First-time buyers see rates fall to decade-low
First-time buyers can now access the cheapest low-deposit mortgage rates in at least a decade, according to Moneyfacts. Data from the financial information website reveals that the average rate on a two-year fixed mortgage with a 5% deposit is currently 3.09%. This is a drop from November's 3.22% and is the lowest rate since its records began in 2011. The typical five-year fixed rate on the same terms is 3.39%, down from 3.51% in November and also a decade low. Rates on 10% deposit mortgages have also dropped in the last month, with two-year fixes falling from 2.54% to 2.51%, and five-year fixes dropping to 2.95%, down from 3.02% in November. Meanwhile, mortgages for those with large deposits hit were at record lows of less than 1% earlier in the year, but are now on the rise as lenders anticipate an increase in the base rate.
Technology drives banks to question future models
The Times’ Katherine Griffiths considers how technology is driving the evolution of banks noting the advent of Bank of London last week – a new clearing bank which aims to make it quicker and easier for small and large businesses to make payments. It will also provide off the shelf banking packages that corporates can repackage. With big banks striving to keep up with disruptors, and digital currencies looming, Griffiths says leaders in the field will have to ask themselves existential questions about what banks are. “A lot of the answers will be driven by technology.”
Easing affordability checks will drive house prices up further
The Telegraph’s Jeremy Warner reacts to news that the Bank of England is considering loosening affordability checks and loan to income constraints for borrowers. He states: “This makes some sense in terms of making mortgages more accessible to first-time buyers, but will also pour further fuel on an already raging housing market fire.” Warner goes on to say that interest rates are a blunt tool to fight soaring house prices, and that it would be better to ration credit to stem the stratospheric rise in prices.
Homeowners turning to equity release to help kids onto property ladder
Homeowners are drawing down more and more equity when they remortgage, according to figures from City lobby group UK Finance. The average amount withdrawn for home improvements is now more than £50,000. Equity withdrawals for undefined "other purposes" peaked at £106,000, and experts point out that a growing number of parents are withdrawing cash to help children get onto the property ladder.
Tally launches savings account backed by gold
Tally Money has launched a savings account supported by gold and offering a 2% annual rate of return. Cameron Parry, chief executive and founder of the e-money institution, said: “With inflation badly outstripping the low rates being offered by high-street banks, people are desperately searching for solutions that offer value, security and an alternative to this fiat money trap.”
Scammers’ cash to be used to combat fraud
A pilot project will see Lloyds Bank take £7m from the frozen bank accounts of fraudsters and hand it to law enforcement to finance a dedicated scams unit at the City of London Police and a new specialist cyber investigations team. The money will come from accounts linked to scammers where the bank has been unable to trace victims for more than a year.
Paragon bounces off buoyant housing market
Pre-tax profit at Paragon Banking Group, which focuses on mortgages for professional landlords, rose by a better-than-expected 80.5% to £213.7m in the 12 months to the end of September. Mortgage lending advances climbed by 29.4% to £1.63bn compared with a 19.7% decline a year earlier.
Payroll start-up raises fresh funds
London-based payroll start-up Pento has raised £26.4m in a new round of funding. The firm fully automates the payroll process for a monthly fee, eliminating the need for outsourcing to accountants. Pento claims to reduce the amount of time firms need to spend on the monthly pay run by 80% and has grown ten-fold in a year.
Permira to take Mimecast private
Permira is to take email security company Mimecast Ltd private in a deal valued at about $5.8bn. The deal, expected to close in the first half of 2022, has a "go-shop" period of 30 days for Mimecast to court other offers.
FCA to introduce new consumer duty
The Financial Conduct Authority is to introduce a new consumer duty in order to better protect users of financial services and help to “stop harm before it happens”. The new rules will help tackle harmful practices such as providers of financial services presenting information in a way that exploits consumers’ behavioural biases, selling products or services that are not fit for purpose, or providing poor customer support. The new rules will mean firms will have to place emphasis on supporting and empowering their clients to make good financial decisions and avoid foreseeable harm throughout the customer relationship. Firms will be required to provide customers with information they can understand, offer products and service that are fit for purpose and provide helpful customer service. Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: “The new duty will drive a change in culture at firms. We expect firms to step up and put consumers at the heart of what they do and we’ll be holding senior managers accountable if they do not. The duty will also help create an environment for healthy competition between firms, encouraging them to be innovative in developing products and services that meet consumer's needs.”
How fund managers game the system to profit from ESG
Louis Ashworth examines in the Telegraph how funds managers are able to label a fund as net zero by placing bets against a high polluter and then counting their emissions as offsetting the rest of the portfolio. Barclays analyst Charlotte Edwards says several hedge funds have employed this process which has “little to no impact in the real world.” Luke Sussams at Jefferies says disparate standards regarding ESG performance has meant that, “what is considered good and what is considered bad has always depended on who you asked. There is no universality, there is no standardisation." Investment manager Gina Miller is calling on the Financial Conduct Authority to take urgent action to clamp down on funds that falsely bill themselves as ESG or socially responsible.
Zopa to quit peer-to-peer lending
Zopa is closing down its P2P consumer investment division with CEO Natasha Wear telling customers their entire loan portfolios will be bought at face value. A slump in trust in P2P investing along with new regulations has prompted Zopa to fully focus on its banking unit, Wear explained. Martin Campbell, a veteran consultant to the alternative finance industry, said it was depressing that Zopa had decided to abandon peer-to-peer entirely to “join the bad boys of banking it was originally launched to disrupt”.
Majority of Britain's financial services exports head to US
A report by TheCityUK has found that the US has overtaken the EU as the leading destination for UK financial services exports after Britain’s trade with the bloc dropped after Brexit.
Veritas weighs sale of Cotiviti
Veritas Capital is exploring a sale of healthcare analytics company Cotiviti Corp which could secure a valuation of over $15bn.
MEDIA & ENTERTAINMENT
Amazon services hit by computer problems
Amazon and its cloud computing arm, Amazon Web Services, suffered a major outage yesterday affecting Amazon’s marketplace, prime video and Alexa services. The company said it had identified the cause and has "seen some signs of recovery", but gave no timescale for a solution. The biggest disruption for customers is being seen on the US east coast, according to reports.
Informa puts Lloyd's List up for sale
Informa has put Lloyd's List up for sale as part of a wider reorganisation at the FTSE 100 media and events group which could also see the disposal of its intelligence division, a portfolio of data and consultancy interests.
Evergrande faces imminent default
Chinese real estate giant Evergrande yesterday missed a 30-day grace period deadline to pay debts worth over £82m taking the company another step closer to default. Evergrande is buckling under the weight of around $300bn in debt and saw its shares fall to their lowest level on record as investors ran for cover. State representatives have now occupied the majority of seats on a new risk management committee to oversee an attempted rescue of the developer.
House price growth highest for 15 years
House prices in the UK grew at the fastest pace in 15 years over the past three months, the Halifax has said. House prices rose 3.4% in the three months to the end of November, the sharpest increase since late 2006, and are 8.2% higher than a year earlier. The average UK property price hit a fresh record high of £272,992 in November, the mortgage lender said.
Central bank of Norway acquires Boohoo stake
Norges Bank, the central bank of Norway, has purchased a 3.1% stake in Boohoo, making it the fifth largest institutional investor in the online retailer.
Spotlight Sports picks bankers for £500m sale
The owner of the Racing Post has picked PJT Partners to oversee a £500m sale of the company. Exponent Private Equity will look to sell Spotlight Sports Group next year amid booming interest in sports betting data from US-based gambling and media companies.
Pay hikes will harm plans to recruit more staff, Treasury warns
The Treasury has warned that large pay rises for public sector workers risks driving inflation up further and limiting the prospects of hiring more doctors and teachers. The warning was issued in an evidence submission to the pay review bodies, which are responsible for making recommendations to Government departments on salary increases for public sector workers. The Treasury urged the pay bodies to approach its latest set of recommendations with caution, noting that “public sector earnings growth over the next three years should retain broad parity with the private sector and continue to be affordable.”