash terms from April this year, a decision the Institute for Fiscal Studies branded “arbitrary and unfair” ‘.

The NRLA is calling for the Local Housing Allowance to return, at the very least, to a level that will cover the bottom 30 per cent of market rents in any given area, but preferably for it to be increased to a level that covers average rents. It also wants a Government guaranteed, interest free, hardship loan scheme to help tenants pay off rent arrears built since the lockdown began.

‘The Chancellor has clearly decided on a strategy of making landlords the scapegoats for a crisis of his own making’, claimed NRLA chief executive Ben Beadle. ‘For less than the cost of the Eat Out to Help Out Scheme he could provide landlords and tenants with the financial support they need to keep tenants in their homes and prevent damage to credit scores.

‘Landlords want to sustain tenancies wherever possible, but without the support so many tenants desperately need, the Chancellor will need to accept the tragic costs of his failure to act’.

Source: Landlord Knowledge

Discover our Second Charge Mortgage Broker services.

Second Charge Mortgage
Marketing No Comments

UK Borrowing Falls More Than Expected as Economy Rebounds

UK government borrowing is running well below levels seen at the height of the coronavirus pandemic as the economy emerges from lockdown and people shift from benefits to work.

The budget deficit stood at 24.3 billion pounds ($33.8 billion) in May compared with 43.8 billion pounds in the same month of 2020, the Office for National Statistics said Tuesday. The shortfall was below the 25.5 billion pounds median forecast in a Bloomberg survey of economists.

The figure is also below the 28.5 billion pounds predicted by the Office for Budget Responsibility. That points to a potentially faster improvement in the public finances, thanks to surprisingly buoyant economic growth and a strengthening labor market.

“As we emerge from the pandemic, we are continuing to support people and businesses to get back on their feet,” Chancellor of the Exchequer Rishi Sunak said in a statement. “We are taking to keep debt under control in the years to come.”

The budget deficit ballooned to a peacetime high of 14.3% of GDP in the last fiscal year, largely reflecting the vast cost of supporting workers and businesses through the deepest recession in 300 years. The cumulative cost of wage subsidies alone reached 65 billion pounds in May.

In March, the OBR predicted that borrowing would fall to just over 10% in the current fiscal year. Since then, however, a rapid vaccination program has seen the outlook improve dramatically. On average, economists expect growth this year of around 7%, versus the 4% predicted by the fiscal watchdog.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The hope is that growth will bring down the deficit without Sunak having to implement the hefty tax rises he has penciled in from 2023 to pay for the pandemic.

Tax revenue rose 15%, and spending fell 12% from a year ago. Debt stood at 99.2% of GDP.

The deficit in the first two months of the fiscal year was 53.4 billion pounds, with the ONS revising down borrowing in April by 2.6 billion pounds. The shortfall was 14.1 billion pounds lower than the OBR forecast.

“More than a third of that reflects differences in the timing of EU divorce bill payments,” the watchdog said in a commentary on the latest figures. “But lower spending and moderately stronger receipts growth mean that two months into 2021-22, the underlying outperformance of borrowing relative to forecast is 8.6 billion pounds.”

By Andrew Atkinson

Source: Bloomberg

Discover our Second Charge Mortgage Broker services.

UK service sector Britain’s economic output UK economy Second charge mortgage UK economy UK economic growth
Marketing No Comments

UK economy posts record annual jump in April, up 27.6%

Britain’s economic output in April was a record 27.6% larger than 12 months before, official data showed on Friday, an increase that reflects recent reopening and the scale of disruption to everyday life early in the COVID pandemic.

The figure matched the consensus of economists polled by Reuters.

In April alone, output rose by 2.3%, marking the fastest growth since July, the Office for National Statistics (ONS) said, and compared with the Reuters poll consensus for a 2.2% increase.

To find out more about how we can assist you with your Second Charge Mortgage please click here

But British economic output is still 3.7% lower than in February 2020, before the pandemic led to lockdown measures.

“Today’s figures are a promising sign that our economy is beginning to recover,” finance minister Rishi Sunak said in a statement.

Last month the Bank of England raised its forecast for British economic growth in 2021 to 7.25% from February’s estimate of 5.0%.

That would be the fastest annual growth since 1941 when Britain was rearming during World War Two. But it comes after output plunged by almost 10%, the biggest drop in more than 300 years.

Source: CNBC

Discover our Second Charge Mortgage Broker services.

UK’s economic growth winter economy plan UK economy UK economic recovery
Marketing No Comments

UK economy accelerates as tourism and hospitality emerge from lockdown

The UK economy accelerated in May as tourism and recreation firms reopened, but the delay in ending Covid-19 restrictions is putting hospitality firms at risk, research shows.

Eleven out of 14 UK sectors reported faster growth in output month on month in May, up from nine in April, according to the Lloyds Bank UK Recovery Tracker, as the UK moved further out of lockdown.

The tracker found that the UK tourism and recreation sector recorded the sharpest rise in output growth as British hotels, pubs and restaurants benefited from pent-up consumer demand.

Firms took on more staff to handle rising demand. All 14 sectors reported jobs growth in May, led by manufacturing, while the tourism and recreation sector added jobs for the first time since January 2020.

Jeavon Lolay, the head of economics and market insight for commercial banking at Lloyds Bank, said sectors that had been acutely affected by coronavirus restrictions were now outpacing those that operated more freely during lockdown.

“Whether the four-week delay to further easing of restrictions will impact this trend is unclear. But while the delay is understandably disappointing for many businesses, there’s no denying that the economy is now on a much sounder footing,” Lolay said.

The survey also showed that companies across the economy raised their prices in May, led by chemicals and metals and mining producers.

“While UK inflation jumped higher than expected in May and stronger demand saw more businesses pass on rising costs to their customers, it’s arguably still too soon to worry about inflation spiralling out of control,” Lolay said.

The fast-food chain McDonald’s announced expansion plans on Sunday and will recruit 20,000 workers over the next 12 months as it opens 50 new restaurants in the UK and Ireland.

To find out more about how we can assist you with your Second Charge Mortgage please click here

But the Covid-19 restrictions are continuing to hurt the hospitality sector, particularly the night-time economy.

About 25,000 licensed premises were still shut at the end of May 2021, according to research from CGA and AlixPartners, which warned that thousands more clubs, restaurants, pubs and bars are at risk from the delay to ending lockdown.

CGA and AlixPartners found that more than three-quarters of Britain’s licensed sites were trading by the end of last month, up from about a third in April, thanks to the return of inside service.

However, while more than nine in 10 food pubs, high street pubs and casual dining restaurants are open, sectors that rely on late-night trading are still in jeopardy of failure, the report found.

“Many operators will have reopened in anticipation of restrictions falling away on 21 June, and likely forecast and accepted suppressed trade for the period up to that point,” said Graeme Smith, the managing director of AlixPartners.

“While far from ideal, knowing that ‘freedom day’ was on the horizon meant operators could battle through this challenging time, perhaps welcoming team members back to the business in anticipation and getting operations up to speed. A further delay of four weeks is a devastating blow, creating significant uncertainty and further financial strain.”

Michael Kill, the chief executive of the Night Time Industries Association, has urged the government to lift restrictions on 5 July – at the two-week review point set when the restrictions were extended. He said the industry was “on the verge of breaking”.

By Graeme Wearden

Source: The Guardian

Discover our Second Charge Mortgage Broker services.

Furlough numbers ONS Second local lockdown UK redundancies Nationwide House prices Covid UK economy
Marketing No Comments

Reopening of UK economy to be delayed for four weeks

The full reopening of Britain’s economy has been postponed for at least four weeks due to the spread of the so-called Delta variant of Covid-19 first detected in India.

Prime Minister Boris Johnson made the announcement after the close of trading on Monday.

Restrictions on activity in pubs and nightlife venues or the rules on the use of facemasks had been due to be lifted on 21 June.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Johnson nevertheless sounded a hopeful note, saying: “As things stand, and on the evidence that I can see right now. I’m confident that we will not need more than four weeks.”

He was speaking just after fresh figures from Public Health England revealed that the number of infections from the Delta variant had more than doubled over just the past week to 42,323.

By Alexander Bueso

Source: ShareCast

Discover our Second Charge Mortgage Broker services.

UK unemployment rate redundancies UK jobless rate UK unemployment rates employment
Marketing No Comments

UK unemployment rate drops in April, according to ONS

The UK unemployment rate fell in April as the economy began to reopen, according to figures released on Tuesday by the Office for National Statistics.

The unemployment rate declined to 4.7% in the three months to April, from 4.8% in March and in line with consensus expectations. Non-essential shops and outdoor hospitality reopened in April, while indoor hospitality resumed in May.

The figures showed the number of payrolled employees rose for the sixth consecutive month, up by 197,000 in May to 28.5m. However, it was still 553,000 below pre-pandemic levels.

Since February 2020, the largest declines in payrolled employment have been in the accommodation and food services sector, people aged under 25 years, and those living in London.

To find out more about how we can assist you with your Second Charge Mortgage please click here

ONS head of economic statistics Sam Beckett said: “The number of employees on payroll grew strongly in May, up by almost 200,000, although it is still over half a million down since the pandemic struck.

“Job vacancies continued to recover in the spring, and our early estimates suggest that by May the total had surpassed its pre-pandemic level, with strong growth in sectors such as hospitality. Meanwhile the redundancy rate remains subdued, while the number of employees on furlough has continued to decline.”

On Monday, Prime Minister Boris Johnson announced a four-week delay to the lifting of lockdown in England, which had been due to take place on 21 June. According to reports, Chancellor Rishi Sunak will not be extending furlough support despite the reopening delay.

By Michele Maatouk

Source: Sharecast

Discover our Second Charge Mortgage Broker services.