BoE considers relaxing mortgage affordability checks
The Bank of England is considering relaxing affordability checks borrowers must pass in order to take out a mortgage. The BoE may revise its reversion rate modelling, reducing the 3% interest rate figure which is added to the lender's standard variable rate when calculating a hypothetical future mortgage payment. Although the move would make it easier for buyers to acquire bigger or better property in the areas they like it could also further stoke house price inflation, experts warn. The bank is also considering whether to allow lenders to increase the volume of large mortgages they hand out. The proposals are part of a market review that the bank is set to conclude next week.
MPs voice concerns over loss of mutuals
A group of 100 cross-party MPs and peers has called on the Chancellor to strengthen the laws governing friendly societies and mutuals to make them less vulnerable to buyouts. The move comes in the wake of LV's controversial £530m takeover by Bain Capital. Meanwhile, Gareth Thomas, chair of the all-party parliamentary group for mutuals, has called on Alison Hutchinson, the vice-chair of Yorkshire Building Society, to resign from her non-executive director role on the board of LV arguing that it was unacceptable for her to sit on the board of one mutual while telling members of another that customer-owned status wasn't in their best interests.
FCA says £85k limit on bank customers’ protection ‘is enough’
The Financial Conduct Authority said there should be no increase in the amount of money that customers can get back if their bank, building society or other investment company collapses. It said the £85,000 limit is enough to cover most cases. However, it suggested the level be reviewed every three years to ensure it keeps pace with inflation.
Private equity floats aid profit taking
The Times’ Patrick Hosking comments on CVC’s exploration of a possible float saying it’s counterintuitive for such “fiercely media-shy businesses” to volunteer for scrutiny whilst criticising public markets for their burdensome governance and reporting requirements. However, there comes a time when the temptation to crystallise some profit while valuations are favourable becomes to much to resist, suggests Hosking.
SoftBank shares fall as value of portfolio companies plummets
SoftBank saw its share price fall 8% on Monday reviving speculation that the group will embark on a massive stock buyback. SoftBank’s share price has dropped by more than a quarter since mid-November.
PBOC slashes reserve requirement
The People's Bank of China (PBOC) has cut the amount of money the country's lenders need to hold in reserves by 0.5 percentage points in a bid to stimulate the country's economy. The move brings the average required reserve ratio for China's entire banking sector to 8.4%. “The PBOC is trying to nudge banks to lower lending rates to help struggling firms but doesn't want to engineer a sharp pick-up in the quantity of lending,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
Danske Bank told to expand debt-collection investigation
Danske Bank has been asked by the Financial Supervisory Authority – the Danish financial watchdog - to extend and expand an external investigation into issues with its debt-collection practices. The regulator said that the order was needed to properly follow up on Danske's remediation efforts, which were taking longer than expected.
UK construction recovers
Britain's construction industry saw growth hit a four-month high in November as the worst of supply chain difficulties subsided for the sector. The IHS Markit/CIPS UK Construction Purchasing Managers' Index (PMI) rose to 55.5 last month from 54.6 in October. "Port delays and a severe lack of transport availability due to haulage driver shortages continued to hold back supplier performance, although firms noted an improvement in the availability of specific items, especially timber," IHS Markit said. However, looking ahead, the end to a moratorium on commercial property evictions may reduce demand for new space and a likely rise in interest rates and lower disposable income could hurt housing demand, causing problems for the sector in 2022.
Amigo offers improved compensation package
Shares in Amigo Loans fell yesterday after the sub-prime lender announced its contribution to a compensation fund for customers mis-sold loans would rise from £35m to £97m. A further contribution of £15m will be on offer from a previously announced equity and capital raise. Creditors would need to vote on the plan, an alternative to which would be for Amigo to wind down its guarantor loans business.
Financial watchdog calls for stricter rules in bond and DeFi markets
The Bank for International Settlements has called for tighter regulation of blockchain-based decentralised finance and tougher rules to stop bond funds from amplifying risks to financial market stability.
MEDIA & ENTERTAINMENT
US regulators probe Trump social media Spac deal
The Securities and Exchange Commission is seeking information about possible communications between Digital World Acquisition Corp and Trump Media and Technology Group (TMTG) before they revealed plans in October to combine. Meanwhile, TMTG said on Monday that Republican congressman Devin Nunes would join the company as chief executive officer from January. Additionally, Howard Lutnick, the CEO of Rumble's parent company Cantor Fitzgerald, stated on Monday that they have worked out a distribution deal with Donald Trump's planned "Truth" social media platform.
Christmas sales lifts retail footfall
New data reveals that footfall in large cities outside of London fell by 3.8% last week compared with the week before, as caution around the new Omicron variant prompted more people to stay working from home. However, analysis shows the start of the Christmas shopping season lifted footfall across the UK’s retail destinations by 0.7%, with shopping centres and retail parks performing better than high streets. Meanwhile, separate figures showed that Black Friday helped like-for-like retail sales rise by 1.8% in November compared with a year earlier and by 4.1% on the same month in 2019. Elsewhere, Barclaycard found that spending on payment cards in Britain rose 16% in November compared with the same period in 2019, reaching its highest level this year.
UK jobs boom poses inflation risk, Bank of England official warns
Ben Broadbent, a deputy governor of the Bank of England, said on Monday that the UK’s unexpectedly tight labour market posed a risk to future inflation if workers demanded higher wages to offset rising living costs. The Bank’s monetary policy chief said inflation is likely to soar “comfortably” above 5% next spring when Ofgem raises the energy price cap. Speaking to Leeds University Business School, Broadbent said: “The aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5% when the Ofgem cap on retail energy prices is next adjusted.” He went on to predict that the recent jump in inflation for goods is “more likely to subside than intensify” over the next couple of years as the squeeze on global supply chains eases.