(Disclosure: the author is 27… and renting.)
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The PRA and the FCA should ensure that mortgage lenders do not extend more than 15% of their total number of new residential mortgages at loan to income ratios at or greater than 4.5. This recommendation applies to all lenders which extend residential mortgage lending in excess of £100 million per annum. The recommendation should be implemented as soon as is practicable.
From Tomas Hirst, editorial director of Pieria, commissioning editor at the World Economic Forum and sometime playwright…
Commentators have been huffing and puffing themselves breathless with warnings of an imminent market correction in Britain’s property market. Even the European Commission has got in on the act warning policymakers of the risk of “excessive house price rises and increases in mortgage indebtedness”.
What there is no disagreement over is that prices have been rising strongly. According to the Nationwide House Price Index the average UK house price sold for a record £186,512 in May pushing annual pace of price growth up to 11.1 per cent:
This, as the BoE explains on its website, will see the Bank accept UK Export Finance-guaranteed debt capital market notes as collateral for liquidity operations, encouraging (it is hoped) banks to make export-finance related loans to industry. So, similar to funding for lending, but on this occasion specifically lending to export businesses. Read more
When Morgan Stanley’s Huw Van Steenis and his colleague Charles Goodhart ventured into these pink pixels last September, arguing that Britain needed a housebuilding and house-buying support scheme if the economy was going to achieve ‘escape velocity,’ the analytical duo probably didn’t count on getting dragged through the august columns of the FT editorial page.
The ECB’s deflation problem has been well covered.
Years of mass media conditioning that the UK has an inflation problem, however, have assured that the BoE’s flirtation with disinflationary pressure has by and large been overlooked.
But there are clues that this might become a problem soon enough. Read more
This post is just to flesh out a point in this great piece by John McDermott — so read that first.
But we think it’s an important point. An alternative title for this post: What’s under your gilt?
After all, it is the debt that has enabled Her Majesty’s government to turn so breezily confident that currency union with an independent Scotland “is not going to happen”, fully seven months before an independence referendum. Read more
Inflation had returned to the 2% target… and cost pressures were subdued. Members therefore saw no immediate need to raise Bank Rate even if the 7% unemployment threshold were to be reached in the near future. Moreover, it was likely that the headwinds to growth associated with the aftermath of the financial crisis would persist for some time yet and that inflationary pressures would remain contained…
Someone tell cable? Read more
We know that living in a counterintuitive zero-rate world can lead to lay misunderstandings.
For example, there’s the paradox of thrift and the idea that saving can be bad. WHAAT? Then there’s asset nationalisation and government spending, and the idea these can be good for capitalism. WHAAT REALLY? Last and not least — after years of general indoctrination that inflation is always bad — there’s the fact that inflation can actually be a good thing.
This presumably explains why, when the ONS announced this week that UK CPI had slowed to 2 per cent, the story was almost universally covered in the UK press as a good thing and a sign of a wonderfully encouraging turnaround in the economy.
Indeed, UK chancellor, George Osborne, was immediately wheeled out across numerous networks to take credit for his fabulous economic work. Read more
UK home-builders trying to move ahead of the political wind on foreign investors buying up London property?
In any case, though we missed this on Wednesday it seems part of the Zeitgeist — eleven of them agreed not to sell UK (read: London) new-builds abroad before they go on the domestic market from next year: Read more
Does £450/sq ft really count as ‘prime’ London these days?
We don’t know. But these were some interesting charts from Deutsche Bank nevertheless on Monday, about who’s been buying up London from abroad: Read more
In fact, London is in the grip of a terrible and deep housing bust that has only just begun to turn. Greater London house prices, adjusted for inflation, are fully 27 per cent below their peak in the summer of 2007.
We know that one day UK high streets will be windswept vistas of pubs, charity shops and discount grocery stores, with the odd place to pick up your online purchases from Asos.
It’s Help to Buy 2 launch day. Or, extend mortgages and warehouse them until the UK government supplies its guarantee for a portion of the money in January, launch day.
The scheme’s complete rules are here if you missed all 66 pages. Note the lending policy questionnaire.
So, reflecting on some HTB bits and pieces floating around on Tuesday… Read more
In contrast I am an optimist. I believe in free markets.
–George Osborne, Conservative party conference 2013
Details TBC, of course. But UK banks will be lending mortgages with a five per cent deposit in the very near future, under the rushed-forward Help to Buy 2 scheme.
And that means the UK government will be guaranteeing them — not the borrower — the next 15 per cent of mortgage value. Hence the fee paid by lenders for the guarantee (90bps for a 95 per cent loan to value, less for lower LTVs, apparently). Read more
Some hurried back-covering from Britain’s Financial Policy Committee, which last met on September 18…
In the United Kingdom, the continued recovery of the banking sector had been associated with a further easing in credit conditions. Against that backdrop, the recovery in the housing market appeared to have gained momentum and to be broadening.
Ever feel like you are slipping behind in the rat race? Well, Londoners now face competition from their homes as well. The average house in the capital is now earning as much as its occupants.
The following is not for distribution in the United States
The triennial central bank survey of foreign exchange and derivatives market activity from the BIS is out.
But if you are interested in how financial centres stack up against each other you’ll need to consult this table: (Click to enlarge)
We missed this speech by Lord Hope, the former Deputy President of the UK Supreme Court, last week. Shame.
It covers the plight of Rangers Football Club, the Insolvency Act 1986; why legal textbook writers don’t have to be dead before you can cite them any more; and the implications of the court’s May decision in the Eurosail case — one of the most important judgments for securitisation law in years. Read more
Pints, royals, strawberries and cream, bulldogs, cricket, fry-ups, football hooligans, and porn filters. All things British. The last item on the list being a recent arrival announced by Prime Minister David Cameron in a speech last week.
The filters will require an active selection to be able to view porn — plus anything that gets misidentified as porn — on one’s home internet connection.
Now, given that many Brits seem barely able flirt without the aid of alcohol (sorry!), one wonders exactly how many people will go to the trouble of getting the filters removed… but allow FT Alphaville to note that we kinda put “porn” in at least a couple of headlines over the last year. Just FYI. Read more